Apple's Accounts Receivable, Turnover, and Liquid Assets: A

School: Liberty University - Course: ACCT 211 - Subject: Accounting

Question? 1. What is the amount of Apple's accounts receivable as of September 28, 2019? 2. Compute Apple's accounts receivable turnover as of September 28, 2019. 3. Apple's most liquid assets include (a) cash and cash equivalents, (b) marketable securities (current), (c) accounts receivable, and (d) inventory. Compute the percentage that these liquid assets (in total) make up of current liabilities as of September 28, 2019, and as of September 29, 2018. 4. Did Apple's liquid assets as a percentage of current liabilities improve or worsen as of its fiscal 2019 year-end compared to its fiscal 2018 year-end? Answer: 1). Apple's account receivable as of September 28, 2019 is $22,926 million 2). Accounts Receivable Turnover is computed as follows: Accounts Receivable Turnover = Net Sales / Average Accounts Receivable Where: Apple's net sales for the fiscal year ended September 28, 2019 was $260,174 million Average accounts receivable = (beginning accounts receivable + ending accounts receivable)/2 = (23,186 + 22,926) / 2 = 46,112 / 2 = 23,056 Hence, Accounts Receivable Turnover = Net Sales / Average Accounts Receivable = 260,174 / 23,056 = 11.28 3). Apple's total liquid assets is $127,589 million and $93,443 million as of September 28, 2019 and 2018, respectively in millions September 28, September 28, 2019 2018 Cash and Cash Equivalents 48,844 25,913 Marketable Securities (current) 51,713 40,388 Accounts Receivable 22,926 23,186 Inventory 4,106 3,956 Total Liquid Assets 127,589 93,443 Apple's total current liabilities is $105,718 million and $115,929 million as of September 28, 2019 and 2018, respectively LIABILITIES AND SHAREHOLDERS' EQUITY:

Current liabilities: Accounts payable $46,236 55,888 Other current liabilities 37,720 33,327 Deferred revenue 5,522 5,966 Commercial paper 5,980 11,964 Term debt 10,260 8,784 Total current liabilities 105,718 115,929 Hence, Liquid Assets to Current Liabilities: September 28, 2019 = Total Liquid Assets / Current Liabilities *100 = 127,589 / 105,718 *100 = 121% September 28, 2018 = Total Liquid Assets / Current Liabilities *100 = 93,443 / 115,929 *100 = 81% 4). Comparison of Apple's Liquid Assets to Current Liabilities in 2019 and 2018 Apple's liquid assets as a percentage of current liabilities improved as of its fiscal 2019 year-end compared to its fiscal 2018 year-end. As of September 28, 2019, Apple's liquid assets as a percentage of current liabilities is 121% compared to 81% as of September 28, 2018. This means that as of September 28, 2019, Apple has more liquid assets to pay its current liabilities. A higher ratio means that Apple has a higher margin to meet its current liabilities as they fall due. This is a good indicator of the financial health of the business