The following selected financial statements for Apple Computer are taken from the company's SEC filings. Answer questions 1 and 2 as follows based on this data.
(in millions except share and per share amounts)
Net Income (loss)
Earnings (loss) per common share:
Cash Dividends declared per common share
Shares used in computing earnings (loss) per share (in thousands):
Cash, cash equivalents, and short-term investments
1. Determine the year-to-year percentage annual growth in total net sales.
2. Based only on your answers to question #1, do you think the company will hit its sales goal of +20% annual revenue growth in 2000? Determine the target revenue figure, and explain why you do or do not feel that the company can hit this target.
Next, consider Apple's Consolidated Statement of Operations for the year ended September 25, 1999 as shown below and answer questions 3 and 4.
3. Use the Percentage Sales Method and a 20% increase in sales to forecast Apples' Consolidated Statement of Operations for the period September 26, 1999 through September 25, 2000. Assume a 15% tax rate and restructuring costs of 1% of the new sales figure.
4. Discuss your results from question number #3. What assumptions have you made? Do any of your assumptions seem unreasonable?
Consolidated Statements of Operations For the period September 26, 1998 through September 25, 1999
Cost of Sales
R & D
Selling, General, and Administrative
In-process R & D
Total Operating Exp
Total interest and other Income net
Income before provision for Income taxes
Provision for income Taxes (15%)
Used the following information to answer the three question,s that follows.
ABC Fitness Company 000's
INCOME STATEMENT Dec. 99
Cost of Goods Sold
Selling and Ad. Expenses
Operating Income (EBIT)
BALANCE SHEET 000's
Total Current Assets
Gross Plant & Equipment
Net Plant & Equip
Total Current Liabilities
Total Liabilities and Equity
Calculate the following asset activity ratios for the end of 1999.
1. Average Collection Period
2. Inventory Turnover
3. Total Asset Turnover
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The question has two sets of questions, the first is asking you to calculate the growth in sales. Please note that the sales show a turnaround in the final year but the other indicators are not very favorable. The question then asks you to calculate certain combined ratios.
<br>There are some assumptions, which the question makes. First the question assumes that you can calculate the average collection period only on the bases of net receivables, this is not the industry norm usually the trade debtors and the receivables are added together. Since the breakup of the current assets is not given it is not possible to add the trade debtors to the bills receivables. This is exactly the reason why the figure of average collection period of 3.303 days is ludicrously low! Second the question assumes that the change in sales indicates a turnaround and expects a growth in sales, the financial evidence provided does not support this. To bolster his case the author of the question must be able to provide some non financial evidence to support his optimism. Third, the question presupposes that there is capacity of have an increase in sales next year, however the ratio analysis does not support this presupposition . The total asset turnover ratio is more than 5 which indicates an overtrading on fixed assets. Thus there is a need for an injection of ...