Management Discussion and Analysis Section
Question One
As per the Table of Contents near the front of the Form 10-K, the statement is subdivided into four groups. In part II, The Item Management’s Discussion and Analysis of Financial Condition and Results of Operations holds the largest section as it gives an extensive overview of the Apple Inc’s operations, products, services and performance over the fiscal years, 2016, 2017 and 2018. It also entails the performance highlights of each of the product provided by Apple Inc. like the iPhone as well as their performance in specific regions like America, Europe, and Japan. This section generally gives an overview of the company over the last few years and the management’s prospects over the next few years, hence useful to investors.
Question Two
The reason that the management gives for the increase in net sales over the prior year is that there were greater net sales of products and services during 2018 in comparison to 2017.
Question Three
The information about the sales in terms of net sales by geographic operating segment would be beneficial to investors as they would be able to get crucial information on the appropriate region that they can put their investments.
Question Four
Similarly, the information about net sales is crucial to investors as it gives the investors the sales of the products and their performance over time so that they can get an appropriate overview of the best product that they can put their investments.
Question Five
In page 31, of the Capital return program, Apple explains their procedure of repurchasing stock as they spend $210 in the past year hence the returns made it possible for them to repurchase.
Financial Statements and Notes Overview
Question One
Some of the statements that are input in Item 8 include the consolidates Statements of Operations for the years ended September 29, 2018, September 30, 2017, and September 24, 2016; Consolidated Statements of Comprehensive Income for the years ended September 29, 2018, September 30, 2017 and September 24, 2016 ,Consolidated Balance Sheets as of September 29, 2018 and September 30, 2017;Consolidated Statements of Shareholders’ Equity for the years ended September 29, 2018, September 30, 2017 and September 24, 2016 ;Consolidated Statements of Cash Flows for the years ended September 29, 2018, September 30, 2017 and September 24, 2016.
Question Two
There are 11 notes included with the financial statements on page 43
Question Three
Note two is the longest as it gives insights into the financial instruments
Question Four
Apple determines its fiscal years by computing its financial operation over a 52-53-week range on the last Saturday of September in every year
Question Five
The credit concentration information would be essential to investors as it gives technical information required for investment
Question Six
The inventory method that Apple uses is the first in, first out procedure
Question Seven
The method used for depreciation is the straight-line basis method
Question Eight
The estimated useful life for buildings- 30 years, machinery and equipment 1- 5 years, leasehold improvements and internal-use software – 1- 5 years
Question Nine
The depreciation and amortization expense on Apple’s property and equipment for the years 2018, 2019, and 2016 is $ 9.3 billion, $ 8.2 billion and $8.3 billion respectively
Question Ten
The Amounts for the Accumulated depreciation and amortization at the end of 2018 and 2017, respectively is $ 9.3 billion, $ 8.2 billion and $8.3 billion.
Report of Independent Registered Public Accounting Firm
The accounting firm that audited Apple’s fiscal statements is Ernst & Young Limited.
The accounting Firm Completed its Audit in 2018
The Public Company Accounting Oversight Board (PCAOB) promulgated the standards that the accounting firm used in conducting this audit
The opinions that the firm states near the end of the first paragraph of the report are that they believe the results on the financial information of Apple Inc are fair and at per with the US laws and regulations.
Financial Statement Analysis
Ratios for The Fiscal Year 2018
Current Ratio
=Current Assets/ Current Liabilities
131,339/116,866= 1.1238
Accounts Receivable Turnover
Net Credit Sales/Average Accounts Receivable
163, 756 /23186 = 7.0627
Asset Turnover
Net Sales/ Average Total Assets
265595/182862.5=1.4524
Return on assets
Net Income/ Total Assets
59,531/ 365,725=0.1628
Price Earnings Ratio
Price per Share/ Earnings Per Share
224.79/12.01= 18.7169
Payout Ratio
Dividends Paid /net earnings * 100
12803/ 59,531=0.2150
Debt to Assets Ratio
Total debt / Total Assets
258, 578/365,725= 0.7070