BABF SECOND DISCUSSION POST
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Nov 24, 2024
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Indeed, it is paramount to identify the main sources of finances for an
organization. The Apple Corporation’s most recent annual report can be obtained from
its website, apple.com. It is a comprehensive document, detailing the company’s
financial and operational performance over the previous year. It includes information on
the company’s income and expenses, asset values, and sources of financing. The main
sources of finance for Apple Corporation in 2021 are long-term debt, short-term debt,
and equity. Long-term debt accounted for $110.2 billion, short-term debt accounted for
$9.1 billion and equity accounted for $195.2 billion (Apple.com, 2022). The company’s
equity and debt totals are reported in the annual report.
To calculate the gearing ratio, one must first calculate the total debt of Apple
Corporation. This can be ascertained from the annual report by adding up all the debt
and other financial instruments that the company has taken out (Li et al, 2021). The
gearing ratio can be calculated by dividing total debt (long-term debt plus short-term
debt) by total equity (Jia et al, 2020). This gives a gearing ratio of 0.56 for Apple
Corporation in 2021. Any assumptions or limitations of this calculation include the fact
that it does not take into account any off-balance sheet liabilities, such as any
contingent liabilities, which could potentially affect the gearing ratio.
Discussion Question
What assumptions and limitations should be taken into account when calculating
the gearing ratio for Apple Corporation?
References
Apple.com (2022). Apple’s Financial Statement. New York: Apple press
Li, H., Li, Y., Li, Y., & Liu, X. (2021). Gearing Ratio and Firm Performance: Evidence
from China’s A-Share Market. Sustainability, 12(10), 4145.
Jia, X., Xu, L., & Chen, J. (2020). Gearing ratio and corporate performance: Evidence
from the Shenzhen Stock Exchange. International Journal of Managerial
Finance, 16(3), 439-456.
Millar, G., & McNally, H. (2020). The Impact of Gearing on Firm Performance: Evidence
from the UK Market. Corporate Ownership & Control, 17(4), 244-253.
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payments of $65,000 beginning January 1, 2024.…
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270
520
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340
320
350
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490
335
570
240
360
355
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430
200
680
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380
.....
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365
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*
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Cost of goods sold
Depreciation
Inventories
Administrative expenses
Interest expense
Federal and state taxes*
Accounts payable
Accounts receivable
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Notes payable
Dividends paid
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440
290
400
110
350
330
380
5,500
2,900
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850
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2,000
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340
450
110
370
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3,330
520
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460
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Total Current assets
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$?
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Cost of goods sold
Depreciation
Inventories
Administrative expenses
Interest expense
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Accounts payable
Accounts receivable
Net fixed assetst
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1,800
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490
350
580
240
340
310
430
6,000
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990
400
880
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t
Net fixed assets are fixed assets net of accumulated depreciation since the asset was installed.
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by
510
380
630
240
360
345
460
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2,340
510
400
330
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BINTANG BULAN BERHAD
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Cash
Account Receivable
Inventory
Prepaid expenses
Net buildings and equipment
TOTAL ASSETS
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64,000
Operating profit
Less: Interest
Profit before tax
Less: Tax
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56,000
21,000
2,500,500
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Less: Cost of goods sold
Gross profit
Less: Selling and administrative expenses
Current Ratio
Quick Ratio
Debt Ratio
Time Interest Earned
Accruals
Long-term debt
Bond
Preferred share
Common share
Retained earnings
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STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 2022
INDUSTRY AVERAGE RATIOS
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1.30 times
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Net Profit Margin
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6.5 times
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24,000
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Cost of goods sold
other expenses
INCOME STATEMENT
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Depreciation
Earnings before interest and taxes (EBIT)
Interest expense
Income before tax
Taxes (at 21%)
Net income
Dividends
Assets
cash and marketable securities
Receivables
Inventories
other current assets
BALANCE SHEET
(Figures in $ millions)
Total current assets
Net property, plant, and equipment
other long-term assets
Total assets
Liabilities and shareholders' equity
Payables
short-term debt
other current liabilities
Total current liabilities
Long-term debt and leases
other long-term liabilities
Shareholders' equity
Total liabilities and shareholders' equity
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3,660
4,137
2,278
$ 2,325
645
a. Return on equity (use average balance sheet figures)
b. Return on assets (use average balance sheet figures)
$ 1,680
353
$ 1,327
$ 796
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Depreciation expense
14,100
Other operating expenses
15,700
Loss on sale of investments
1,900
Gain on sale of capital assets
6,200
Sales revenue
99,700
Interest revenue
7,100
Dividend revenue
3,200
Salary expense
24,700
Interest expense
5,200
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Other expenses
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(Figures in $ millions)
Depreciation
Earnings before interest and taxes (EBIT)
Interest expense
Income before tax
Taxes (at 21%)
Net income
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Inventories
Other current assets
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(Figures in $ millions)
Total current assets
Net property, plant, and equipment
Other long-term assets.
Total assets
Liabilities and shareholders' equity
Payables
Short-term debt
Other current liabilities
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4,162
2,668
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718
$1,750
368
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a) Evaluate the company’s latest annual financial statements (balance sheet,
income statement, and cash flow statement) and comment on the company's
financial performance and position. In your response, use the requirements of
IAS 1 as a guide.
b) Identify and discuss key accounting principles and standards applied in the
company’s financial reporting process indicating their reasons for choosing these
and how they were applied. Comment briefly on the appropriateness of the
choices made given the company’s industry, location and type (e.g. MNC,
regional conglomerate, etc.)
c) Critically analyze any significant accounting policies and estimates disclosed in
the notes to the financial statements. In your answer, indicate whether the
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Please use Apple Inc’s complete annual report, including the notes to its financial statements for 2019 and 2018 to answer this case study. Information are available at the company's website. Apple's financial statements contain the following selected accounts, stated in millions of dollars.
Accounts PayableAccounts ReceivableProperty, Plant, and Equipment
Instructions
Cash and Cash Equivalents Research and Development Expense Inventories
a. Answer the following questions.1. What is the increase and decrease side for each account? 2. What is the normal balance for each account?
b. Identify the probable other account in the transaction and the effect on that account when:
1. Accounts Receivable is decreased. 2. Accounts Payable is decreased.3. Inventories are increased.
c. Identify the other account(s) that ordinarily would be involved when: 1. Research and Development Expense is increased.2. Property, Plant, and Equipment is increased.
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Current assets of $293,950
Current liabilities $68,700
Total assets $765,600
Equity $305,890
Required:
The company’s Management Board required you to evaluate two alternative options of debt funding and equity funding for a new project. What is the job are you doing to complete the task? (referring to one out of 3 important questions of corporate finance for your answer)
Calculate non-current assets, non-current liabilities and build a balance sheet for the company?
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- You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company’s interest expense for the year ended December 31, 2024. Your accounting group provided you the following information on the company's debt: Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) On July 1, 2024, Moonlight Bay issued bonds with a face amount of $2,000,000. The bonds mature in 20 years and interest of 9% is payable semiannually on June 30 and December 31. The bonds were issued at a price to yield investors 10%. Moonlight Bay records interest at the effective rate. At December 31, 2023, Moonlight Bay had a 10% installment note payable to Third Mercantile Bank with a balance of $500,000. The annual payment is $60,000, payable each June 30. On January 1, 2024, Moonlight Bay leased a building under a finance lease calling for four annual lease payments of $40,000 beginning January 1, 2024. Moonlight…arrow_forwardYou are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company’s interest expense for the year ended December 31, 2024. Your accounting group provided you the following information on the company's debt: Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) On July 1, 2024, Moonlight Bay issued bonds with a face amount of $2,400,000. The bonds mature in 20 years and interest of 13% is payable semiannually on June 30 and December 31. The bonds were issued at a price to yield investors 14%. Moonlight Bay records interest at the effective rate. At December 31, 2023, Moonlight Bay had a 10% installment note payable to Third Mercantile Bank with a balance of $680,000. The annual payment is $150,000, payable each June 30. On January 1, 2024, Moonlight Bay leased a building under a finance lease calling for four annual lease payments of $75,000 beginning January 1, 2024.…arrow_forwardThe table below contains data on Fincorp Incorporated. The balance sheet items correspond to values at year-end 2021 and 2022, while the income statement items correspond to revenues or expenses during the year ended 2021 and 2022. All values are in thousands of dollars. Revenue Cost of goods sold Depreciation Inventories Administrative expenses Interest expense Federal and state taxes* Accounts payable Accounts receivable. Net fixed assets* Long-term debt Notes payable Dividends paid Cash and marketable securities 2021 $ 4,100 1,700 470 270 520 240 340 320 350 4,800 2,400 687 380 760 Net working capital 2022 $ 4,200 1,800 490 335 570 240 360 355 395 * Taxes are paid in their entirety in the year that the tax obligation is incurred. t Net fixed assets are fixed assets net of accumulated depreciation since the asset was installed. 5,540 2,860 540 380 480 What was the change in net working capital during the year? Note: Enter your answer in thousands of dollars. byarrow_forward
- The table below contains data on Fincorp Incorporated. The balance sheet items correspond to values at year-end 2021 and 2022, while the income statement items correspond to revenues or expenses during the year ended 2021 and 2022. All values are in thousands of dollars. Revenue Cost of goods sold Depreciation Inventories Administrative expenses Interest expense Federal and state taxes* Accounts payable Accounts receivable Net fixed assets* Long-term debt Notes payable Dividends paid Cash and marketable securities 2021 $ 4,300 1,200 Earnings per share 2021 480 400 430 200 680 300 380 ..... 4,000 2,900 875 340 730 2022 $ 4,400 1,300 500 435 2022 480 200 700 * Taxes are paid in their entirety in the year that the tax obligation is incurred. t Net fixed assets are fixed assets net of accumulated depreciation since the asset was installed. 365 420 Suppose that Fincorp has 408,000 shares outstanding. What were earnings per share in 2022? (Round your answers to 2 decimal places.) 4,710 3,230…arrow_forwardhttps://www.republictt.com/pdfs/annual-reports/RFHL-Annual-Report-2022.pdf Financial Reporting Analysis: Use Republic Bank Limited Annual Report 2022 to answer the Questions. a) Evaluate the company’s latest annual financial statements (balance sheet, income statement, and cash flow statement) and comment on the company's financial performance and position. In your response, use the requirements of IAS 1 as a guide. b) Identify and discuss key accounting principles and standards applied in the company’s financial reporting process indicating their reasons for choosing these and how they were applied. Comment briefly on the appropriateness of the choices made given the company’s industry, location and type (e.g. MNC, regional conglomerate, etc.) c) Critically analyze any significant accounting policies and estimates disclosed in the notes to the financial statements. In your answer, indicate whether the company complied with the accounting standards and conventions.arrow_forwardYou are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company’s interest expense for the year ended December 31, 2021. Your accounting group provided you the following information on the company's debt: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) On July 1, 2021, Moonlight Bay issued bonds with a face amount of $2,000,000. The bonds mature in 20 years and interest of 9% is payable semiannually on June 30 and December 31. The bonds were issued at a price to yield investors 10%. Moonlight Bay records interest at the effective rate. At December 31, 2020, Moonlight Bay had a 10% installment note payable to Third Mercantile Bank with a balance of $500,000. The annual payment is $60,000, payable each June 30. On January 1, 2021, Moonlight Bay leased a building under a finance lease calling for four annual lease payments of $40,000 beginning January 1, 2021.…arrow_forward
- You are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company’s interest expense for the year ended December 31, 2021. Your accounting group provided you the following information on the company's debt: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) On July 1, 2021, Moonlight Bay issued bonds with a face amount of $1,600,000. The bonds mature in 10 years and interest of 11% is payable semiannually on June 30 and December 31. The bonds were issued at a price to yield investors 12%. Moonlight Bay records interest at the effective rate. At December 31, 2020, Moonlight Bay had a 10% installment note payable to Third Mercantile Bank with a balance of $630,000. The annual payment is $125,000, payable each June 30. On January 1, 2021, Moonlight Bay leased a building under a finance lease calling for four annual lease payments of $50,000 beginning January 1, 2021.…arrow_forwardYou are the new controller for Moonlight Bay Resorts. The company CFO has asked you to determine the company’s interest expense for the year ended December 31, 2021. Your accounting group provided you the following information on the company's debt: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) On July 1, 2021, Moonlight Bay issued bonds with a face amount of $2,000,000. The bonds mature in 20 years and interest of 11% is payable semiannually on June 30 and December 31. The bonds were issued at a price to yield investors 12%. Moonlight Bay records interest at the effective rate. At December 31, 2020, Moonlight Bay had a 10% installment note payable to Third Mercantile Bank with a balance of $530,000. The annual payment is $75,000, payable each June 30. On January 1, 2021, Moonlight Bay leased a building under a finance lease calling for four annual lease payments of $40,000 beginning January 1, 2021.…arrow_forwardThe table below contains data on Fincorp Incorporated. The balance sheet items correspond to values at year-end 2021 and 2022, while the income statement items correspond to revenues or expenses during the year ending in either 2021 or 2022. All values are in thousands of dollars. * Revenue Cost of goods sold Depreciation Inventories Administrative expenses Interest expense Federal and state taxes* Accounts payable Accounts receivable Net fixed assets Long-term debt Notes payable Dividends paid Cash and marketable securities 2021 $ 4,000 1,900 440 290 400 110 350 330 380 5,500 2,900 821 440 850 Price 2022 $ 4,100 2,000 460 340 450 110 370 405 440 Taxes are paid in their entirety in the year that the tax obligation is incurred. per share 6,340 3,330 520 440 460 t Net fixed assets are fixed assets net of accumulated depreciation since the asset was installed. Suppose that the market value (in thousands of dollars) of Fincorp's fixed assets in 2022 is $6,570 and that the value of its…arrow_forward
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