Question

Apple and Google work to maintain high-quality and low-cost operations. One ratio routinely computed for this assessment is the cost of goods sold divided by total expenses. A decline in this ratio can mean that the company is spending too much on selling and administrative activities. An increase in this ratio beyond a reasonable level can mean that the company is not spending enough on selling activities. Use Apple's financial statements in Appendix Ai (Assume for this analysis that total expenses equal the cost of goods sold plus total operating expenses.) Required 1. For Apple and Google, compute the ratios of cost of goods sold to total expenses for Apple and Google during the fiscal years 2017 and 2016. 2. Which company had a greater percentage reduction in selling and administrative expenses in 2017? Complete this question by entering your answers in the tabs below. Required 1 Required 2 For Apple and Google, compute the ratios of cost of goods sold to total expenses for Apple and Google during the fiscal years 2017 and 2016. (Record answers as percents, rounded to one decimal.) Apple 2017 2016 % % Google 2107 2016 % % Ratio of cost of goods sold to total expenses < Required 1 Required 2 >

Answer 1

		Apple			Google
		2017	2016		2017	2016
1	Ratio of cost of goods sold to total expenses	84.0%	84.4%		53.8%	52.8%
	(COGS + Operating Expenses = Total Expenses)
	(COGS/Total Expenses)
	Working
		[141,048/(141,048 + 26,842)]	[131,376/(131,376 + 24,239)]		(45,583/84,709)	(35,138/66,556)
2	Google Inc.