Accounting: What the Numbers Mean 11th Edition by Wayne McManus,Daniel Viele,David Marshall

Exercise 20

Analysis of liquidity and profitability measures of Apple Inc. The following summarized data (amounts in millions) are taken from the September 27, 2014, and September 28, 2013, comparative financial statements of Apple Inc., a manufacturer of mobile communication and media devices, personal computers, portable digital music players, and seller of a variety of related software, services, accessories, networking solutions, and third-party digital content and applications:

At September 29, 2012, total assets were $176,064 and total shareholders' equity was $118,210.
Required:
a. Calculate Apple Inc.'s working capital, current ratio, and acid-test ratio at September 27, 2014, and September 28, 2013. Round your ratio answers to one decimal place.
b. Calculate Apple's ROE for the years ended September 27, 2014, and September 28, 2013. Round your percentage answers to one decimal place.
c. Calculate Apple's ROI, showing margin and turnover, for the years ended September 27, 2014, and September 28, 2013. Round your turnover calculations to two decimal places. Round your margin and ROI percentages to one decimal place.
d. Evaluate the company's overall liquidity and profitability.
Optional continuation of Case 3.24-trend analysis
The following historical data were derived from Apple Inc.'s consolidated financial statements (in millions):
Note: Past data are not necessarily indicative of the results of future operations.

e. Calculate Apple Inc.'s total liabilities for each year presented above.
f. Are the trends expressed in these data generally consistent with each other?
g. In your opinion, which of these trends would be most meaningful to a potential investor in common stock of Apple Inc.? Which trend would be least meaningful?
h. What other data (trend or otherwise) would you like to have access to before making an investment in Apple Inc.?