Apple Inc: Analysis of Financial Statement Essay

I chose Apple for my course switch mainly based on the fact that they release all their records to the public and they exact excellent business relationship practices. Their paper work is easy to read and follow and based on their records they have an endless join of revenue in the billions. As we have discussed about Apple in class I was very intrigued how they looked in the books on a specific level of detail and this course project was the perfect personal manner to take initiative to find out just how their numbers actually add up tell the following questions.1. What amount of deferred assessation assets or deferred revenue enhancement liabilities argon on the devil most late years on the balance sheet? What gives rise to these deferred taxes? What information is bring out in the footnotes related to deferred taxes? occupy define a deferred tax asset and deferred tax liability. At year end September 24 2011 the balance sheet shows following amount of deferred tax as sets and liabilitiesDeferred tax asset is arising imputable to deductible maverick differences, tax losses, and tax credits of $3.2Billion and deferred tax liabilities of $9.2Billion. Deferred revenue is recorded when the club receives even outments of their products in advance or for the performance of services. It includes amount for unspecified and specified softw atomic number 18 upgrade rights and non-software services that are attached to the products of the company. It is cave ind in the footnotes that Deferred tax assets and liabilities shows the effects of tax losses, credits, and the next income tax effects of temporary differences between the consolidate financial statement carrying amounts of current assets and liabilities and their respective tax bases and are metrical using en-acted tax range that apply to their taxable income in the years in which these temporary differences are expected to be regain or settled. Footnotes to a fault states that company recor ds a valuation allowance in order to crop the deferred tax asset to the amount it thinks nookienot be realized.Deferred tax assetDeferred tax asset is outlined as reduction in companys future taxes as the company has already paid for these taxes in past. It is corresponding a prepaid tax. It is used 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 will 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 an otherwise(prenominal) examples of temporary and permanent differences?Operating loss to carry forrad /carry forwardThe company had unrecognized tax benefits of 1.4 billionGuidelines for carry forwards and carrybacksTax fair-mindedness allows corporation to carry forward loss up to 20 ye ars 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 persona plan? What are the give away elements of the plan 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 coordinated 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 Benefit and contribution planIn contribution the employer put certain fixed percentage of employees to the fund and invest it no loss or gain is recognized because its liability is of contributing that amount 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 divulge on the income statement for the most recent year? What dilutive securities are discussed in the footnotes? Please identify and separate other examples of dilutive securities. How do these impact earnings per share? Diluted EPSEffect on EPS of DilutiveDilutive EPS is calculated due to the Debt securities company issued to which company offers for conversion from debt security to Company shares. If converted, the denominator will increase and hence EPS will decrease. other types of dilutive sharesThe other types of diluted shares are warrants and share option. Bonus shares whitethorn also dilute EPS.6. What kind of share-based remuneration does the company have? What was the compensation expense for the two most recent years? What are the key elements of this plan discussed in the footnotes? Please identify and descr ibe other types of share-based compensation.Share based PaymentsThe Company has two kind of share based compensation one is that the company receives employees service in exchange of equity instrument, or of recognizing liabilities that are based on the fair value of the company demarcation or may be settled through issuance.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 grant date. However in stock option the valuation at grant 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 property settled i.e. by subject liabilities or by equity settlements.7. Does the company use the direct or corroboratory money decrease presentation method? What is the difference between these two methods? How does the cash campaign statement agree to the other financial statements?APPLE INC. uses indirect method of cash flow. The main difference in direct and indirect method is of operating activities section. In direct method of cash flow there is a mettle 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 terminal cash flow from operating activities. Net cash balance calculated in the cash flow statement agrees with cash balance in the balance sheet.8. What investing and financing activities does the company have? What are some other examples of investing and financing activities? Company has following investing activitiesPurchases of marketable securities, Proceeds from maturities of marketable securities, Proceeds from gross changes of marketable securities, Payments made in connection with business encyclopaedisms, net of cash acquired Payments for acquisition of property, p lant and equipment and Payments for acquisition of intangible assets. Other examples of investing activities are purchase/sale of dogged 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 transactions does the company have on its cash flow statement? What are some other examples of non-cash transactions?Following are the non cash transactions of the company on its cash flow statement$(000) Depreciation, amortization and accretion 1,814 Share-based compensation expense 1,168 Deferred income tax expense 2,868 Other non cash-transaction examples are provisions, unrealized foreign currency gains/losses and minority interests.Con clusionThis course project shows evidence in Apples strict guidelines and how they run their business. canvas the numbers they have posted on their site Im able to physically name how certain liabilities and Assets are moved and balanced in different quarters throughout the year. Seeing this also allows me to understand on how they operate in a bigger scale from a birds eye view. Since they are such a large company they do not hesitate to promulgate all their taxes and pay the full amount without using shortcuts that most smaller companies are able to find away with.Based on the report from 2011 and 2010 Apple prioritizes their tax expenses with alacrity and with their triple checked body it truly leaves no room 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 100 years. Most companies dont have that kind of net value since they fall into c ategory 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? sign=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