Question

Target is the publicly traded company I chose. Review its most recent Annual Report.

Use the Income Statement and Balance Sheet to determine the changes in:

assets, liabilities, and equity

total revenue and net income

Briefly describe the change from the current and prior years in each of these key areas and determine if the changes would be positive or negative from an investor / stockholder’s view.

Answer 1

I select Apple Incorporation's statements for the year ended 2016 and will compare it from previous years.

Income Statement- Findings-

Revenues- If we compare Dec.2016 results from dec. 2015, We find that revenues have increased from last year as it was $75872 in 2015 and $78351 in the current year. It shows that company is able to generate more revenues YOY.

Cost of Revenue- Cost has increased as it was $45449 in 2015 but $48175 in current year that may be due to make new product (iPhone) 6 and launching it. Cost has increased from previous year so it is a serious matter to think over.

Gross Profit- Gross profit is $30176 in 2016 as compare to $30423 in 2015. It has come down because of increase in cost.

Net income after tax- It has come down from previous year as it was $18361 in 2015 but in 2016, it is $17891. It may be because of some heavy expenditures like Selling & distribution and income taxes.

Balance Sheet- Findings-

Current Assets- Current assets have increased from previous year as it was $76219 in 2015 and $103332 in 2016. Current assets have increased it means that company is investing into its current assets. It will increase the current ratio of company.

Long term assets- Long term assets are less in numbers as compare to short term assets, it means company does not want to engage so much money into long term assets. There is less change in long term assets from the previous year.

Current Liabilities- Current liabilities have increased from previous year as it was $76092 in 2015 but in 2016, it is $84130 because of increase in Notes payable and Accounts payable.

Total debt- It has increased so much from previous year as it was $62963 in 2015 but in 2016, it is $87549, that is huge, because of company took some long term loan for making new products. High debt will lead to high debt equity ratio that is not good.

Equity section- Common stocks have increased from previous year, it means company issued some new shares to raise money from public. Additional paid in capital is Nil. Retained earnings have decreased little bit from 2015 as it was $101494 in 2015 and $100001 in 2016 that shows, company has retained less profit and has distributed it in the form of dividend.

Conclusion- Overall position is satisfactory but not so good as some elements have increased so much like debt and cost that should be less, reason may be new product launch as iPhone7 was launched in 2016 But on the other hand, revenue and profits have increased.