University of Denver Income Statement Analysis

The assignment this week is to calculate and analyze an Income Statement.

If you have not done the Income Statement exercise in the textbook now would be a good time to do it as it will greatly help you with the assignment. The assignment specifics are similar to the recommended Income Statement exercises for Kimberly-Clark and FedEx in Appendix B.

The assignment has two parts, both use the Income Statement from Apple. See attachment.

Apple+Financials.pdf Download Apple+Financials.pdf

Part one. Using the Apple Income Statement, perform the following calculations. Create a table or spreadsheet for your answers that will show the formulas used in the calculations as well as the results.

Percentage change in revenue for 2012 to 2013 and 2011 to 2012 (revenue growth)

Your answer will be two percentages

Gross profit as a percentage of revenue (gross profit margin percentage) for 2011, 2012 and 2013.

Your answer will be three percentages

Operating income as a percent of revenue (operating income margin percentage) for 2011, 2012 and 2013.

Your answer will be three percentages

Note: Be sure of the figures you use for your numerator and denominator. There is a nice reference on pages 73-75 of your textbook.

Part two.

Based on your results, answer the following question:

1. What trends do you see by looking at the Income Statement itself, the raw numbers and the percent change results? In other words, what is happening at Apple that created the change?

IMPORTANT: Explain what is causing the numbers to change, not just when increasing / decreasing. Go beyond the numbers with some analysis. There is a great deal of literature on what was happening at Apple during this period. Remember to cite your sources.

The paper should contain the following:

1. Calculations, show formulas and results. Grading will be based on using the correct formula (show all formulas) and correct results. You can use a Word table or Excel spreadsheet for your calculations.

2. Analysis. Restate the questions and your responses. Grading will be based on your level of insight. This will require some research with at least three external references. There are many articles on Apple so you should not have any problem finding material.

The minimum analysis per question is two paragraphs.

Submissions should be in MS Word. If using an Excel worksheet for the calculations, embed in the document or create two separate documents.

Grading for this assignment will depend on three things:

1. Using the correct formulas

2. Obtaining the correct results

3. The quality of your analysis. Meaning, did you use two references and did your analysis provide insights vs. simply repeating the results. What was learned about what was driving/impacting the financial results.

This pattern will be repeated in the next few weeks, meaning we will be referencing the Apple financials for the Balance Sheet, Cash Flow and Ratio assignments.