Week 2 Journal

 In one-two pages answering the following questions:

  • What are three financial facts that you have determined so far in your work in this course that you believe are critical in determining whether to recommend an investment in this company? Justify your answer.
  • At this point, do you think you will end up with a buy, hold, or sell recommendation for your chosen company? Explain your answer.

Apendix A

Sep. 25, 2021 Sep. 26, 2020 Sep. 26, 2019

Marketable securities

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Term debt

Apple .Inc
12 Months Ended
Income statement
Sep. 25, 2021 Sep. 26, 2020 Sep. 26, 2019
Net sales
Cost of sales 365817 274515 260174
Gross margin 212981 169559 161782
Operating expenses:
Research and development 21914 18752 16217
Selling, general and administrative 21973 19916 18245
Total operating expenses 43887 38668 34462
Operating income 108949 66288 63930
Other income/(expense), net 258 803 1807
Income before provision for income taxes 109207 67091 65737
Provision for income taxes 14527 9680 10481
Net income 94680 57411 55256
CONSOLIDATED BALANCE SHEETS – USD ($) $ in Millions
Current assets:
Cash and cash equivalents 34940 38016 48844
Marketable securities 27699 52927 51713
Accounts receivable, net 26278 16120 22926
Inventories 6580 4061 4106
Vendor non-trade receivables 25228 21325 22878
Other current assets 14111 11264 12352
Total current assets 134836 143713 162819
Non-current assets:
127877 100887 105341
Property, plant and equipment, net 39440 36766 37378
Other non-current assets 48849 42522 32978
Total non-current assets 216166 180175 175697
Total assets 351002 323888 338516
Current liabilities:
Accounts payable 54763 42296 46236
Other current liabilities 47493 42684 37720
Deferred revenue 7612 6643 5522
Commercial paper 6000 4996 5980
Term debt 9613 8773 10260
Total current liabilities 125481 105392 105718
Non-current liabilities:
109106 98667 91807
Other non-current liabilities 53325 54490 50503
Total non-current liabilities 162431 153157 142310
Total liabilities 287912 258549 248028
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital, 57365 50779 45174
$0.00001 par value: 50,400,000 shares
authorized; 16,426,786 and 16,976,763
shares issued and outstanding, respectively
Retained earnings 5562 14966 45898
Accumulated other comprehensive income/(loss) 163 -406 -584
Total shareholders’ equity 63090 65339 90488
Total liabilities and shareholders’ equity $ 351,002 $ 323,888 $ 338,516

Apendix B

Apple .Inc
12 Months Ended
Income statement

Sep. 25, 2021 Sep. 26, 2020

Net sales

100% 100%

Cost of sales

62%

Gross margin

38%

Operating expenses:

Research and development

6%

Selling, general and administrative 6% 7% 7%
Total operating expenses

Operating income

Other income/(expense), net 0% 0%

Income before provision for income taxes 30% 24% 25%
Provision for income taxes 4% 4% 4%
Net income

21%

CONSOLIDATED BALANCE SHEETS – USD ($) $ in Millions Sep. 25, 2021 Sep. 26, 2020 Sep. 26, 2019

Current assets:

Cash and cash equivalents

Accounts receivable, net

Inventories

Vendor non-trade receivables

Other current assets

Total current assets

Non-current assets:

Marketable securities

Property, plant and equipment, net

Other non-current assets

Total non-current assets

Total assets

100.00% 100.00%

Current liabilities:

Accounts payable

Other current liabilities

Deferred revenue

Commercial paper

Total current liabilities

Non-current liabilities:

Term debt

Other non-current liabilities

Total non-current liabilities

Total liabilities 100.00% 100.00% 100.00%
Sep. 28, 2019
10

0%
58% 62%
42% 38%
6% 7%
12% 1

4% 13%
30% 24% 25%
1%
26% 21%
9.95% 11.74% 14.43%
Marketable securities 7.89% 16.34% 15.28%
7.49% 4.98% 6.77%
1.87% 1.25% 1.21%
7.19% 6.58% 6.76%
4.02% 3.48% 365.00%
38.41% 44.37% 48.10%
36.43% 31.15% 31.12%
11.24% 11.35% 11.04%
13.92% 13.13% 9.74%
61.59% 55.63% 51.90%
100.00%
19.02% 16.36% 18.64%
16.50% 16.51% 15.21%
2.64% 2.57% 2.23%
2.08% 1.93% 2.41%
Term debt 3.34% 3.39% 4.14%
43.58% 40.76% 42.62%
37.90% 38.16% 37.01%
18.52% 21.08% 20.36%
56.42% 59.24% 57.38%

12

Apple Inc. Financial Statement Analysis

Kevin Sessions

The University of Arizona Global Campus

BUS 401 Principles of Finance

Phillip Sarakatsannis

August 1, 2022

Apple Inc. financial analysis

Part 1: Overview of the company

Apple Inc. is one of the leading tech firms not only in the United States but also globally. The company is known for manufacturing smart devices such as smartwatches, smartphones, smart glasses, and computers. It also manufactures software that runs on the mentioned devices (Reuters, 2022). The company currently takes the highest market share of 51% of mobile and computer devices.

Part 2: Income statements

The income statements record the income of the company every year.

The income statement records the net

sales

(revenues), operating income, and net sales. Apple’s revenues have increased over the last three years. It was $ 260, 174, $274, 515, and $ 365, 817 in 2019,

2020

, and

2021

respectively.

The operating expenses also increased in the last three years. The company recorded $34, 462, $36, 668, and $ 43, 887 in the years 2019, 2020, and 2021 respectively. With the increase in net sales, the net income also increased significantly over the past three years. The company managed to increase. In 2019 the company had $55,256; in 2020, the company had $ 57,411; in 2021, the company registered a net income of $ 94,680.

Part 3: Common size income statements

The common size income statement is used to determine how each line component in the business affects the company’s financial position. The company’s gross margin in the last three years has been increasing: it was 38 % in 2019 and 2020 and 42% at the end of the 2021 fiscal year. The operating income also increased in the last financial year (2021) compared to the preceding 2020, a drop compared to the 2019 operating margin (Arnold, Ellis, & Krishnan, 2018). The operating margin in the last three years was 30%, 24%, and 25% for 2021, 2020, and 2019 respectively.

Part 4: Balance sheets

The balance is an important company document that records the organization’s assets and

liabilities

. These are the items that make up the company’s capital. Apple’s total assets have been increasing last two years. The company had $ 251,002 worth of total assets in 2021, an increase from $ 323,880 in 2020 and a decrease from $ 338,516 in 2019. The current assets have, however, dropped in the last three years. The company had $ 162,819, $143,713, $134,836 in the year 2019, 2020, and 2021 respectively.

The total liabilities of the company also increased in the last three years.

The company had $ 248, 028, $ 258, 549, and $ 287, 912 in the year 2019, 2020, and 2021 respectively. The current liabilities also increased from 105,718 in 2019 to 125,481 in 2021; the current liabilities in 2020 were $ 105,392. The shareholder equity decreased from $ 904,800 million in 2019 to $ 63,090 million in 2021.

Part 5: Common size balance sheets

The common size balance can reveal each item over the critical item. The current assets as a percentage of the current assets have been dropping over the last three years. The current asset has dropped by 10 points from the 2019 current assets (Roychowdhury, Shroff, & Verdi, 2019). The current liabilities, on the other, had increased from 16.36 % in 2020 to 19.02 % in 2021.

Part 6: Cash flow

The cash flow of an organizations shows the movement of cash in and out of an organization in a fiscal year. The cash flow record cash flow associated with the operating activities, investing activities, and financing activities. From the information provide we can calculate apple’s cash flow in the last three years using the following formula.

Cash Flow = Cash from operating activities + (-) Cash from investing activities + (-) Cash from financing activities + Beginning cash balance.

2019

Cash flow = 69,391, 000 + 45, 896, 000 + (90,976,000) + 25, 913, 000 = 50,224,000

2020

Cash flow = 80, 674,000 + (4, 289, 000) + (86,820,000) + 50, 224,000 = 39,789,000

2021

Cash flow = 104, 038, 000 + (14, 545,000) + (93,353,000) + 39, 789,000 = 35, 929,000

The cash flow has been decline in the last three years shown in the calculation.

Part 7: Financial analysis conclusion

Through the analysis of the firm’s financial information, we can see that it is performing well in most of its areas of operations. However, there is some weakness that the company needs to look into. The tables below show the company’s financial strengths and weaknesses as far as financial performance is concerned.

Strengths

Weaknesses

Cash flow operating activities

Investing activities

Shareholders’ equity

Financing activities

Assets

liabilities
sales

The strengths have shown an increase in the amount of income to the organization, as shown in the financial statements—the weaknesses, on the other hand, led to the drop in Apple’s financial resources.

References

Arnold, A. G., Ellis, R. B., & Krishnan, V. S. (2018). Toward effective use of the statement of cash flows. Journal of Business and Behavioral Sciences, 30(2), 46-62.

Reuters. (2022). Apple Inc. Breaking International News & Views | Reuters. https://www.reuters.com/markets/companies/AAPL.O/

Roychowdhury, S., Shroff, N., & Verdi, R. S. (2019). The effects of financial reporting and disclosure on corporate investment: A review. Journal of Accounting and Economics, 68(2-3), 101246.

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