Question

The following summarized data (amounts in millions) are taken from the September 30, 2017, and September 24, 2016, comparative financial statements of Apple Inc., a company that designs, manufactures, and markets mobile communication and media devices and personal computers; sells a variety of related software, services, accessories, networking solutions, and offers third-party digital content and applications:

  

(Amounts Expressed in Millions)
For the Fiscal Years Ended September 30 and September 24, respectively:	2017		2016
Net sales	$	229,234	$	215,639
Costs of sales		114,048		131,376
Operating income		61,344		60,024
Net income	$	48,351	$	45,687
At Year End: Assets
Current assets:
Cash and cash equivalents	$	20,289	$	20,484
Short-term marketable securities		53,892		46,671
Accounts receivable, less allowance of $58 and $53, respectively		17,874		15,754
Inventories		4,855		2,132
Vendor nontrade receivables		17,799		13,545
Other current assets		13,936		8,283
Total current assets		128,645		106,869
Long-term marketable securities		194,714		170,430
Property, plant, and equipment, net		33,783		27,010
Goodwill		5,717		5,414
Acquired intangible assets, net		2,298		3,206
Other assets		10,162		8,757
Total assets	$	375,319	$	321,686
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	49,049	$	37,294
Accrued expenses		25,744		22,027
Deferred revenue		7,548		8,080
Commercial paper		11,977		8,105
Current portion of long-term debt		6,496		3,500
Total current liabilities		100,814		79,006
Deferred revenue—noncurrent		2,836		2,930
Long-term debt		97,207		75,427
Other noncurrent liabilities		40,415		36,074
Total liabilities		241,272		193,437
Shareholders’ Equity:
Common stock and additional paid-in capital, $0.00001 par value, 12,600,000 shares authorized; 5,126,201 and 5,336,166 shares issued and outstanding, respectively		35,867		31,251
Retained earnings		98,330		96,364
Accumulated other comprehensive income (loss)		(150	)	634
Total shareholders’ equity		134,047		128,249
Total liabilities and shareholders’ equity	$	375,319	$	321,686

At September 26, 2015, total assets were $290,345 and total shareholders’ equity was $119,355.

Required:

A) Calculate Apple Inc.’s working capital, current ratio, and acid-test ratio at September 30, 2017, and September 24, 2016.

B) Calculate Apple’s ROE for the years ended September 30, 2017, and September 24, 2016.

C) Calculate Apple’s ROI, showing margin and turnover, for the years ended September 30, 2017, and September 24, 2016.

• Required A
• Required B
• Required C

Calculate Apple Inc.’s working capital, current ratio, and acid-test ratio at September 30, 2017, and September 24, 2016. (Round your ratio answers to 1 decimal place. Enter "Working capital" in million of dollars.)

A) Please find Acid-Test Ratio

Calculate Apple Inc.’s working capital acid-test ratio at September 30, 2017, and September 24, 2016.

	2017 2016 Working capital $27,831 $27,863 Current ratio 1.3 1.4 Acid-test ratio ??? ???

B) Please find ROI, Margin, Turnover, and complete the table.

• Calculate Apple’s ROI, showing margin and turnover, for the years ended September 30, 2017, and September 24, 2016. (Round "Turnover" answers to 2 decimal places. Round your percentage answers to 1 decimal place.)

	2017 2016 ROI % % Margin % % Turnover

Answer 1

		2017		2016
	Acid-test ratio	0.91		1.05
		(20289+53892+17874)/100,814		(20,484+46,671+15,754)/79,006
	Acid-test ratio =	(Cash+short term marketable securities+Account receivable)/Current liabilities
		2017		2016
	ROI	37.7%		38.3%
	Margin	22.4%		19.9%
	Turnover
Approach-1 using opening stockholders wealth	ROI	Net income	/	Cost of investment
	2017	$48,351	/	$128,249	37.7%
	2016	$45,687	/	$119,355	38.3%
Approach-2 using average stockholders wealth	ROI	Net income	/	Cost of investment
	2017	$48,351	/	(128,349+134,047)/2	36.9%
	2016	$45,687	/	(119,355+128,349)/2	36.9%
	Margin	Net income	/	Net sales
	2017	$48,351	/	$215,639	22.4%
	2016	$45,687	/	$229,234	19.9%
	Turnover	Cost of sales	/	Average account receivable		Turnover:	In absense of turnover ratio meaning, calculation was done for Account receivable turnover ratio.
	2017	$114,048	/	(17874+15754)/2
	2016	$131,376	/	$15,754		Note: In absense of information of opening Sept. 26, 2015, trade receivable on 2016 deemed to be average)