1. Determine the amount of Apple’s accounts receivable as of September 26, 2015. 2. Compute the accounts receivable turnover of Apple as of September 26, 2015. 3. How long does it take, on average, for the company to collect receivables? 4. Compute the percentage that the liquid assets make up of current liabilities as of September 26, 2015 and as of September 27, 2014 and comment on the company ability to satisfy its current liabilities as of its fiscal 2015 year-end compared to its fiscal 2014 year-end. 5. What criteria did Apple use to classify items as cash equivalents? 6. Access Apple financial statements for fiscal years after September 26, 2015. Recompute parts 2 and 4 and comment on any changes since September 26, 2015. Schedule of Accounts Receivable: Schedule of accounts receivable shows all the accounts receivable of a company under statement.

Question

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Answer 1

Question

Chapter 9, Problem 1BTN

To determine

1. Determine the amount of Apple’s accounts receivable as of September 26, 2015.

2. Compute the accounts receivable turnover of Apple as of September 26, 2015.

3. How long does it take, on average, for the company to collect receivables?

4. Compute the percentage that the liquid assets make up of current liabilities as of September 26, 2015 and as of September 27, 2014 and comment on the company ability to satisfy its current liabilities as of its fiscal 2015 year-end compared to its fiscal 2014 year-end.

5. What criteria did Apple use to classify items as cash equivalents?

6. Access Apple financial statements for fiscal years after September 26, 2015. Recompute parts 2 and 4 and comment on any changes since September 26, 2015.

Schedule of Accounts Receivable:

Schedule of accounts receivable shows all the accounts receivable of a company under statement.

Expert Solution & Answer

Answer to Problem 1BTN

Solution:

1. The accounts receivable of Apple Inc. as September 26, 2015 is $16,849 million.

2. The Apple Inc.’s accounts receivable turnover as of September 26, 2015 is 13.62.

3. The average collection period of Apple Inc. is 26.80 days.

4. The percentage of liquid assets over current liabilities is:

Apple Inc.
September 26, 2015	September 27, 2014
75.4%	70.3%

The company’s ability to pay-off its current liabilities by using liquid assets as of September 26, 2015 has improved by 5% but it is not good enough to satisfy all its current liabilities.

5. The highly liquid investments of Apple Inc. with maturity period of or less from the date of purchase are classified as cash equivalents

6.

Apple Inc. September 24, 2016
Accounts Receivable Turnover	Acid-Test Ratio
13.23	107.6%

The percentage of liquid assets over current liabilities of Apple Inc. has improved by 25% and the company would be able to pay-off its current liabilities by using its liquid assets. But the accounts receivable turnover of the company has decreased by 0.39.

Explanation of Solution

2. Computation of accounts receivable turnover as of September 26, 2015

$\begin{array}{l} A c c o u n t s R e c e i v a b l e T u r n o v e r (A m o u n t s i n m i l l i o n) = \frac{N e t S a l e s}{A v e r a g e A c c o u n t s R e c e i v a b l e} \\ = \frac{$ 233, 715}{$ 17, 154.5} \\ = 13.62 \\ * A v e r a g e A c c o u n t s R e c e i v a b l e = \frac{B e g i n n i n g A c c o u n t s R e c e i v a b l e + E n d i n g A c c o u n t s R e c e i v a b l e}{2} \\ = \frac{$ 17, 460 + $ 16, 849}{2} \\ = $ 17, 154.5 \end{array}$

3. Computation of average collection period as of September 26, 2015

$\begin{array}{l} A v e r a g e C o l l e c t i o n P e r i o d = \frac{365 d a y s}{A c c o u n t s R e c e i v a b l e T u r n o v e r} \\ = \frac{365 d a y s}{13.62} \\ = 26.80 d a y s \end{array}$

4. Computation of acid-test ratio as of September 26, 2015 and September 27, 2014

$\begin{array}{l} A c i d - T e s t R a t i o = \frac{L i q u i d A s s e t s}{C u r r e n t L i a b i l i t i e s} \\ * L i q u i d A s s e t s = C a s h a n d c a s h e q u i v a l e n t s + S h o r t - t e r m m a r k e t a b l e s e c u r i t i e s + R e c e i v a b l e s + \\ I n v e n t o r y \\ S e p t e m b e r 26, 2015 = \frac{$ 60, 799}{$ 80, 610} \\ = 0.754 \\ * L i q u i d A s s e t s = $ 21, 120 + $ 20, 481 + $ 16, 849 + $ 2, 349 = $ 60, 799 \\ S e p t e m b e r 27, 2014 = \frac{$ 44, 648}{$ 63, 443} \\ = 0.703 \\ * L i q u i d A s s e t s = $ 13, 844 + $ 11, 233 + $ 17, 460 + $ 2, 111 = $ 44, 648 \end{array}$

6.

Computation of accounts receivable turnover and acid test ratio as of September 24, 2016

$\begin{array}{l} A c c o u n t s R e c e i v a b l e T u r n o v e r (A m o u n t s i n m i l l i o n) = \frac{N e t S a l e s}{A v e r a g e A c c o u n t s R e c e i v a b l e} \\ = \frac{$ 215, 639}{$ 16, 301.5} \\ = 13.23 \\ * A v e r a g e A c c o u n t s R e c e i v a b l e = \frac{B e g i n n i n g A c c o u n t s R e c e i v a b l e + E n d i n g A c c o u n t s R e c e i v a b l e}{2} \\ = \frac{$ 16, 849 + $ 15, 754}{2} \\ = $ 16, 301.5 \end{array}$

$\begin{array}{l} A c i d - T e s t R a t i o = \frac{L i q u i d A s s e t s}{C u r r e n t L i a b i l i t i e s} \\ = \frac{$ 20, 484 + $ 46, 671 + $ 15, 754 + $ 2, 132}{$ 79, 006} \\ = \frac{$ 85, 041}{$ 79, 006} \\ = 1.076 \end{array}$

Conclusion

The acid-test ratio of Apple Inc. is improving on yearly basis but the accounts receivable turnover of the company has decreased by 0.39.

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Answer 2

Question

Chapter 9, Problem 1BTN

To determine

1. Determine the amount of Apple’s accounts receivable as of September 26, 2015.

2. Compute the accounts receivable turnover of Apple as of September 26, 2015.

3. How long does it take, on average, for the company to collect receivables?

4. Compute the percentage that the liquid assets make up of current liabilities as of September 26, 2015 and as of September 27, 2014 and comment on the company ability to satisfy its current liabilities as of its fiscal 2015 year-end compared to its fiscal 2014 year-end.

5. What criteria did Apple use to classify items as cash equivalents?

6. Access Apple financial statements for fiscal years after September 26, 2015. Recompute parts 2 and 4 and comment on any changes since September 26, 2015.

Schedule of Accounts Receivable:

Schedule of accounts receivable shows all the accounts receivable of a company under statement.

Expert Solution & Answer

Answer to Problem 1BTN

Solution:

1. The accounts receivable of Apple Inc. as September 26, 2015 is $16,849 million.

2. The Apple Inc.’s accounts receivable turnover as of September 26, 2015 is 13.62.

3. The average collection period of Apple Inc. is 26.80 days.

4. The percentage of liquid assets over current liabilities is:

Apple Inc.
September 26, 2015	September 27, 2014
75.4%	70.3%

The company’s ability to pay-off its current liabilities by using liquid assets as of September 26, 2015 has improved by 5% but it is not good enough to satisfy all its current liabilities.

5. The highly liquid investments of Apple Inc. with maturity period of or less from the date of purchase are classified as cash equivalents

6.

Apple Inc. September 24, 2016
Accounts Receivable Turnover	Acid-Test Ratio
13.23	107.6%

The percentage of liquid assets over current liabilities of Apple Inc. has improved by 25% and the company would be able to pay-off its current liabilities by using its liquid assets. But the accounts receivable turnover of the company has decreased by 0.39.

Explanation of Solution

2. Computation of accounts receivable turnover as of September 26, 2015

$\begin{array}{l} A c c o u n t s R e c e i v a b l e T u r n o v e r (A m o u n t s i n m i l l i o n) = \frac{N e t S a l e s}{A v e r a g e A c c o u n t s R e c e i v a b l e} \\ = \frac{$ 233, 715}{$ 17, 154.5} \\ = 13.62 \\ * A v e r a g e A c c o u n t s R e c e i v a b l e = \frac{B e g i n n i n g A c c o u n t s R e c e i v a b l e + E n d i n g A c c o u n t s R e c e i v a b l e}{2} \\ = \frac{$ 17, 460 + $ 16, 849}{2} \\ = $ 17, 154.5 \end{array}$

3. Computation of average collection period as of September 26, 2015

$\begin{array}{l} A v e r a g e C o l l e c t i o n P e r i o d = \frac{365 d a y s}{A c c o u n t s R e c e i v a b l e T u r n o v e r} \\ = \frac{365 d a y s}{13.62} \\ = 26.80 d a y s \end{array}$

4. Computation of acid-test ratio as of September 26, 2015 and September 27, 2014

$\begin{array}{l} A c i d - T e s t R a t i o = \frac{L i q u i d A s s e t s}{C u r r e n t L i a b i l i t i e s} \\ * L i q u i d A s s e t s = C a s h a n d c a s h e q u i v a l e n t s + S h o r t - t e r m m a r k e t a b l e s e c u r i t i e s + R e c e i v a b l e s + \\ I n v e n t o r y \\ S e p t e m b e r 26, 2015 = \frac{$ 60, 799}{$ 80, 610} \\ = 0.754 \\ * L i q u i d A s s e t s = $ 21, 120 + $ 20, 481 + $ 16, 849 + $ 2, 349 = $ 60, 799 \\ S e p t e m b e r 27, 2014 = \frac{$ 44, 648}{$ 63, 443} \\ = 0.703 \\ * L i q u i d A s s e t s = $ 13, 844 + $ 11, 233 + $ 17, 460 + $ 2, 111 = $ 44, 648 \end{array}$

6.

Computation of accounts receivable turnover and acid test ratio as of September 24, 2016

$\begin{array}{l} A c c o u n t s R e c e i v a b l e T u r n o v e r (A m o u n t s i n m i l l i o n) = \frac{N e t S a l e s}{A v e r a g e A c c o u n t s R e c e i v a b l e} \\ = \frac{$ 215, 639}{$ 16, 301.5} \\ = 13.23 \\ * A v e r a g e A c c o u n t s R e c e i v a b l e = \frac{B e g i n n i n g A c c o u n t s R e c e i v a b l e + E n d i n g A c c o u n t s R e c e i v a b l e}{2} \\ = \frac{$ 16, 849 + $ 15, 754}{2} \\ = $ 16, 301.5 \end{array}$

$\begin{array}{l} A c i d - T e s t R a t i o = \frac{L i q u i d A s s e t s}{C u r r e n t L i a b i l i t i e s} \\ = \frac{$ 20, 484 + $ 46, 671 + $ 15, 754 + $ 2, 132}{$ 79, 006} \\ = \frac{$ 85, 041}{$ 79, 006} \\ = 1.076 \end{array}$

Conclusion

The acid-test ratio of Apple Inc. is improving on yearly basis but the accounts receivable turnover of the company has decreased by 0.39.

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Answer 3

Question

Chapter 9, Problem 1BTN

To determine

1. Determine the amount of Apple’s accounts receivable as of September 26, 2015.

2. Compute the accounts receivable turnover of Apple as of September 26, 2015.

3. How long does it take, on average, for the company to collect receivables?

4. Compute the percentage that the liquid assets make up of current liabilities as of September 26, 2015 and as of September 27, 2014 and comment on the company ability to satisfy its current liabilities as of its fiscal 2015 year-end compared to its fiscal 2014 year-end.

5. What criteria did Apple use to classify items as cash equivalents?

6. Access Apple financial statements for fiscal years after September 26, 2015. Recompute parts 2 and 4 and comment on any changes since September 26, 2015.

Schedule of Accounts Receivable:

Schedule of accounts receivable shows all the accounts receivable of a company under statement.

Expert Solution & Answer

Answer to Problem 1BTN

Solution:

1. The accounts receivable of Apple Inc. as September 26, 2015 is $16,849 million.

2. The Apple Inc.’s accounts receivable turnover as of September 26, 2015 is 13.62.

3. The average collection period of Apple Inc. is 26.80 days.

4. The percentage of liquid assets over current liabilities is:

Apple Inc.
September 26, 2015	September 27, 2014
75.4%	70.3%

The company’s ability to pay-off its current liabilities by using liquid assets as of September 26, 2015 has improved by 5% but it is not good enough to satisfy all its current liabilities.

5. The highly liquid investments of Apple Inc. with maturity period of or less from the date of purchase are classified as cash equivalents

6.

Apple Inc. September 24, 2016
Accounts Receivable Turnover	Acid-Test Ratio
13.23	107.6%

The percentage of liquid assets over current liabilities of Apple Inc. has improved by 25% and the company would be able to pay-off its current liabilities by using its liquid assets. But the accounts receivable turnover of the company has decreased by 0.39.

Explanation of Solution

2. Computation of accounts receivable turnover as of September 26, 2015

$\begin{array}{l} A c c o u n t s R e c e i v a b l e T u r n o v e r (A m o u n t s i n m i l l i o n) = \frac{N e t S a l e s}{A v e r a g e A c c o u n t s R e c e i v a b l e} \\ = \frac{$ 233, 715}{$ 17, 154.5} \\ = 13.62 \\ * A v e r a g e A c c o u n t s R e c e i v a b l e = \frac{B e g i n n i n g A c c o u n t s R e c e i v a b l e + E n d i n g A c c o u n t s R e c e i v a b l e}{2} \\ = \frac{$ 17, 460 + $ 16, 849}{2} \\ = $ 17, 154.5 \end{array}$

3. Computation of average collection period as of September 26, 2015

$\begin{array}{l} A v e r a g e C o l l e c t i o n P e r i o d = \frac{365 d a y s}{A c c o u n t s R e c e i v a b l e T u r n o v e r} \\ = \frac{365 d a y s}{13.62} \\ = 26.80 d a y s \end{array}$

4. Computation of acid-test ratio as of September 26, 2015 and September 27, 2014

$\begin{array}{l} A c i d - T e s t R a t i o = \frac{L i q u i d A s s e t s}{C u r r e n t L i a b i l i t i e s} \\ * L i q u i d A s s e t s = C a s h a n d c a s h e q u i v a l e n t s + S h o r t - t e r m m a r k e t a b l e s e c u r i t i e s + R e c e i v a b l e s + \\ I n v e n t o r y \\ S e p t e m b e r 26, 2015 = \frac{$ 60, 799}{$ 80, 610} \\ = 0.754 \\ * L i q u i d A s s e t s = $ 21, 120 + $ 20, 481 + $ 16, 849 + $ 2, 349 = $ 60, 799 \\ S e p t e m b e r 27, 2014 = \frac{$ 44, 648}{$ 63, 443} \\ = 0.703 \\ * L i q u i d A s s e t s = $ 13, 844 + $ 11, 233 + $ 17, 460 + $ 2, 111 = $ 44, 648 \end{array}$

6.

Computation of accounts receivable turnover and acid test ratio as of September 24, 2016

$\begin{array}{l} A c c o u n t s R e c e i v a b l e T u r n o v e r (A m o u n t s i n m i l l i o n) = \frac{N e t S a l e s}{A v e r a g e A c c o u n t s R e c e i v a b l e} \\ = \frac{$ 215, 639}{$ 16, 301.5} \\ = 13.23 \\ * A v e r a g e A c c o u n t s R e c e i v a b l e = \frac{B e g i n n i n g A c c o u n t s R e c e i v a b l e + E n d i n g A c c o u n t s R e c e i v a b l e}{2} \\ = \frac{$ 16, 849 + $ 15, 754}{2} \\ = $ 16, 301.5 \end{array}$

$\begin{array}{l} A c i d - T e s t R a t i o = \frac{L i q u i d A s s e t s}{C u r r e n t L i a b i l i t i e s} \\ = \frac{$ 20, 484 + $ 46, 671 + $ 15, 754 + $ 2, 132}{$ 79, 006} \\ = \frac{$ 85, 041}{$ 79, 006} \\ = 1.076 \end{array}$

Conclusion

The acid-test ratio of Apple Inc. is improving on yearly basis but the accounts receivable turnover of the company has decreased by 0.39.

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Answer 4

Question

Chapter 9, Problem 1BTN

To determine

1. Determine the amount of Apple’s accounts receivable as of September 26, 2015.

2. Compute the accounts receivable turnover of Apple as of September 26, 2015.

3. How long does it take, on average, for the company to collect receivables?

4. Compute the percentage that the liquid assets make up of current liabilities as of September 26, 2015 and as of September 27, 2014 and comment on the company ability to satisfy its current liabilities as of its fiscal 2015 year-end compared to its fiscal 2014 year-end.

5. What criteria did Apple use to classify items as cash equivalents?

6. Access Apple financial statements for fiscal years after September 26, 2015. Recompute parts 2 and 4 and comment on any changes since September 26, 2015.

Schedule of Accounts Receivable:

Schedule of accounts receivable shows all the accounts receivable of a company under statement.

Expert Solution & Answer

Answer to Problem 1BTN

Solution:

1. The accounts receivable of Apple Inc. as September 26, 2015 is $16,849 million.

2. The Apple Inc.’s accounts receivable turnover as of September 26, 2015 is 13.62.

3. The average collection period of Apple Inc. is 26.80 days.

4. The percentage of liquid assets over current liabilities is:

Apple Inc.
September 26, 2015	September 27, 2014
75.4%	70.3%

The company’s ability to pay-off its current liabilities by using liquid assets as of September 26, 2015 has improved by 5% but it is not good enough to satisfy all its current liabilities.

5. The highly liquid investments of Apple Inc. with maturity period of or less from the date of purchase are classified as cash equivalents

6.

Apple Inc. September 24, 2016
Accounts Receivable Turnover	Acid-Test Ratio
13.23	107.6%

The percentage of liquid assets over current liabilities of Apple Inc. has improved by 25% and the company would be able to pay-off its current liabilities by using its liquid assets. But the accounts receivable turnover of the company has decreased by 0.39.

Explanation of Solution

2. Computation of accounts receivable turnover as of September 26, 2015

$\begin{array}{l} A c c o u n t s R e c e i v a b l e T u r n o v e r (A m o u n t s i n m i l l i o n) = \frac{N e t S a l e s}{A v e r a g e A c c o u n t s R e c e i v a b l e} \\ = \frac{$ 233, 715}{$ 17, 154.5} \\ = 13.62 \\ * A v e r a g e A c c o u n t s R e c e i v a b l e = \frac{B e g i n n i n g A c c o u n t s R e c e i v a b l e + E n d i n g A c c o u n t s R e c e i v a b l e}{2} \\ = \frac{$ 17, 460 + $ 16, 849}{2} \\ = $ 17, 154.5 \end{array}$

3. Computation of average collection period as of September 26, 2015

$\begin{array}{l} A v e r a g e C o l l e c t i o n P e r i o d = \frac{365 d a y s}{A c c o u n t s R e c e i v a b l e T u r n o v e r} \\ = \frac{365 d a y s}{13.62} \\ = 26.80 d a y s \end{array}$

4. Computation of acid-test ratio as of September 26, 2015 and September 27, 2014

$\begin{array}{l} A c i d - T e s t R a t i o = \frac{L i q u i d A s s e t s}{C u r r e n t L i a b i l i t i e s} \\ * L i q u i d A s s e t s = C a s h a n d c a s h e q u i v a l e n t s + S h o r t - t e r m m a r k e t a b l e s e c u r i t i e s + R e c e i v a b l e s + \\ I n v e n t o r y \\ S e p t e m b e r 26, 2015 = \frac{$ 60, 799}{$ 80, 610} \\ = 0.754 \\ * L i q u i d A s s e t s = $ 21, 120 + $ 20, 481 + $ 16, 849 + $ 2, 349 = $ 60, 799 \\ S e p t e m b e r 27, 2014 = \frac{$ 44, 648}{$ 63, 443} \\ = 0.703 \\ * L i q u i d A s s e t s = $ 13, 844 + $ 11, 233 + $ 17, 460 + $ 2, 111 = $ 44, 648 \end{array}$

6.

Computation of accounts receivable turnover and acid test ratio as of September 24, 2016

$\begin{array}{l} A c c o u n t s R e c e i v a b l e T u r n o v e r (A m o u n t s i n m i l l i o n) = \frac{N e t S a l e s}{A v e r a g e A c c o u n t s R e c e i v a b l e} \\ = \frac{$ 215, 639}{$ 16, 301.5} \\ = 13.23 \\ * A v e r a g e A c c o u n t s R e c e i v a b l e = \frac{B e g i n n i n g A c c o u n t s R e c e i v a b l e + E n d i n g A c c o u n t s R e c e i v a b l e}{2} \\ = \frac{$ 16, 849 + $ 15, 754}{2} \\ = $ 16, 301.5 \end{array}$

$\begin{array}{l} A c i d - T e s t R a t i o = \frac{L i q u i d A s s e t s}{C u r r e n t L i a b i l i t i e s} \\ = \frac{$ 20, 484 + $ 46, 671 + $ 15, 754 + $ 2, 132}{$ 79, 006} \\ = \frac{$ 85, 041}{$ 79, 006} \\ = 1.076 \end{array}$

Conclusion

The acid-test ratio of Apple Inc. is improving on yearly basis but the accounts receivable turnover of the company has decreased by 0.39.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 9, Problem 1BTN

To determine

1. Determine the amount of Apple’s accounts receivable as of September 26, 2015.

2. Compute the accounts receivable turnover of Apple as of September 26, 2015.

3. How long does it take, on average, for the company to collect receivables?

4. Compute the percentage that the liquid assets make up of current liabilities as of September 26, 2015 and as of September 27, 2014 and comment on the company ability to satisfy its current liabilities as of its fiscal 2015 year-end compared to its fiscal 2014 year-end.

5. What criteria did Apple use to classify items as cash equivalents?

6. Access Apple financial statements for fiscal years after September 26, 2015. Recompute parts 2 and 4 and comment on any changes since September 26, 2015.

Schedule of Accounts Receivable:

Schedule of accounts receivable shows all the accounts receivable of a company under statement.

Expert Solution & Answer

Answer to Problem 1BTN

Solution:

1. The accounts receivable of Apple Inc. as September 26, 2015 is $16,849 million.

2. The Apple Inc.’s accounts receivable turnover as of September 26, 2015 is 13.62.

3. The average collection period of Apple Inc. is 26.80 days.

4. The percentage of liquid assets over current liabilities is:

Apple Inc.
September 26, 2015	September 27, 2014
75.4%	70.3%

The company’s ability to pay-off its current liabilities by using liquid assets as of September 26, 2015 has improved by 5% but it is not good enough to satisfy all its current liabilities.

5. The highly liquid investments of Apple Inc. with maturity period of or less from the date of purchase are classified as cash equivalents

6.

Apple Inc. September 24, 2016
Accounts Receivable Turnover	Acid-Test Ratio
13.23	107.6%

The percentage of liquid assets over current liabilities of Apple Inc. has improved by 25% and the company would be able to pay-off its current liabilities by using its liquid assets. But the accounts receivable turnover of the company has decreased by 0.39.

Explanation of Solution

2. Computation of accounts receivable turnover as of September 26, 2015

$\begin{array}{l} A c c o u n t s R e c e i v a b l e T u r n o v e r (A m o u n t s i n m i l l i o n) = \frac{N e t S a l e s}{A v e r a g e A c c o u n t s R e c e i v a b l e} \\ = \frac{$ 233, 715}{$ 17, 154.5} \\ = 13.62 \\ * A v e r a g e A c c o u n t s R e c e i v a b l e = \frac{B e g i n n i n g A c c o u n t s R e c e i v a b l e + E n d i n g A c c o u n t s R e c e i v a b l e}{2} \\ = \frac{$ 17, 460 + $ 16, 849}{2} \\ = $ 17, 154.5 \end{array}$

3. Computation of average collection period as of September 26, 2015

$\begin{array}{l} A v e r a g e C o l l e c t i o n P e r i o d = \frac{365 d a y s}{A c c o u n t s R e c e i v a b l e T u r n o v e r} \\ = \frac{365 d a y s}{13.62} \\ = 26.80 d a y s \end{array}$

4. Computation of acid-test ratio as of September 26, 2015 and September 27, 2014

$\begin{array}{l} A c i d - T e s t R a t i o = \frac{L i q u i d A s s e t s}{C u r r e n t L i a b i l i t i e s} \\ * L i q u i d A s s e t s = C a s h a n d c a s h e q u i v a l e n t s + S h o r t - t e r m m a r k e t a b l e s e c u r i t i e s + R e c e i v a b l e s + \\ I n v e n t o r y \\ S e p t e m b e r 26, 2015 = \frac{$ 60, 799}{$ 80, 610} \\ = 0.754 \\ * L i q u i d A s s e t s = $ 21, 120 + $ 20, 481 + $ 16, 849 + $ 2, 349 = $ 60, 799 \\ S e p t e m b e r 27, 2014 = \frac{$ 44, 648}{$ 63, 443} \\ = 0.703 \\ * L i q u i d A s s e t s = $ 13, 844 + $ 11, 233 + $ 17, 460 + $ 2, 111 = $ 44, 648 \end{array}$

6.

Computation of accounts receivable turnover and acid test ratio as of September 24, 2016

$\begin{array}{l} A c c o u n t s R e c e i v a b l e T u r n o v e r (A m o u n t s i n m i l l i o n) = \frac{N e t S a l e s}{A v e r a g e A c c o u n t s R e c e i v a b l e} \\ = \frac{$ 215, 639}{$ 16, 301.5} \\ = 13.23 \\ * A v e r a g e A c c o u n t s R e c e i v a b l e = \frac{B e g i n n i n g A c c o u n t s R e c e i v a b l e + E n d i n g A c c o u n t s R e c e i v a b l e}{2} \\ = \frac{$ 16, 849 + $ 15, 754}{2} \\ = $ 16, 301.5 \end{array}$

$\begin{array}{l} A c i d - T e s t R a t i o = \frac{L i q u i d A s s e t s}{C u r r e n t L i a b i l i t i e s} \\ = \frac{$ 20, 484 + $ 46, 671 + $ 15, 754 + $ 2, 132}{$ 79, 006} \\ = \frac{$ 85, 041}{$ 79, 006} \\ = 1.076 \end{array}$

Conclusion

The acid-test ratio of Apple Inc. is improving on yearly basis but the accounts receivable turnover of the company has decreased by 0.39.

Answer 6

Chapter 9, Problem 1BTN

To determine

1. Determine the amount of Apple’s accounts receivable as of September 26, 2015.

2. Compute the accounts receivable turnover of Apple as of September 26, 2015.

3. How long does it take, on average, for the company to collect receivables?

4. Compute the percentage that the liquid assets make up of current liabilities as of September 26, 2015 and as of September 27, 2014 and comment on the company ability to satisfy its current liabilities as of its fiscal 2015 year-end compared to its fiscal 2014 year-end.

5. What criteria did Apple use to classify items as cash equivalents?

6. Access Apple financial statements for fiscal years after September 26, 2015. Recompute parts 2 and 4 and comment on any changes since September 26, 2015.

Schedule of Accounts Receivable:

Schedule of accounts receivable shows all the accounts receivable of a company under statement.

Expert Solution & Answer

Answer to Problem 1BTN

Solution:

1. The accounts receivable of Apple Inc. as September 26, 2015 is $16,849 million.

2. The Apple Inc.’s accounts receivable turnover as of September 26, 2015 is 13.62.

3. The average collection period of Apple Inc. is 26.80 days.

4. The percentage of liquid assets over current liabilities is:

Apple Inc.
September 26, 2015	September 27, 2014
75.4%	70.3%

The company’s ability to pay-off its current liabilities by using liquid assets as of September 26, 2015 has improved by 5% but it is not good enough to satisfy all its current liabilities.

5. The highly liquid investments of Apple Inc. with maturity period of or less from the date of purchase are classified as cash equivalents

6.

Apple Inc. September 24, 2016
Accounts Receivable Turnover	Acid-Test Ratio
13.23	107.6%

The percentage of liquid assets over current liabilities of Apple Inc. has improved by 25% and the company would be able to pay-off its current liabilities by using its liquid assets. But the accounts receivable turnover of the company has decreased by 0.39.

Explanation of Solution

2. Computation of accounts receivable turnover as of September 26, 2015

$\begin{array}{l} A c c o u n t s R e c e i v a b l e T u r n o v e r (A m o u n t s i n m i l l i o n) = \frac{N e t S a l e s}{A v e r a g e A c c o u n t s R e c e i v a b l e} \\ = \frac{$ 233, 715}{$ 17, 154.5} \\ = 13.62 \\ * A v e r a g e A c c o u n t s R e c e i v a b l e = \frac{B e g i n n i n g A c c o u n t s R e c e i v a b l e + E n d i n g A c c o u n t s R e c e i v a b l e}{2} \\ = \frac{$ 17, 460 + $ 16, 849}{2} \\ = $ 17, 154.5 \end{array}$

3. Computation of average collection period as of September 26, 2015

$\begin{array}{l} A v e r a g e C o l l e c t i o n P e r i o d = \frac{365 d a y s}{A c c o u n t s R e c e i v a b l e T u r n o v e r} \\ = \frac{365 d a y s}{13.62} \\ = 26.80 d a y s \end{array}$

4. Computation of acid-test ratio as of September 26, 2015 and September 27, 2014

$\begin{array}{l} A c i d - T e s t R a t i o = \frac{L i q u i d A s s e t s}{C u r r e n t L i a b i l i t i e s} \\ * L i q u i d A s s e t s = C a s h a n d c a s h e q u i v a l e n t s + S h o r t - t e r m m a r k e t a b l e s e c u r i t i e s + R e c e i v a b l e s + \\ I n v e n t o r y \\ S e p t e m b e r 26, 2015 = \frac{$ 60, 799}{$ 80, 610} \\ = 0.754 \\ * L i q u i d A s s e t s = $ 21, 120 + $ 20, 481 + $ 16, 849 + $ 2, 349 = $ 60, 799 \\ S e p t e m b e r 27, 2014 = \frac{$ 44, 648}{$ 63, 443} \\ = 0.703 \\ * L i q u i d A s s e t s = $ 13, 844 + $ 11, 233 + $ 17, 460 + $ 2, 111 = $ 44, 648 \end{array}$

6.

Computation of accounts receivable turnover and acid test ratio as of September 24, 2016

$\begin{array}{l} A c c o u n t s R e c e i v a b l e T u r n o v e r (A m o u n t s i n m i l l i o n) = \frac{N e t S a l e s}{A v e r a g e A c c o u n t s R e c e i v a b l e} \\ = \frac{$ 215, 639}{$ 16, 301.5} \\ = 13.23 \\ * A v e r a g e A c c o u n t s R e c e i v a b l e = \frac{B e g i n n i n g A c c o u n t s R e c e i v a b l e + E n d i n g A c c o u n t s R e c e i v a b l e}{2} \\ = \frac{$ 16, 849 + $ 15, 754}{2} \\ = $ 16, 301.5 \end{array}$

$\begin{array}{l} A c i d - T e s t R a t i o = \frac{L i q u i d A s s e t s}{C u r r e n t L i a b i l i t i e s} \\ = \frac{$ 20, 484 + $ 46, 671 + $ 15, 754 + $ 2, 132}{$ 79, 006} \\ = \frac{$ 85, 041}{$ 79, 006} \\ = 1.076 \end{array}$

Conclusion

The acid-test ratio of Apple Inc. is improving on yearly basis but the accounts receivable turnover of the company has decreased by 0.39.

Answer 7

Chapter 9, Problem 1BTN

To determine

1. Determine the amount of Apple’s accounts receivable as of September 26, 2015.

2. Compute the accounts receivable turnover of Apple as of September 26, 2015.

3. How long does it take, on average, for the company to collect receivables?

4. Compute the percentage that the liquid assets make up of current liabilities as of September 26, 2015 and as of September 27, 2014 and comment on the company ability to satisfy its current liabilities as of its fiscal 2015 year-end compared to its fiscal 2014 year-end.

5. What criteria did Apple use to classify items as cash equivalents?

6. Access Apple financial statements for fiscal years after September 26, 2015. Recompute parts 2 and 4 and comment on any changes since September 26, 2015.

Schedule of Accounts Receivable:

Schedule of accounts receivable shows all the accounts receivable of a company under statement.

Answer 8

Expert Solution & Answer

Answer to Problem 1BTN

Solution:

1. The accounts receivable of Apple Inc. as September 26, 2015 is $16,849 million.

2. The Apple Inc.’s accounts receivable turnover as of September 26, 2015 is 13.62.

3. The average collection period of Apple Inc. is 26.80 days.

4. The percentage of liquid assets over current liabilities is:

Apple Inc.
September 26, 2015	September 27, 2014
75.4%	70.3%

The company’s ability to pay-off its current liabilities by using liquid assets as of September 26, 2015 has improved by 5% but it is not good enough to satisfy all its current liabilities.

5. The highly liquid investments of Apple Inc. with maturity period of or less from the date of purchase are classified as cash equivalents

6.

Apple Inc. September 24, 2016
Accounts Receivable Turnover	Acid-Test Ratio
13.23	107.6%

The percentage of liquid assets over current liabilities of Apple Inc. has improved by 25% and the company would be able to pay-off its current liabilities by using its liquid assets. But the accounts receivable turnover of the company has decreased by 0.39.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

2. Computation of accounts receivable turnover as of September 26, 2015

$\begin{array}{l} A c c o u n t s R e c e i v a b l e T u r n o v e r (A m o u n t s i n m i l l i o n) = \frac{N e t S a l e s}{A v e r a g e A c c o u n t s R e c e i v a b l e} \\ = \frac{$ 233, 715}{$ 17, 154.5} \\ = 13.62 \\ * A v e r a g e A c c o u n t s R e c e i v a b l e = \frac{B e g i n n i n g A c c o u n t s R e c e i v a b l e + E n d i n g A c c o u n t s R e c e i v a b l e}{2} \\ = \frac{$ 17, 460 + $ 16, 849}{2} \\ = $ 17, 154.5 \end{array}$

3. Computation of average collection period as of September 26, 2015

$\begin{array}{l} A v e r a g e C o l l e c t i o n P e r i o d = \frac{365 d a y s}{A c c o u n t s R e c e i v a b l e T u r n o v e r} \\ = \frac{365 d a y s}{13.62} \\ = 26.80 d a y s \end{array}$

4. Computation of acid-test ratio as of September 26, 2015 and September 27, 2014

$\begin{array}{l} A c i d - T e s t R a t i o = \frac{L i q u i d A s s e t s}{C u r r e n t L i a b i l i t i e s} \\ * L i q u i d A s s e t s = C a s h a n d c a s h e q u i v a l e n t s + S h o r t - t e r m m a r k e t a b l e s e c u r i t i e s + R e c e i v a b l e s + \\ I n v e n t o r y \\ S e p t e m b e r 26, 2015 = \frac{$ 60, 799}{$ 80, 610} \\ = 0.754 \\ * L i q u i d A s s e t s = $ 21, 120 + $ 20, 481 + $ 16, 849 + $ 2, 349 = $ 60, 799 \\ S e p t e m b e r 27, 2014 = \frac{$ 44, 648}{$ 63, 443} \\ = 0.703 \\ * L i q u i d A s s e t s = $ 13, 844 + $ 11, 233 + $ 17, 460 + $ 2, 111 = $ 44, 648 \end{array}$

6.

Computation of accounts receivable turnover and acid test ratio as of September 24, 2016

$\begin{array}{l} A c c o u n t s R e c e i v a b l e T u r n o v e r (A m o u n t s i n m i l l i o n) = \frac{N e t S a l e s}{A v e r a g e A c c o u n t s R e c e i v a b l e} \\ = \frac{$ 215, 639}{$ 16, 301.5} \\ = 13.23 \\ * A v e r a g e A c c o u n t s R e c e i v a b l e = \frac{B e g i n n i n g A c c o u n t s R e c e i v a b l e + E n d i n g A c c o u n t s R e c e i v a b l e}{2} \\ = \frac{$ 16, 849 + $ 15, 754}{2} \\ = $ 16, 301.5 \end{array}$

$\begin{array}{l} A c i d - T e s t R a t i o = \frac{L i q u i d A s s e t s}{C u r r e n t L i a b i l i t i e s} \\ = \frac{$ 20, 484 + $ 46, 671 + $ 15, 754 + $ 2, 132}{$ 79, 006} \\ = \frac{$ 85, 041}{$ 79, 006} \\ = 1.076 \end{array}$