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    Accounting & Forecasting

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    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.

    Fiscal Years
    (in millions except share and per share amounts)

    1999

    1998

    1997

    1996

    1995

    Net Sales
    $ 6,134
    $ 5,941
    $ 7,081
    $ 9,833
    $11,062

    Net Income (loss)
    $ 601
    $ 309
    $ (1,045)
    $ (816)
    $ 424

    Earnings (loss) per common share:
    Basic
    $ 4.20
    $ 2.34
    $ (8.29)
    $ (6.59)
    $ 3.50

    Diluted
    $ 3.61
    $ 2.10
    $ (8.29)
    $ (6.59)
    $ 3.45

    Cash Dividends declared per common share

    $ --

    $ --

    $ --

    $ 0.12

    $ 0.48

    Shares used in computing earnings (loss) per share (in thousands):
    Basic
    143,157
    131,974
    126,062
    123,734
    121,192

    Diluted
    174,164
    167,917
    126,062
    123,734
    123,047

    Cash, cash equivalents, and short-term investments

    $ 3,226
    $ 2,300
    $ 1,459
    $ 1,745
    $ 952

    Total Assets
    $ 5,161
    $ 4,289
    $ 4,233
    $ 5,364
    $ 6,231

    Long-term Debt
    $ 300
    $ 954
    $ 951
    $ 949
    $ 303

    Shareholder's Equity
    $ 3,104
    $ 1,642
    $ 1,200
    $ 2,058
    $ 2,901

    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

    Sales
    $6,134
    Cost of Sales
    4,438
    Gross Margin
    1,696
    Operating expenses:
    R & D
    314
    Selling, General, and Administrative
    996
    In-process R & D
    ---------
    Restructuring costs
    ---------
    Total Operating Exp
    $1,310
    Operating income
    $ 386
    Total interest and other Income net
    317
    Income before provision for Income taxes
    703
    Provision for income Taxes (15%)
    105.4
    Net income
    $ 597.6

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
    Used the following information to answer the three question,s that follows.

    ABC Fitness Company 000's

    INCOME STATEMENT Dec. 99

    Sales
    1968.016
    Cost of Goods Sold
    1466.733
    Gross Profit
    501.283
    Selling and Ad. Expenses
    361.402
    Depreciation
    35.7
    Operating Income (EBIT)
    104.181
    Interest Expense
    34.482
    Other Expense
    14.124
    EBT
    83.823
    Taxes
    24.701
    Net Income
    59.122

    BALANCE SHEET 000's

    Assets
    Cash
    89.469
    Net Receivables
    55.514
    Inventories
    322.433
    Prepaids
    8.775
    Total Current Assets
    476.191
    Gross Plant & Equipment
    955.661
    Accumulated Dep
    338.513
    Net Plant & Equip
    617.148
    Other Assets
    24.621
    Total Assets
    1117.96

    Liabilities

    Notes Payable
    1.127
    Accounts Payable
    144.638
    Taxes Payable
    16.797
    Accrued Expense
    98.233
    Total Current Liabilities
    260.795
    Long-Term Debt
    415.138
    Deferred Taxes
    20.396
    Total Liabilities
    696.329

    Equity

    Common Stock
    0.32
    Capital Surplus
    242.843
    Retained Earnings
    178.468
    Total Equity
    421.631
    Total Liabilities and Equity
    1117.96

    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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    https://brainmass.com/business/business-management/22110

    Solution Preview

    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>
    <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 ...

    $2.19

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