Presented below is Apple\'s 3 Year Financial Results taken from their 2013 10K (

Question

Presented below is Apple's 3 Year Financial Results taken from their 2013 10K (annual report) which can be found on their website under SEC filings and annual reports:

http://investor.apple.com/sec.cfm#filings

All the figures below are presented in millions except for the per share data. So yes, Apple generated $170 billion dollars in net sales in 2013.

1. Compute the Debt Ratio and the Equity Ratio for all of the years. Explain the ratios.

2. Why would a company so cash rich like Apple ($146 billion dollars reported in cash and cash equivalents and marketable securities) take on more long-term debt in 2013?

2013 2012 2011 Net sales $              170,910 $              156,508 $              108,249 Net income $                37,037 $                41,733 $                25,922 Earnings per share: Basic $                 40.03 $                 44.64 $                 28.05 Diluted $                 39.75 $                 44.15 $                 27.68 Cash dividends declared per share $                 11.40 $                   2.65 $0 Shares used in computing earnings per share: Basic 925,331 934,818 924,258 Diluted 931,662 945,355 936,645 Total cash, cash equivalents and marketable securities $              146,761 $              121,251 $                81,570 Total assets $              207,000 $              176,064 $              116,371 Long-term debt $                16,960 $0 $0 Long-term obligations (a) $                20,208 $                16,664 $                10,100 Total liabilities $                83,451 $                57,854 $                39,756 Total shareholders' equity $              123,549 $              118,210 $                76,615

Explanation / Answer

1. Drbt equity ratio= total liabity/total share holder equity

Year                               2013       2012 2011

Debt Equity Ratio           83451/123549            57854/118210               39756/76615

                                              0.67                              0.48 0.51

debts to equity ratio mean it is a ratio of total liability of business to its share ohlder equity. it is leverage ratio and it measure the degree to which assets of business are financed by the debts and shareholder of business. Lowe value of debt equity ratio is favourable less risk.

2. if we compare diluted no of share and current /bqasic no of share there is increasing trend in no os share it mean comany is planning to convert debts to its euity share. another things apany has its plann to further investment or investment in business or securities or pay off is liability by utilising cash.

secondly during 2013, company issue debts $ 16960 to make capital structure more better and leverage of its firm by using debts in its capital structure. by doing this comany has pay more dividend to its equity shareholder as compare to last year.

       

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