Apple Incorporated PDF

Preview

Summary

Assignment solutions...

Description

Financial Accounting Assignment #1 Apple Inc. 1. Balance sheet equation: Assets = Liabilities + Equity $321,686 million = $193,437 million + $128,249 million 2. Total (shareholders’) equity = $128,249 million Market value of equity = $607,330 million Shareholders’ equity is the value of assets minus liabilities, or net assets. However, the assets listed on the balance sheet are often stated at a historical cost less depreciation, which may differ from the current market value. The market value of an asset is what a buyer is willing to pay a seller currently. The market value of equity in this case is greater than the total equity listed on the balance sheet possibly because investors take future expected earnings from company growth and expansion into account. 3. Retained earnings (2015) = $92,284 million Retained earnings (2016) = $96,364 million There is a difference between the two values because: Beginning retained earnings in 2015 + net income in 2015 – dividends in 2015 = ending retained earnings in 2016 Thus, $92,284 million + $45,687 million - $12,188 million - $29,000 million - $419 million = $96,364 million 4. Net income (2016) = $45,687 million Cash generated by operating activities (2016) = $65,824 million Net income is earned revenues minus incurred expenses. The operative cash flow reports inflows and outflows as a result of regular operating activities. Usually, net income and operative cash flow differ in value because there is a time lag between documented sales and actual payments. 5. Cash in hand (2016) = $20,484 million Cash in hand (2015) = $21,120 million The amount of cash in hand in 2016 is thus smaller than that in 2015. Major sources of cash in 2016 as compared to 2015 – sales of marketable securities, long-term debt issuances, cash generated by operating activities Major uses of cash in 2016 as compared to 2015 – repayments of term debt, payments for strategic investments, payment for acquisition of intangible assets 6. Ernst & Young LLP, Apple Inc.’s auditors, stated that the financial statements (consolidated balance sheets for 2015 and 2016 and consolidated operations and cash flow statements for all 3 years) were accurately reported in accordance with the GAAPs. Additionally, Apple Inc.’s internal control over financial reporting as of 24th September 2016, audited in accordance with the standards of the Public Company Accounting Oversight Board, was also deemed to be of unqualified opinion....