B. F URTHER A NALYSIS 1. Using the formula given in the textbook, calculate the
ID: 2492619 • Letter: B
Question
B. FURTHER ANALYSIS
1. Using the formula given in the textbook, calculate the following ratio for the last two years. You will find outstanding shares for multiple years in the stockholders’ equity statement:
Show your computations.
a) Basic Earnings per share:
Annual Report: Current year __________ Last year _________
b) Explain what information this ratio provides. Why do we use it?
c) How do the results for your company compare by year? Explain and give possible reasons for what you’ve found. (at least one paragraph)
C. INFORMATION FOR DECISION MAKING
1. Answer the following questions using the company’s balance sheet in the annual report:
a) In which equity account does the company have the largest dollar amount?
b) In total dollar amounts, are the company’s equity primarily contributed or retained earnings.
Company Data:
2015 Form 10-K: http://investor.apple.com/secfiling.cfm?filingid=1193125-15-356351&cik=320193
Explanation / Answer
a) Basic Earnings per share:
Annual Report: Current year ($53394 / $5793069) x $1000 = $9.28 Last year ($39510 x $6122663) x $1000 = $6.49
b) Explain what information this ratio provides. Why do we use it?
Basic Earning per share gives a rough measurement of the company's profit allocated to one share. Minor shareholder use this to estimate the dividend pay out ratio. It is a simple capital structure.
c) How do the results for your company compare by year? Explain and give possible reasons for what you’ve found.
Results of the company gets compared year by year by using various ratios and percentage such as gross margin, net profit margin, interest coverage ratio. Some people think that Earning per share can also be used to measure performance but it is just used to estimate the dividend amount by small shareholder's. It is not a performance measure tool.
1. Answer the following questions using the company’s balance sheet in the annual report:
a) In which equity account does the company have the largest dollar amount?
Retained Earnings with $92284 millions
b) In total dollar amounts, are the company’s equity primarily contributed or retained earnings
The company's has primarily retained earnings as a company's equity
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