Horizontal analysis of income statement and balance sheet

Question

Analyze Apple Inc. using their financial statements below.

Horizontal Analysis of Income Statement and Balance Sheet
Prepare a three-year horizontal analysis of the income statement and balance sheet of your selected company. Discuss the importance and meaning of horizontal analysis. Discuss both the positive and negative trends presented in your company.

Ratio Analysis
Calculate the current ratio, quick ratio, cash to current liabilities ratio, over a two-year period. Discuss and interpret the ratios that you calculated. Discuss potential liquidity issues based on your calculations of the current and quick ratios. Are there any factors that could be erroneously influencing the results of the ratios? Discuss liquidity issues of competitive companies within the same industry.

Recommendation
Based on your analysis would you recommend an individual invest in this company? What strengths do you see? What risks do you see? It is perfectly acceptable to state that you would recommend avoiding this company as long as you provide support for your position.

Income Statement

Period Ending Sep 28, 2012 Sep 23, 2011 Sep 24, 2010 Total Revenue 156,508,000 108,249,000 65,225,000 Cost of Revenue 87,846,000 64,431,000 39,541,000 Gross Profit 68,662,000 43,818,000 25,684,000 Operating Expenses Research Development 3,381,000 2,429,000 1,782,000 Selling General and Administrative 10,040,000 7,599,000 5,517,000 Non Recurring - - - Others - - - Total Operating Expenses - - - Operating Income or Loss 55,241,000 33,790,000 18,385,000 Income from Continuing Operations Total Other Income/Expenses Net 522,000 415,000 155,000 Earnings Before Interest And Taxes 55,763,000 34,205,000 18,540,000 Interest Expense - - - Income Before Tax 55,763,000 34,205,000 18,540,000 Income Tax Expense 14,030,000 8,283,000 4,527,000 Minority Interest - - - Net Income From Continuing Ops 41,733,000 25,922,000 14,013,000 Non-recurring Events Discontinued Operations - - - Extraordinary Items - - - Effect Of Accounting Changes - - - Other Items - - - Net Income 41,733,000 25,922,000 14,013,000 Preferred Stock And Other Adjustments - - - Net Income Applicable To Common Shares 41,733,000 25,922,000 14,013,000

Currency in USD.

Balance Sheet

Period Ending Sep 29, 2012 Sep 24, 2011 Sep 25, 2010 Assets Current Assets Cash And Cash Equivalents 10,746,000 9,815,000 11,261,000 Short Term Investments 18,383,000 16,137,000 14,359,000 Net Receivables 21,275,000 13,731,000 11,560,000 Inventory 791,000 776,000 1,051,000 Other Current Assets 6,458,000 4,529,000 3,447,000 Total Current Assets 57,653,000 44,988,000 41,678,000 Long Term Investments 92,122,000 55,618,000 25,391,000 Property Plant and Equipment 15,452,000 7,777,000 4,768,000 Goodwill 1,135,000 896,000 741,000 Intangible Assets 4,224,000 3,536,000 342,000 Accumulated Amortization - - - Other Assets 5,478,000 3,556,000 2,263,000 Deferred Long Term Asset Charges - - - Total Assets 176,064,000 116,371,000 75,183,000 Liabilities Current Liabilities Accounts Payable 32,589,000 23,879,000 17,738,000 Short/Current Long Term Debt - - - Other Current Liabilities 5,953,000 4,091,000 2,984,000 Total Current Liabilities 38,542,000 27,970,000 20,722,000 Long Term Debt - - - Other Liabilities 16,664,000 10,100,000 5,531,000 Deferred Long Term Liability Charges 2,648,000 1,686,000 1,139,000 Minority Interest - - - Negative Goodwill - - - Total Liabilities 57,854,000 39,756,000 27,392,000 Stockholders' Equity Misc Stocks Options Warrants - - - Redeemable Preferred Stock - - - Preferred Stock - - - Common Stock 16,422,000 13,331,000 10,668,000 Retained Earnings 101,289,000 62,841,000 37,169,000 Treasury Stock - - - Capital Surplus - - - Other Stockholder Equity 499,000 443,000 (46,000) Total Stockholder Equity 118,210,000 76,615,000 47,791,000 Net Tangible Assets 112,851,000 72,183,000 46,708,000

Currency in USD.

Cash Flow

Period Ending Sep 29, 2012 Sep 24, 2011 Sep 25, 2010 Net Income 41,733,000 25,922,000 14,013,000 Operating Activities, Cash Flows Provided By or Used In Depreciation 3,277,000 1,814,000 1,027,000 Adjustments To Net Income 6,145,000 4,036,000 2,319,000 Changes In Accounts Receivables (6,965,000) (1,791,000) (4,860,000) Changes In Liabilities 9,843,000 8,664,000 8,302,000 Changes In Inventories (15,000) 275,000 (596,000) Changes In Other Operating Activities (3,162,000) (1,391,000) (1,610,000) Total Cash Flow From Operating Activities 50,856,000 37,529,000 18,595,000 Investing Activities, Cash Flows Provided By or Used In Capital Expenditures (8,295,000) (4,260,000) (2,005,000) Investments (38,427,000) (32,464,000) (11,075,000) Other Cash flows from Investing Activities (1,505,000) (3,695,000) (774,000) Total Cash Flows From Investing Activities (48,227,000) (40,419,000) (13,854,000) Financing Activities, Cash Flows Provided By or Used In Dividends Paid (2,488,000) - - Sale Purchase of Stock 665,000 831,000 912,000 Net Borrowings - - - Other Cash Flows from Financing Activities (1,226,000) (520,000) (406,000) Total Cash Flows From Financing Activities (1,698,000) 1,444,000 1,257,000 Effect Of Exchange Rate Changes - - - Change In Cash and Cash Equivalents 931,000 (1,446,000) 5,998,000

Currency in USD.