Financial Reporting and Analysis

WELCOME TO
WEEK 3

Source:
https://www.statista.com/chart/4574/apples-revenue-since-1977/

© Dr G Whelan 2018 1
 Assignment FRA Part 1

 PLEASE READ AND FOLLOW THESE INSTRUCTIONS CAREFULLY

 This is the first part of your assignment for FRA.

 Do NOT submit this, or any, part of your assignment separately.

 Other parts will be published soon and the entire assignment will be submitted (as
one document) towards the end of this semester.

 Once you have the necessary material, copy and paste in the required information
and type in the answers into the appropriate places in the tables.

 The assignment is based on material relating to Apple and a company of your choice.
Use figures provided on MyGUST for Apple. The material for Figure 1A has been
completed for you as an illustration.

 Obviously, you cannot choose Apple as your company. Also, do not choose Cisco,
because I will be using that company for illustration purposes. Make sure you start
work on choosing a company as soon as possible. I will allocate time during lectures
to ensure that everyone has a company and that they can access the necessary
information. Please do not contact me outside of lecture times about your company.
We will go through the procedures for accessing the information during the
lectures. This is an essential part of extracting and analysing financial reporting
information.

 You may choose the same company as others in the class. However, it is
recommended (but not mandatory) that you use a different company than that
chosen by your friends so that you all have plenty of practice finding the relevant
figures and completing the calculations on your own. Further details of the
assignment will be published soon.

 We will be working on the various tables in the online lectures but it is the
responsibility of each student to have their figures ready for their chosen company.

 I will answer questions at various stages during the lectures about figures for your
company but please make sure you have the Income Statement and Balance Sheet
ready and the website address for these.

 If you have an urgent query relating to some issue not covered the lectures or in the
notes on MyGUST, any email sent should state the name of this course (FRA, Acct
409-82) in the subject header. Also, as a matter of basic business courtesy, please
acknowledge (with a brief email) any response received.

© Dr G Whelan 2018 2
 FIGURE 1A- (Apple)

INFORMATION FOR FIGURE 1A (Apple)

INTEREST (Dr G) Visited California – San Francisco, Berkeley etc.

Country visited or Interest, Pastime or
Hobby associated with this company.
NAME OF COMPANY Apple
NON-CURRENT ASSET 1 Building
[You can use any Non-Current Asset]
NON-CURRENT ASSET 2 Brand
[Use second picture if necessary, but
make sure that both pictures and this
information fits on one page only]
SOURCE OF PICTURE (URL) https://www.independent.co.uk/news/business/apple-
records-profits-despite-fall-iphone-sales-a8190346.html
[NOT WIKIPEDIA!!]

© Dr G Whelan 2018 3
 FIGURE 1B- (Insert name of your company here)

INFORMATION FOR FIGURE 1B (Your company)

INTEREST (Dr G) Bahrain, Washington, and Dubai

Country visited or Interest, Pastime or
Hobby associated with this company.
NAME OF COMPANY Microsoft
NON-CURRENT ASSET 1 Property and Equipment
[You can use any Non-Current Asset]
NON-CURRENT ASSET 2 Brand
[Use second picture if necessary, but
make sure that both pictures and this
information fits on one page only]
SOURCE OF PICTURE (URL) https://strategicmanagementinsight.com/swot-analyses/
microsoft-swot-analysis.html
[NOT WIKIPEDIA!!]

© Dr G Whelan 2018 4
APPLE INC Income Statement
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions)
Years ended Sept 28, 2013 Sept 29, 2012 Sept 24, 2011
Net sales $ 170,910 $ 156,508 $ 108,249
Cost of sales 106,606 87,846 64,431

Gross margin 64,304 68,662 43,818

Operating expenses:
Research and development 4,475 3,381 2,429
Selling, general and
administrative 10,830 10,040 7,599

Total operating expenses 15,305 13,421 10,028

Operating income 48,999 55,241 33,790

Other income/(expense), net (N1) 1,156 522 415

Income before provision for

income taxes 50,155 55,763 34,205
Provision for income taxes 13,118 14,030 8,283

Net income $ 37,037 $ 41,733 $ 25,922

(N1)
Interest Expense included 136 0 0

© Dr G Whelan 2018 5
© Dr G Whelan 2018 6
APPLE INC Balance Sheet
(In millions)
Years ended Sept 28, 2013 Sept 29, 2012
ASSETS:
Current assets:
Cash and cash equivalents $ 14,259 $ 10,746
Short-term marketable securities 26,287 18,383
Accounts receivable, less allowances of
$99 and $98, respectively 13,102 10,930
Inventories 1,764 791
Deferred tax assets 3,453 2,583
Vendor non-trade receivables 7,539 7,762
Other current assets 6,882 6,458
Total current assets 73,286 57,653

Long-term marketable securities 106,215 92,122

Property, plant and equipment, net 16,597 15,452
Goodwill 1,577 1,135
Acquired intangible assets, net 4,179 4,224
Other assets 5,146 5,478
Total assets $ 207,000 $ 176,064

LIABILITIES AND SHAREHOLDERS' EQUITY:

Current liabilities:
Accounts payable $ 22,367 $ 21,175
Accrued expenses 13,856 11,414
Deferred revenue 7,435 5,953
Total current liabilities 43,658 38,542

Deferred revenue - non-current 2,625 2,648

Long-term debt 16,960 0
Other non-current liabilities 20,208 16,664
Total liabilities 83,451 57,854

Shareholders' equity:
Common stock, no par value; 1,800,000
shares authorized; 899,213 and 939,208
shares issued and outstanding,
respectively 19,764 16,422
Retained earnings 104,256 101,289
Accumulated other comprehensive
income/(loss) -471 499
Total shareholders' equity 123,549 118,210

Total liabilities and shareholders'

equity $ 207,000 $ 176,064

© Dr G Whelan 2018 7
 TABLE 1A-1 (Apple)

INTEREST (Dr G) Visited California – San Francisco, Berkeley

Country visited or Interest, Pastime or etc.
Hobby associated with this company.
NAME OF COMPANY Apple
Y/E (Later Year) (Previous Year) ∆ (Delta)
2013 $m 2012 $m % Change
TOTAL REVENUES 170,910 156,508 9.20

TOTAL ASSETS 207,000 176,064 17.57

TOTAL EQUITY 123,549 118,210 4.52

[This may be called Shareholders’ Equity or similar]

TABLE 1A-2 (Apple)

INTEREST (Dr G) Visited California – San Francisco, Berkeley

Country visited or Interest, Pastime or etc.
Hobby associated with this company.
NAME OF COMPANY Apple Inc

Y/E (Later Year) (Previous Year) ∆ (Delta)

2019 $m 2018 $m % Change
TOTAL REVENUES 260,174 265,595 -2.04

TOTAL ASSETS 338,516 365,725 -7.44

TOTAL EQUITY 90,488 107,147 -15.55

[This may be called Shareholders’ Equity or similar]

Formula to calculate ∆ (Delta)

(Later Year – Previous Year) x 100

Previous Year

© Dr G Whelan 2018 8
APPLE INC Income Statement
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions)
Years ended Sept 28, 2013 Sept 29, 2012 Sept 24, 2011
Net sales $ 170,910 $ 156,508 $ 108,249
Cost of sales 106,606 87,846 64,431

Gross margin 64,304 68,662 43,818

Operating expenses:
Research and development 4,475 3,381 2,429
Selling, general and
administrative 10,830 10,040 7,599

Total operating expenses 15,305 13,421 10,028

Operating income 48,999 55,241 33,790

Other income/(expense), net (N1) 1,156 522 415

Income before provision for

income taxes 50,155 55,763 34,205
Provision for income taxes 13,118 14,030 8,283

Net income $ 37,037 $ 41,733 $ 25,922

(N1)
Interest Expense included 136 0 0

© Dr G Whelan 2018 9
APPLE INC Balance Sheet
(In millions)
Years ended Sept 28, 2013 Sept 29, 2012
ASSETS:
Current assets:
Cash and cash equivalents $ 14,259 $ 10,746
Short-term marketable securities 26,287 18,383
Accounts receivable, less allowances of
$99 and $98, respectively 13,102 10,930
Inventories 1,764 791
Deferred tax assets 3,453 2,583
Vendor non-trade receivables 7,539 7,762
Other current assets 6,882 6,458
Total current assets 73,286 57,653

Long-term marketable securities 106,215 92,122

Property, plant and equipment, net 16,597 15,452
Goodwill 1,577 1,135
Acquired intangible assets, net 4,179 4,224
Other assets 5,146 5,478
Total assets $ 207,000 $ 176,064

LIABILITIES AND SHAREHOLDERS' EQUITY:

Current liabilities:
Accounts payable $ 22,367 $ 21,175
Accrued expenses 13,856 11,414
Deferred revenue 7,435 5,953
Total current liabilities 43,658 38,542

Deferred revenue - non-current 2,625 2,648

Long-term debt 16,960 0
Other non-current liabilities 20,208 16,664
Total liabilities 83,451 57,854

Shareholders' equity:
Common stock, no par value; 1,800,000
shares authorized; 899,213 and 939,208
shares issued and outstanding,
respectively 19,764 16,422
Retained earnings 104,256 101,289
Accumulated other comprehensive
income/(loss) -471 499
Total shareholders' equity 123,549 118,210

Total liabilities and shareholders'

equity $ 207,000 $ 176,064

© Dr G Whelan 2018 10
 Apple Inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except number of shares which are
reflected in thousands and per share amounts)
Years ended
September 28, September 29, September 30,
2019 2018 2017
Total net sales 260,174 265,595 229,234

Total cost of sales 161,782 163,756 141,048

Gross margin 98,392 101,839 88,186

Operating expenses:
Research and development 16,217 14,236 11,581

Selling, general and administrative 18,245 16,705 15,261

Total operating expenses 34,462 30,941 26,842

Operating income 63,930 70,898 61,344

Other income/(expense), net 1,807 2,005 2,745
Income before provision for income
65,737 72,903 64,089
taxes
Provision for income taxes 10,481 13,372 15,738
Net income $ 55,256 $ 59,531 $ 48,351

© Dr G Whelan 2018 11
 Apple Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except number of shares
which are reflected in thousands and par
September 28, September 29,
2019 2018
ASSETS:
Current assets:
Cash and cash equivalents $ 48,844 $ 25,913
Marketable securities 51,713 40,388
Accounts receivable, net 22,926 23,186
Inventories 4,106 3,956
Vendor non-trade receivables 22,878 25,809
Other current assets 12,352 12,087
Total current assets 162,819 131,339

Non-current assets:
Marketable securities 105,341 170,799
Property, plant and equipment, net 37,378 41,304
Other non-current assets 32,978 22,283

Total non-current assets 175,697 234,386

Total assets $ 338,516 $ 365,725

LIABILITIES AND SHAREHOLDERS’ EQUITY:

Current liabilities:
Accounts payable $ 46,236 $ 55,888
Other current liabilities 37,720 33,327
Deferred revenue 5,522 5,966
Commercial paper 5,980 11,964

Term debt 10,260 8,784

Total current liabilities 105,718 115,929

Non-current liabilities:
Term debt 91,807 93,735
Other non-current liabilities 50,503 48,914

Total non-current liabilities 142,310 142,649

Total liabilities 248,028 258,578

Shareholders’ equity:
Common stock and additional paid-in capital,
$0.00001 par value: 12,600,000 shares
authorized; 4,443,236 and 4,754,986 shares
45,174 40,201
issued and outstanding, respectively
Retained earnings 45,898 70,400
Accumulated other comprehensive
(584 ) (3,454 )
income/(loss)
Total shareholders’ equity 90,488 107,147

Total liabilities and

$ 338,516 $ 365,725
shareholders’ equity

© Dr G Whelan 2018 12
GUIDELINES FOR TABLES 1B-1 AND 1B-2

For Table 1B-1

USE FIGURES FROM A COMPANY’S 2013 ANNUAL RETURN
This will show the figures for 2013 and 2012. It doesn’t matter which month was used for
the financial year end. Just make sure that the figures refer to 2013 and 2012.
If 2013 and 2012 figures are not available, use any two earlier years, such as 2017 and 2016. If you cannot
find figures for any four years, you need to choose another company!

For Table 1B-2

USE FIGURES FROM A COMPANY’S MOST RECENT ANNUAL RETURN
For most companies, this will be 2019 and the previous year will be 2018.
However, if the most recent year available is 2018, then the previous year will be 2017, etc.

Use the same company for both tables.

Make sure the company you choose is quoted on a stock exchange.

You may choose the same company as others in the class. However, it is strongly
recommended that you use a different company than that chosen by your friends so that
you all have plenty of practice finding the relevant figures and completing the calculations
on your own. Further details of the assignment will be published soon.

Guidelines for finding the annual return which will include the financial statements:
Google the company’s name, Investor Relations
Annual Reports
[For US quoted companies, these may be found as SEC filings as a 10K or 20F]
Find the Income Statement (may be known as the Comprehensive Statement of Income,
Consolidated Statement of Operations, etc.) for the Total Revenues
Find the Balance Sheet (may be known as the Statement of Financial Position etc.) for the
Total Assets and Equity

You may use other sources but do NOT use Wikipedia [the figures may not be reliable] !!!

If you are not sure which figure to use, make a reasonable assumption and use the
appropriate figures for all years. State your assumption at the end of the page with the
tables.
As stated above, I will answer questions at various stages during the lectures about figures
for your company but please make sure you have the Income Statement and Balance Sheet
ready and the website address for these. If you cannot find the Annual Return with an
Income Statement and Balance Sheet, you may choose another company.

NOTE THAT THE TABLES ARE ON THE NEXT PAGE

© Dr G Whelan 2018 13
 TABLE 1B-1 (Microsoft)

INTEREST (Optional)
Country visited or Interest, Pastime or
Hobby associated with this company.
NAME OF COMPANY Microsoft

Y/E (Later Year) (Previous Year) ∆ (Delta)

2013 $m (see Note 1) 2012 $m (see Note % Change
1)
TOTAL REVENUES 77,849 73,723 5.60

TOTAL ASSETS 142,431 121,271 17.45

TOTAL EQUITY 78,944 66,363 18.96

[This may be called Shareholders’ Equity or similar]

Note 1 If 2013 and 2012 figures are not available, use any two earlier years, such as 2017 and 2016. If you
cannot find these years, you need to choose another company!

TABLE 1B-2 (Microsoft)

INTEREST (Optional)
Country visited or Interest, Pastime or
Hobby associated with this company.
NAME OF COMPANY Microsoft

Y/E (Later Year) (Previous Year) ∆ (Delta)

2019 $m 2018 $m % Change

TOTAL REVENUES 125,843 110,360 14.03

TOTAL ASSETS 286,556 258,848 10.70

TOTAL EQUITY 102,330 82,718 23.71

[This may be called Shareholders’ Equity or similar]

Formula to calculate ∆ (Delta)

(Later Year – Previous Year) x 100

Previous Year

© Dr G Whelan 2018 14