Calculate Apple's current, quick, and cash ratios for 2015 and 2016. The industry averages for these ratios for 2016 were 1.72, 1.41, and 0.77, respectively. Round your answers to two decimal places. 2016 2015 Current Ratio fill in the blank 1 fill in the blank 2 Quick Ratio fill in the blank 3 fill in the blank 4 Cash Ratio fill in the blank 5 fill in the blank 6 Comment on Apple's short-term liquidity. For 2016, Apple the industry average for the cash but is below the industry average for the current and quick ratio. However, because there is little concern about Apple's ability to sell its inventories, the current ratio provides relatively high confidence that Apple be able to meet its short-term obligations.
Integrative Exercise
Integrating Accounting for Liabilities and Equity
Obtain Apple's 2016 10-K (filed October 26, 2016) either through the "Investor Relations" portion of its website (do a web search for "Apple Investor Relations") or go to www.sec.gov and click "Company Filings Search" under "Filings."
Required:
Using Apple's 10-K, answer the following questions (Hint: It may be easier to use the Word or PDF file and use the search feature within the program):
1. Calculate Apple's current, quick, and cash ratios for 2015 and 2016. The industry averages for these ratios for 2016 were 1.72, 1.41, and 0.77, respectively. Round your answers to two decimal places.
| 2016 | 2015 | |
| fill in the blank 1 | fill in the blank 2 | |
| Quick Ratio | fill in the blank 3 | fill in the blank 4 |
| Cash Ratio | fill in the blank 5 | fill in the blank 6 |
Comment on Apple's short-term liquidity.
For 2016, Apple the industry average for the cash but is below the industry average for the current and quick ratio. However, because there is little concern about Apple's ability to sell its inventories, the current ratio provides relatively high confidence that Apple be able to meet its short-term obligations.
2. Calculate Apple's debt to equity, long-term debt to equity, and times interest earned (accrual basis) for 2015 and 2016. The industry averages for these ratios for 2016 were 52.42%, 36.41%, and 13.83, respectively. You will need to read the "Other Income and Expense" section of the Management, Discussion & Analysis section to find the amount of interest expense.
Round your answers to two decimal places.
| 2016 | 2015 | |||
| Debt to Equity | fill in the blank 9 | % | fill in the blank 10 | % |
| Long-Term Debt to Equity | fill in the blank 11 | % | fill in the blank 12 | % |
| Times Interest Earned (Accrual Basis) | fill in the blank 13 | fill in the blank 14 |
Comment on Apple's mix of debt and equity and long-term solvency.
Apple is the industry averages for all three ratios. There is of long-term solvency issues.
3. Calculate Apple's return on equity for 2015 and 2016 (
| 2015 | fill in the blank 17 % |
| 2016 | fill in the blank 18 % |
Comment on Apple's profitability.
Apple is the industry average for return on equity. It doing well.
4. Calculate Apple's Dividend Payout, Stock Repurchase Payout and Total Payout for 2015 and 2016.
Round your answers to two decimal places.
| 2016 | 2015 | |
| Dividend Payout | fill in the blank 21 % | fill in the blank 22 % |
| Stock Repurchase Payout | fill in the blank 23 % | fill in the blank 24 % |
| Total Payout | fill in the blank 25 % | fill in the blank 26 % |
What are Apple's objectives with their dividend policy and stock repurchase plan (See the "Capital Return Program" portion of Item 7: Management Discussion and Analysis)?
Apple is attempting to return capital of between billion to shareholders through a $175 billion share repurchase plan. The remaining billion will come in the form of dividends.
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