Income Statement

Total Revenue => Sales

Cost of Revenue => COGS
Gross Profit
Research and Development
Selling General and Administrative = SG&A
Non Recurring
Others
Total Operating Expenses
Operating Income or Loss
Total Other Income/Expenses Net
Earnings Before Interest and Taxes
Interest Expense
Income Before Tax
Income Tax Expense
Minority Interest
Net Income From Continuing Ops
Non-recurring Events
Discontinued Operations
Extraordinary Items
Effect Of Accounting Changes
Other Items
Net Income
Preferred Stock And Other Adjustments
Net Income Applicable To Common Shares

2014
2015
2016
182,795,000
###
###
112,258,000
###
###
70,537,000 93,626,000 84,263,000
6,041,000 8,067,000 10,045,000
11,993,000 14,329,000 14,194,000

52,503,000 71,230,000 60,024,000

980,000 1,285,000 1,348,000
53,483,000 72,515,000 61,372,000
0
0
0
53,483,000 72,515,000 61,372,000
13,973,000 19,121,000 15,685,000
39,510,000 53,394,000 45,687,000

39,510,000 53,394,000 45,687,000

39,510,000 53,394,000 45,687,000

Questions
Does Apple have debt?
Does Apple pay interest expense?
Calculate the effective tax rate
Calculate EBIAT = EBIT *(1-T)
Compare EBIAT to Net Income
Would you get the same answer if Apple paid 10% interest on its long-term debt?
Look up the number of shares outstanding

Calculate EPS
Look up the share price
Calculate the P/E ratio
Answers
Yes - see the long-term debt item on the Balance Sheet
No,
the company
not pay
This is unusual.
Effective
tax rate=does
Income
Taxinterest.
Expse / Income
before
tax
EBIAT
EBIAT is the same as net income, because interest = 0
NO. Interest expense would be
therefore net income would be lower than EBIAT
Statistics tab in yahoo fin under "Share Statistics"
Net income / # of shares outstanding
Share price (opening price on Jan 10)
Price to Earnings ratio

2014

2015

2016

26.1%
26.4%
25.6%
39,510,000 53,394,000 45,687,000
2,898,700 5,332,900 7,542,700
37,368,616 49,467,297 40,072,007
5,330,000
8.6
118.99
14

Balance Sheet
2014
Current Assets
Cash And Cash Equivalents
Short Term Investments
Net Receivables
Inventory
Other Current Assets
Total Current Assets
Long Term Investments
Property Plant and Equipment
Goodwill
Intangible Assets
Accumulated Amortization
Other Assets
Deferred Long Term Asset Charges
Total Assets
Current Liabilities
Accounts Payable
Short/Current Long Term Debt
Other Current Liabilities
Total Current Liabilities
Long Term Debt
Other Liabilities
Deferred Long Term Liability Charges
Minority Interest
Negative Goodwill
Total Liabilities
Stockholders' Equity
Misc. Stocks Options Warrants
Redeemable Preferred Stock
Preferred Stock
Common Stock
Retained Earnings
Treasury Stock
Capital Surplus
Other Stockholder Equity
Total Stockholder Equity

2015

2016

13,844,000 21,120,000 20,484,000

11,233,000 20,481,000 46,671,000
31,537,000 30,343,000 29,299,000
2,111,000
2,349,000 2,132,000
9,806,000 15,085,000 8,283,000
68,531,000 89,378,000
###
130,162,000 164,065,000
###
20,624,000 22,471,000 27,010,000
4,616,000
5,116,000 5,414,000
4,142,000
3,893,000 3,206,000
3,764,000

5,422,000 8,757,000

231,839,000 290,345,000
48,649,000
6,308,000
8,491,000
63,448,000
28,987,000
24,826,000
3,031,000

###

60,671,000
10,999,000
8,940,000
80,610,000
53,329,000
33,427,000
3,624,000

59,321,000
11,605,000
8,080,000
79,006,000
75,427,000
36,074,000
2,930,000

120,292,000 170,990,000

###

23,313,000
87,152,000

27,416,000 31,251,000
92,284,000 96,364,000

1,082,000
-345,000
111,547,000 119,355,000

Questions
1. Calculate the amount of Net Working Capital

634,000
###

2. Calculate the amount of total capital

3. Calculate the Debt to Equity ratio
using total assets and total liabilities
using debt as a fraction of total capital
4. What can you conclude about the firm's financing policy?
5. Calculate the change in retained earnings
compare it to net income
6. What can you conclude about the firm's dividend policy?
7. Calculate the change in cash
compare it to the figure provided in the SCF
2014
2015
2016
Answers
1. Current Assets - Current Liab
5,083,000
8,768,000 27,863,000
Long term Liab + Equity
168,391,000 209,735,000
###
2. using total assets and total liabilities
1.08
1.43
1.51
3. using debt as a fraction of total capit
0.51
0.76
0.89
Apple uses debt up to 50% in total capital
4. change in retained earnings
na
5,132,000 4,080,000
39,510,000
53,394,000
45,687,000
5. net income
Apple pays dividends and buys back stock actively
6. change in cash
na
7,276,000 -636,000
7. same as figure provided in SCF

Statement of Cash Flow

Net Income
Operating Activities, Cash Flows Provided By or Used
In
Depreciation
Adjustments To Net Income
Changes In Accounts Receivables
Changes In Liabilities
Changes In Inventories
Changes In Other Operating Activities
Total Cash Flow From Operating Activities
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures
Investments
Other Cash flows from Investing Activities
Total Cash Flows From Investing Activities
Financing Activities, Cash Flows Provided By or Used
In
Dividends Paid
Sale Purchase of Stock
Net Borrowings
Other Cash Flows from Financing Activities
Total Cash Flows From Financing Activities
Effect Of Exchange Rate Changes
Change In Cash and Cash Equivalents

2014
2015
2016
39,510,000 53,394,000 45,687,000
7,946,000
5,210,000
-6,452,000
13,408,000
-76,000
167,000
59,713,000
-9,571,000
-9,027,000
-3,981,000
###

11,257,000
4,968,000
-3,124,000
15,188,000
-238,000
-179,000
81,266,000

10,505,000
9,148,000
1,044,000
-1,867,000
217,000
1,090,000
65,824,000

###
###
###
###
-610,000 -1,221,000
###
###

###
###
###
###
###
###
18,266,000 29,305,000 22,057,000
-1,158,000 -1,499,000 -1,570,000
###
###
###
-415,000 7,276,000

-636,000

Questions
Define operating cash flow (ignore adjustments to net income)
Define investing cash flow
Calculate the changes in PP&E and Long Term Investments on the Balance Sheet
and compare it to the investing cash flows on the SCF
Why is net borrowing a positive figure?
Answers
Cash generated by the firm's core operations

2014

2015

2016

Cash spent on increasing productive capability: capital expenditures (increase in PP&E) and LT investments

PP&E
na
1,847,000 4,539,000
Long Term Investments
na
33,903,000 6,365,000
capex on the SCF is higher than increase in PP&E
SCF long-term investments differ from increase in long-term investments on the balance sheet
because it is a cash inflow for Apple

alance Sheet

d LT investments

lance sheet