Apple Inc: Analysis of Financial Statement Essay

I chose Apple for my stock externalise chief(prenominal)ly base on the fact that they release exclusively their records to the public and they cook excellent accounting practices. Their paper work is promiscuous to read and follow and based on their records they have an endless follow of revenue in the wagions. As we have discussed about Apple in class I was very intrigued how they looked in the books on a special level of detail and this course project was the perfect way to fruit initiative to find out just how their numbers actually re matche up answering the interest questions.1. What amount of deferred revenue assets or deferred taxation liabilities be on the two most recent old age on the balance flat solid? What gives rise to these deferred taxes? What information is disclosed in the footnotes link up to deferred taxes? Please define a deferred tax asset and deferred tax financial obligation. At year end September 24 2011 the balance sheet shows following amount of deferred tax assets and liabilitiesDeferred tax asset is arising collect qualified to deductible ephemeral differences, tax losses, and tax credits of $3.2Billion and deferred tax liabilities of $9.2Billion. Deferred revenue is recorded when the ac fraternity receives make upments of their products in advance or for the performance of services. It includes amount for un specify and specified softw atomic number 18 upgrade rights and non-software services that are attached to the products of the corporation. It is disclosed in the footnotes that Deferred tax assets and liabilities shows the effects of tax losses, credits, and the time to come income tax effects of flying differences between the consolidated financial bid carrying amounts of current assets and liabilities and their respective tax bases and are mensurable using en-acted tax rates that apply to their ratable income in the years in which these temporary differences are expected to be recovered or coloni zed. Footnotes besides states that corporation records a valuation salary in order to mow the deferred tax asset to the amount it thinks crappernot be realized.Deferred tax assetDeferred tax asset is define as reduction in companys future taxes as the company has already paid for these taxes in past. It is like a prepaid tax. It is aimd to reduce later periods income taxes.Deferred tax liabilityDeferred tax liability is defined as liability that the company owes but they dont have to pay it in the current time but allow be due in some future time. This often results due to difference in tax regulations and accounting practices.2. What temporary and permanent differences does the company disclose in its footnotes? What are some other examples of temporary and permanent differences?Operating loss to carry forward /carry forwardThe company had un confessd tax public assistances of 1.4 billionGuidelines for carry forwards and carrybacksTax police force allows corporation to carry forward loss up to 20 years and they can carryback tax losses only up to 2 years. A carry forward can be used to reduce future income and in the end reducing future tax payments.4. Does the company have a defined benefit or defined contribution jut out? What are the key elements of the stick out discussed in the footnotes? What amounts on the balance sheet relate to this plan? What are the differences between defined benefit and defined contribution plans? Employee contribution planThe key element discuss in the footnotes is the rate to which the contribution is made and matching of contribution by company itself. The Companys matching contributions to the Savings Plan were $90 million, $72 million and $59 million in 2011, 2010 and 2009, respectively.Difference between returns and contribution planIn contribution the employer put certain strict percentage of employees to the fund and invest it no loss or pip is recognized because its liability is of contributing that amou nt only. However in benefit plan the company promised to pay certain amount to employees due to which it has to recognize gain or losses and liability.5. What are the earnings-per-share amounts disclosed on the income statement for the most recent year? What dilutive securities are discussed in the footnotes? Please recognize and describe other examples of dilutive securities. How do these impact earnings per share? thin out EPSEffect on EPS of DilutiveDilutive EPS is calculated due to the Debt securities company issued to which company offers for spiritual rebirth from debt security to Company shares. If converted, the denominator will increase and hence EPS will decrease. some other types of dilutive sharesThe other types of diluted shares are warrants and share option. Bonus shares may also dilute EPS.6. What kind of share-based wages does the company have? What was the compensation disbursal for the two most recent years? What are the key elements of this plan discussed in the footnotes? Please identify and describe other types of share-based compensation.Share based PaymentsThe Company has two kind of share based compensation adept is that the company receives employees service in exchange of equity instrument, or of recognizing liabilities that are based on the fair protect of the company stock or may be settled through issuing.The elementsThe key element in the foot note is the difference between restricted stock unit and stock option plan. In RSUs the compensation cost is measured by closing fair value of stock at admit date. However in stock option the valuation at give in date is done through Black-Scholes-Merton (BSM) option-pricing model.Other types of compensationThe other types of compensation is that employees to whom compensation is paid is left with the choice whether to take cash settled i.e. by incurring liabilities or by equity settlements.7. Does the company use the direct or indirect cash watercourse presentation mode? What is the difference between these two methods? How does the cash flow statement consort to the other financial statements?APPLE INC. uses indirect method of cash flow. The main difference in direct and indirect method is of operate activities section. In direct method of cash flow there is a sum of all check and deposits in a particular category whereas in indirect method of cash flow we have to make adjustments in order to arrive at loot cash flow from operating activities. Net cash balance calculated in the cash flow statement agrees with cash balance in the balance sheet.8. What investment funds and financial backing activities does the company have? What are some other examples of investing and financial support activities? Company has following investing activitiesPurchases of marketable securities, publication from maturities of marketable securities, Proceeds from bargains agreements of marketable securities, Payments made in connection with business acquisitions, mool ah of cash acquired Payments for acquisition of property, plant and equipment and Payments for acquisition of intangible assets. Other examples of investing activities are purchase/sale of long term investments and purchase/sale of debt or equity securities of other companies.Financing activities of companyProceeds from issuance of common stock, Excess tax benefits from equity awards and Taxes paid related to net share settlement of equity awards. Other examples of financing activities are sale of equity securities, issuance of bonds and notes, dividend paid and redeem long term debt.9. What non-cash proceedings does the company have on its cash flow statement? What are some other examples of non-cash proceedings?Following are the non cash transactions of the company on its cash flow statement$(000) Depreciation, amortization and accumulation 1,814 Share-based compensation expense 1,168 Deferred income tax expense 2,868 Other non cash-transaction examples are provisions, unsucce ssful foreign currency gains/losses and minority interests.ConclusionThis course project shows evidence in Apples strict guidelines and how they run their business. comparability the numbers they have posted on their site Im able to physically see how certain liabilities and Assets are moved and equilibrise in different quarters throughout the year. Seeing this also allows me to get a line on how they operate in a bigger scale from a birds eye view. Since they are such a bouffant company they do not hesitate to report all their taxes and pay the full amount without using shortcuts that most smaller companies are able to get away with.Based on the report from 2011 and 2010 Apple prioritizes their tax expenses with alacrity and with their triple checked system it truly leaves no direction for error in their accounting department. By looking into their books, I can conclude that this company is in strong standing and that they will be around for a long time maybe for another hundr ed years. Most companies dont have that kind of net value since they fall into category of accrued debt paying off an impossible bill of benefits to their employees.Works Citedhttp//investor.apple.com/secfiling.cfm?filingID=1193125-11-282113&CIK=320193 http//investing.money.msn.com/investments/stock-balance-sheet?symbol=AAPL& http//finapps.forbes.com/finapps/jsp/finance/compinfo/IncomeStatement.jsp?tkr=aapl&period=qtr http//finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=aapl