Appendix B: Statement Of Cash Flows

Statement of Cash Flows In evaluating Appendix B, Table 4, the historical statement of cash flows offered insight into financial performance over the three-year timeframe. Analysis of operating activities revealed the strategy to affect a gain of $6.1 billion in cash flow. Accounting for a large portion of operating activities, variations in cash, cash equivalents, and marketable securities increased 28 percent to gain $13.8 billion in 2015; however, 2016 realized a 14 percent, or $7.7 billion, reduction in net income. Nevertheless, net income produced $45 billion, nearly 70 percent, of operating activities in 2016. Depreciation on capital assets increased $3.3 billion in 2015, yet decreased $752 million in 2016. Apple’s tax strategy

Apple 39.08, Google 61.08, Microsoft 61.58 (Appendix B, Table 5 and 6). The profit margin evaluates profitability ((Revenue - Cost of goods sold) / Cost of goods sold). With 39 percent return on sales ratio, Apple lagged behind Google and Microsoft in converting sales into net income. Return on Assets. Apple 14.20, Google 11.63, Microsoft 8.67 (Appendix B, Table 5 and 6). The return on assets measures net income produced from total assets (Net income / Total assets). Indicating a greater return on assets from 2014-2016, Apple outpaced Google and Microsoft by generating 14 cents for every dollar in assets in 2016. Return on Equity. Apple 35.62, Google 14.01, Microsoft 23.33 (Appendix B, Table 5 and 6). Return on equity evaluates the percentage of income derived from common shareholder investments (Net income / Total equity). With a higher ratio, Apple was more efficient in using shareholder money to generate profits across the

Apple 14, Google 6, Microsoft 5 (Appendix B, Table 5 and 6). The receivable turnover ratio assesses how fast a company collects on outstanding debts from extended credit (Revenue / Accounts receivable). With a much quicker ratio than Google or Microsoft, Apple’s aggressive strategy turned over accounts receivable 14 times per year in 2016. Average Collection Period. Apple 26.67, Google 57.16, Microsoft 78.19 (Appendix B, Table 5 and 6). The average collection period measures the average number of days to collect accounts receivable (Accounts receivable / (Revenue/365)). Correlating to the receivables turnover, Apple had a quicker average collection period that both Google and Microsoft. Inventory Turnover. Apple 61.62, Google 131.11, Microsoft 14.56 (Appendix B, Table 5 and 6). The inventory ratio measures inventory efficiencies (Cost of goods sold / Average inventory). A high ratio suggests a company quickly turns over inventory. Although Apple turned over inventory at half of Google’s pace, Apple managed to outperform