Fluent Essays

In order to determine if you can recommend buying or selling a stock, you first must understand how the company has performed recently. Would you want to invest in a company that has had negative earnings for the past 3 years? What about a company that has increased the amount of debt on its balance sheet? Or, would you prefer to invest in a company that has had consistent increases in revenues or net earnings over the past 3 years? As the equity analyst, your first task would be to determine the evidence of patterns in the recent financial performance. The financial analysis provides significant insight into the company’s strengths and weaknesses.To fully understand a company’s financial performance, you cannot “evaluate performance using numbers alone. This level of analysis does not involve an understanding of the cause of performance…an analyst must look beyond the numbers” (Hickman et al.,  2013, Section 11.3, para. 7). In the real world, an analyst spends extensive time and effort researching the business strategy, operations, marketing, and other elements that have contributed to this financial performance. For this class, you will limit your investigation of the company to the historical financial analysis, ratio and competitive analysis, and the valuation of the stock. This Week 1 assignment will become Section 1 of the Week 5 final project. Prepare:Prior to beginning work on this assignment,Review the Week 1 Model Assignment (Links to an external site.).Make sure you have completed both Week 1 - Assignment 1 and Week 1 - Assignment 2. It is recommended that you keep those Excel or PDF documents available when completing this assignment.Complete the Week 1 - Learning Activity.Review Chapter 2 and Section 11.3 from Chapter 11 in the textbook.Review the Week 5 - Final Project for this course. Write:For this assignment, address the following seven parts in a Word document:Part 1: Overview of the company (one paragraph)State the name of the company.Provide a brief overview of the company you selected, including a description of its business operations.State the current market price per share.Part 2: Income statements (one to two paragraphs)Summarize key trends in revenues, operating income, and net income over the last 3 years.Part 3: Common size income statements (one paragraph)Evaluate the trends in gross margin, operating income margin, and net profit margin over the past 3 years.Part 4: Balance sheets (one to two paragraphs)Summarize key trends in total assets, total current assets, total current liabilities, long-term debt, and total shareholders’ equity over the past 3 years.Part 5: Common size balance sheets (one paragraph)Evaluate the trends in total current assets as a percent (\%) of total assets, total current liabilities as a percent (\%) of total assets, long-term debt as percent (\%) of total assets, and total shareholders’ equity as a percent (\%) of total assets over the past 3 years.Part 6: Cash flow (one paragraph)Calculate simple cash flow for the past 3 years.Show your calculations.Summarize the trend in simple cash flow for the past 3 years.Compare the simple cash flow to the net operating cash flow from the statement of cash flows for the past 3 years.Part 7: Financial analysis conclusion: (one paragraph)Determine the strengths and weaknesses of the company based primarily on the trends in items discussed from the income statements, balance sheets, common size income statements, and common size balance sheets, as well as the comments on cash flow.Create a table that indicates whether each financial fact is a strength or a weakness.Determine the overall financial strength of the company based on the financial facts included as strengths or weaknesses.Categorize the overall financial performance of the company as strong, neutral, or weak.Justify your conclusion based on the table you created. Need Help?Struggling? Click the tutoring button below to get immediate help with content-related questions or issues.Connect Now: Finance TutoringDon’t know what to ask the tutor? How about...• I don’t understand gross margin. Could you explain it to me?• I am confused on how to calculate the simple cash flow. Could you walk me through it?• I am struggling with describing trends on the balance sheet. Can you help me? The Section 1: Financial Statement AnalysisMust be two to three double-spaced pages in length including any tables or calculations (but not including title and references pages) and formatted according to APA Style (Links to an external site.) as outlined in the Writing Center’s APA Formatting for Microsoft Word (Links to an external site.)Must include a separate title page with the following:Title of paper in bold fontSpace should be between title and the rest of the information on the title page.Student’s nameName of institution (The University of Arizona Global Campus)Course name and number Powered by Clearbit Apple Inc (NMS: AAPL) Company Financials Income Statement Exchange rate used is that of the Year End reported date As Reported Annual Income Statement Report Date 09/26/2020 09/28/2019 Currency USD USD Audit Status Not Qualified Not Qualified Consolidated Yes Yes Scale Thousands Thousands Products 220,747,000$ 213,883,000$ Services 53,768,000$ 46,291,000$ Net sales 274,515,000$ 260,174,000$ Cost of sales - products 151,286,000$ 144,996,000$ Cost of sales - services 18,273,000$ 16,786,000$ Cost of sales 169,559,000$ 161,782,000$ Gross margin 104,956,000$ 98,392,000$ Research & development expense 18,752,000$ 16,217,000$ Selling, general & administrative expense 19,916,000$ 18,245,000$ Total operating expenses 38,668,000$ 34,462,000$ Operating income (loss) 66,288,000$ 63,930,000$ Interest & dividend income 3,763,000$ 4,961,000$ Interest expense 2,873,000$ 3,576,000$ Other income (expense), net (87,000)$ 422,000$ Other income/(expense), net 803,000$ 1,807,000$ Income (loss) before provision for income taxes 67,091,000$ 65,737,000$ Current federal income tax expense (benefit) 6,306,000$ 6,384,000$ Deferred federal income tax expense (benefit) (3,619,000)$ (2,939,000)$ Total federal income tax expense (benefit) 2,687,000$ 3,445,000$ Current state income tax expense (benefit) 455,000$ 475,000$ Deferred state income tax expense (benefit) 21,000$ (67,000)$ Total state income tax expense (benefit) 476,000$ 408,000$ Current foreign income tax expense (benefit) 3,134,000$ 3,962,000$ Deferred foreign income tax expense (benefit) 3,383,000$ 2,666,000$ Total foreign income tax expense (benefit) 6,517,000$ 6,628,000$ Provision for (benefit from) income taxes 9,680,000$ 10,481,000$ Net income (loss) 57,411,000$ 55,256,000$ Weighted average shares outstanding - basic 17,352,119 18,471,336 Weighted average shares outstanding - diluted 17,528,214 18,595,652 Year end shares outstanding 16,976,763 17,772,944 Net earnings (loss) per share - basic 3.31$ 2.99$ Net earnings (loss) per share - diluted 3.28$ 2.97$ Cash dividends declared per share 0.80$ 0.75$ Number of full time employees 147000 137000 Number of common stockholders 22797 23233 Foreign currency translation adjustments 88000 -408000 Balance Sheet Exchange rate used is that of the Year End reported date As Reported Annual Balance Sheet Report Date 09/26/2020 09/28/2019 Currency USD USD Audit Status Not Qualified Not Qualified Consolidated Yes Yes Scale Thousands Thousands Cash & cash equivalents 38,016,000$ 48,844,000$ Marketable securities 52,927,000$ 51,713,000$ Accounts receivable, net 16,120,000$ 22,926,000$ Inventories 4,061,000$ 4,106,000$ Vendor non-trade receivables 21,325,000$ 22,878,000$ Other current assets 11,264,000$ 12,352,000$ Total current assets 143,713,000$ 162,819,000$ Marketable securities 100,887,000$ 105,341,000$ Land & buildings 17,952,000$ 17,085,000$ Machinery, equipment, & internal-use software 75,291,000$ 69,797,000$ Leasehold improvements 10,283,000$ 9,075,000$ Gross property, plant & equipment 103,526,000$ 95,957,000$ Accumulated depreciation & amortization 66,760,000$ 58,579,000$ Property, plant & equipment, net 36,766,000$ 37,378,000$ Other non-current assets 42,522,000$ 32,978,000$ Total non-current assets 180,175,000$ 175,697,000$ Total assets 323,888,000$ 338,516,000$ Accounts payable 42,296,000$ 46,236,000$ Deferred revenue 6,643,000$ 5,522,000$ Other current liabilities 42,684,000$ 37,720,000$ Commercial paper 4,996,000$ 5,980,000$ Term debt 8,773,000$ 10,260,000$ Current portion of long-term debt - - Total current liabilities 105,392,000$ 105,718,000$ Deferred revenue - - Floating & fixed-rate notes 106,078,000$ 101,679,000$ Total debt 106,078,000$ 101,679,000$ Unamortized discount (314,000)$ (224,000)$ Hedge accounting fair value adjustments 1,676,000$ 612,000$ Less: current portion of long-term debt 8,773,000$ 10,260,000$ Term debt 98,667,000$ 91,807,000$ Long-term taxes payable 28,170,000$ 29,545,000$ Deferred tax liabilities - - Other non-current liabilities 26,320,000$ 20,958,000$ Other non-current liabilities 54,490,000$ 50,503,000$ Total non-current liabilities 153,157,000$ 142,310,000$ Total liabilities 258,549,000$ 248,028,000$ Common stock 50,779,000$ 45,174,000$ Retained earnings 14,966,000$ 45,898,000$ Cumulative foreign currency translation (1,375,000)$ (1,463,000)$ Unrecognized gains (losses) on derivative instruments (877,000)$ 172,000$ Unrealized gains (losses) on marketable securities 1,846,000$ 707,000$ Accumulated other comprehensive income (loss) (406,000)$ (584,000)$ Total shareholders equity 65,339,000$ 90,488,000$ Cash Flows Exchange rate used is that of the Year End reported date As Reported Annual Cash Flow Report Date 09/26/2020 09/28/2019 Currency USD USD Audit Status Not Qualified Not Qualified Consolidated Yes Yes Scale Thousands Thousands Net income (loss) 57,411,000$ 55,256,000$ Depreciation & amortization 11,056,000$ 12,547,000$ Share-based compensation expense 6,829,000$ 6,068,000$ Deferred income tax expense (benefit) (215,000)$ (340,000)$ Other adjustments (97,000)$ (652,000)$ Accounts receivable, net 6,917,000$ 245,000$ Inventories (127,000)$ (289,000)$ Vendor non-trade receivables 1,553,000$ 2,931,000$ Other current & non-current assets (9,588,000)$ 873,000$ Accounts payable (4,062,000)$ (1,923,000)$ Deferred revenue 2,081,000$ (625,000)$ Other current & non-current liabilities 8,916,000$ (4,700,000)$ Net cash flows from operating activities 80,674,000$ 69,391,000$ Purchases of marketable securities ########### (39,630,000)$ Proceeds from maturities of marketable securities 69,918,000$ 40,102,000$ Proceeds from sales of marketable securities 50,473,000$ 56,988,000$ Payments made in connection with business acquisitions, net(1,524,000)$ (624,000)$ Purchases of non-marketable securities (210,000)$ (1,001,000)$ Proceeds from non-marketable securities 92,000$ 1,634,000$ Payments for acquisition of property, plant & equipment(7,309,000)$ (10,495,000)$ Other cash flow from investing activities (791,000)$ (1,078,000)$ Net cash flows from investing activities (4,289,000)$ 45,896,000$ Proceeds from issuance of common stock 880,000$ 781,000$ Payments for taxes related to net share settlement of equity awards(3,634,000)$ (2,817,000)$ Payments for dividends & dividend equivalents (14,081,000)$ (14,119,000)$ Repurchases of common stock (72,358,000)$ (66,897,000)$ Proceeds from issuance of term debt, net 16,091,000$ 6,963,000$ Repayments of term debt (12,629,000)$ (8,805,000)$ Proceeds from/(repayments of) commercial paper, net (963,000)$ (5,977,000)$ Other cash flows from financing activities (126,000)$ (105,000)$ Net cash flows from financing activities (86,820,000)$ (90,976,000)$ Net increase (decrease) in cash, cash equivalents & restricted cash(10,435,000)$ 24,311,000$ Cash, cash equivalents & restricted cash, beginning balances50,224,000$ 25,913,000$ Cash, cash equivalents & restricted cash, ending balances39,789,000$ 50,224,000$ Increase (decrease) in cash & cash equivalents - - Cash & cash equivalents, beginning of the year - - Cash & cash equivalents, end of the year - - Cash paid (received) for income taxes, net 9,501,000$ 15,263,000$ Cash paid for interest 3,002,000$ 3,423,000$ 09/29/2018 USD Not Qualified Yes Thousands - - 265,595,000$ - - 163,756,000$ 101,839,000$ 14,236,000$ 16,705,000$ 30,941,000$ 70,898,000$ 5,686,000$ 3,240,000$ (441,000)$ 2,005,000$ 72,903,000$ 41,425,000$ (33,819,000)$ 7,606,000$ 551,000$ 48,000$ 599,000$ 3,986,000$ 1,181,000$ 5,167,000$ 13,372,000$ 59,531,000$ 19,821,508 20,000,436 19,019,944 3.00$ 2.98$ 0.68$ 132000 23710 -525000 09/29/2018 USD Not Qualified Yes Thousands 25,913,000$ 40,388,000$ 23,186,000$ 3,956,000$ 25,809,000$ 12,087,000$ 131,339,000$ 170,799,000$ 16,216,000$ 65,982,000$ 8,205,000$ 90,403,000$ 49,099,000$ 41,304,000$ 22,283,000$ 234,386,000$ 365,725,000$ 55,888,000$ 7,543,000$ 32,687,000$ 11,964,000$ - 8,784,000$ 116,866,000$ 2,797,000$ 104,193,000$ 104,193,000$ (218,000)$ (1,456,000)$ 8,784,000$ 93,735,000$ 33,589,000$ 426,000$ 11,165,000$ 45,180,000$ 141,712,000$ 258,578,000$ 40,201,000$ 70,400,000$ (1,055,000)$ 810,000$ (3,209,000)$ (3,454,000)$ 107,147,000$ 09/29/2018 USD Not Qualified Yes Thousands 59,531,000$ 10,903,000$ 5,340,000$ (32,590,000)$ (444,000)$ (5,322,000)$ 828,000$ (8,010,000)$ (423,000)$ 9,175,000$ (44,000)$ 38,490,000$ 77,434,000$ (71,356,000)$ 55,881,000$ 47,838,000$ (721,000)$ (1,871,000)$ 353,000$ (13,313,000)$ (745,000)$ 16,066,000$ 669,000$ (2,527,000)$ (13,712,000)$ (72,738,000)$ 6,969,000$ (6,500,000)$ (37,000)$ - (87,876,000)$ - - - 5,624,000$ 20,289,000$ 25,913,000$ 10,417,000$ 3,022,000$ Powered by Clearbit Apple Inc (NMS: AAPL) Company Financials Income Statement Exchange rate used is that of the Year End reported date As Reported Annual Income Statement Report Date 09/26/2020 Currency USD Audit Status Not Qualified Consolidated Yes Scale Thousands Products Services Net sales 100.00\% Cost of sales - products 55.11\% Cost of sales - services 6.66\% Cost of sales 61.77\% Gross margin 38.23\% Research & development expense 6.83\% Selling, general & administrative expense 7.25\% Total operating expenses 14.09\% Operating income (loss) 24.15\% Interest & dividend income 1.37\% Interest expense 1.05\% Other income (expense), net -0.03\% Other income/(expense), net 0.29\% Income (loss) before provision for income taxes 24.44\% Current federal income tax expense (benefit) 2.30\% Deferred federal income tax expense (benefit) -1.32\% Total federal income tax expense (benefit) 0.98\% Current state income tax expense (benefit) 0.17\% Deferred state income tax expense (benefit) 0.01\% Total state income tax expense (benefit) 0.17\% Current foreign income tax expense (benefit) 1.14\% Deferred foreign income tax expense (benefit) 1.23\% Total foreign income tax expense (benefit) 2.37\% Provision for (benefit from) income taxes 3.53\% Net income (loss) 20.91\% Weighted average shares outstanding - basic 6.32\% Weighted average shares outstanding - diluted 6.39\% Year end shares outstanding 6.18\% Net earnings (loss) per share - basic 0.00\% Net earnings (loss) per share - diluted 0.00\% Cash dividends declared per share 0.00\% Number of full time employees 0.05\% Number of common stockholders 0.01\% Foreign currency translation adjustments 0.03\% Balance Sheet Exchange rate used is that of the Year End reported date As Reported Annual Balance Sheet Report Date 9/26/2020 Currency USD Audit Status Not Qualified Consolidated Yes Scale Thousands Cash & cash equivalents 21.10\% Marketable securities 29.38\% Accounts receivable, net 8.95\% Inventories 2.25\% Vendor non-trade receivables 11.84\% Other current assets 6.25\% Total current assets 79.76\% Marketable securities 55.99\% Land & buildings 9.96\% Machinery, equipment, & internal-use software 41.79\% Leasehold improvements 5.71\% Gross property, plant & equipment 57.46\% Accumulated depreciation & amortization 37.05\% Property, plant & equipment, net 20.41\% Other non-current assets 23.60\% Total non-current assets 100.00\% Total assets 100.00\% Accounts payable 23.47\% Deferred revenue 3.69\% Other current liabilities 23.69\% Commercial paper 2.77\% Term debt 4.87\% Current portion of long-term debt NM Total current liabilities 58.49\% Deferred revenue NM Floating & fixed-rate notes 58.87\% Total debt 58.87\% Unamortized discount -0.17\% Hedge accounting fair value adjustments 0.93\% Less: current portion of long-term debt 4.87\% Term debt 54.76\% Long-term taxes payable 15.63\% Deferred tax liabilities NM Other non-current liabilities 14.61\% Other non-current liabilities 30.24\% Total non-current liabilities 85.00\% Total liabilities 143.50\% Common stock 28.18\% Retained earnings 8.31\% Cumulative foreign currency translation -0.76\% Unrecognized gains (losses) on derivative instruments -0.49\% Unrealized gains (losses) on marketable securities 1.02\% Accumulated other comprehensive income (loss) -0.23\% Total shareholders equity 36.26\% Cash Flows Exchange rate used is that of the Year End reported date As Reported Annual Cash Flow Report Date Currency Audit Status Consolidated Scale Net income (loss) Depreciation & amortization Share-based compensation expense Deferred income tax expense (benefit) Other adjustments Accounts receivable, net Inventories Vendor non-trade receivables Other current & non-current assets Accounts payable Deferred revenue Other current & non-current liabilities Net cash flows from operating activities Purchases of marketable securities Proceeds from maturities of marketable securities Proceeds from sales of marketable securities Payments made in connection with business acquisitions, net Purchases of non-marketable securities Proceeds from non-marketable securities Payments for acquisition of property, plant & equipment Other cash flow from investing activities Net cash flows from investing activities Proceeds from issuance of common stock Payments for taxes related to net share settlement of equity awards Payments for dividends & dividend equivalents Repurchases of common stock Proceeds from issuance of term debt, net Repayments of term debt Proceeds from/(repayments of) commercial paper, net Other cash flows from financing activities Net cash flows from financing activities Net increase (decrease) in cash, cash equivalents & restricted cash Cash, cash equivalents & restricted cash, beginning balances Cash, cash equivalents & restricted cash, ending balances Increase (decrease) in cash & cash equivalents Cash & cash equivalents, beginning of the year Cash & cash equivalents, end of the year Cash paid (received) for income taxes, net Cash paid for interest 09/28/2019 09/29/2018 USD USD Not Qualified Not Qualified Yes Yes Thousands Thousands 100.00\% 100.00\% 55.73\% NM 6.45\% NM 62.18\% NM 37.82\% 0.62189477 6.23\% 0.139789275 7.01\% 1.173433549 13.25\% 1.85219994 24.57\% 2.291393297 1.91\% 0.080199724 1.37\% 0.569820612 0.16\% -0.136111111 0.69\% -4.546485261 25.27\% 36.3605985 2.45\% 0.568220787 -1.13\% -0.816391068 1.32\% -0.224903161 0.18\% 0.072442808 -0.03\% 0.087114338 0.16\% 12.47916667 1.52\% 6.65442404 1.02\% 0.296287005 2.55\% 4.375105843 4.03\% 2.587962067 21.24\% 4.451914448 7.10\% 0.332961113 7.15\% 1.009026962 6.83\% 0.950976469 0.00\% 1.57887E-07 0.00\% 0.991674992 0.00\% 0.228341169 0.05\% 194117.6471 0.01\% 0.179621212 -0.16\% -22.14255588 09/28/2019 09/29/2018 USD USD Not Qualified Not Qualified Yes Yes Thousands Thousands 14.43\% 14.43\% 15.28\% 15.28\% 6.77\% 6.77\% 1.21\% 1.21\% 6.76\% 6.76\% 3.65\% 3.65\% 48.10\% 48.10\% 31.12\% 31.12\% 5.05\% 5.05\% 20.62\% 20.62\% 2.68\% 2.68\% 28.35\% 28.35\% 17.30\% 17.30\% 11.04\% 11.04\% 9.74\% 9.74\% 51.90\% 51.90\% 100.00\% 100.00\% 13.66\% 13.66\% 1.63\% 1.63\% 11.14\% 11.14\% 1.77\% 1.77\% 3.03\% 3.03\% NM NM 31.23\% 31.23\% NM NM 30.04\% 30.04\% 30.04\% 30.04\% -0.07\% -0.07\% 0.18\% 0.18\% 3.03\% 3.03\% 27.12\% 27.12\% 8.73\% 8.73\% NM NM 6.19\% 6.19\% 14.92\% 14.92\% 42.04\% 42.04\% 73.27\% 73.27\% 13.34\% 13.34\% 13.56\% 13.56\% -0.43\% -0.43\% 0.05\% 0.05\% 0.21\% 0.21\% -0.17\% -0.17\% 26.73\% 26.73\%