Chapter 20, Problem 1AA

Apple has entered into contracts that require the future purchase of goods or services ("unconditional purchase obligations"). At year-end 2017, Apple reports the following for these future payments.
$ millions 2018 2019 2020 2021 2022

Future payments $1,798 $2,675 $1,626 $1,296 $1,253

Required

1. As of year-end 2017, what was the total dollar amount (in millions) of Apple' s future payments for unconditional purchase obligations?
2. As of year-end 2017, compute the ratio of the total dollar amount of Apple's future payments for unconditional purchase obligations divided by Apple's total liabilities. (Obtain total liabilities from Apple's balance sheet as of September 30, 2017, in Appendix A.)
3. Is the ratio computed in part 2 greater than or less than the ratio of accounts payable divided by total liabilities as of year-end 2017? (Obtain accounts payable from Apple's balance sheet as of September 30, 2017, in Appendix A.)