Solution to BTN chapter 2-7thEdition

Solution to BTN chapter 2-7thEdition - Reporting in Action...

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Reporting in Action — BTN 2-1 1. Apple reports ($ millions): $57,854 in liabilities at September 29, 2012. $39,756 in liabilities at September 24, 2011. 2. Apple reports ($ millions): $176,064 in assets atSeptember 29, 2012. $116,371 in assets at September 24, 2011. 3. ($ millions): As of September 29, 2012 Debt Ratio = $57,854/$176,064 = 32.9% As of September 24, 2011 Debt Ratio = $39,756/$116,371 = 34.2% 4. Apple employed less financial leverage as of September 29, 2012, when 32.9% of its assets were financed by debt, relative to September 24, 2011, when 34.2% of its assets were financed by debt. Consequently, its financing structure was a bit less risky in it’s fiscal 2012 in comparison to it’s fiscal 2011. 5. Solution depends on the financial statements accessed. Comparative Analysis — BTN 2-2 1. Apple ($ millions) Current year debt ratio: $57,854/$176,064 = 32.9% Prior year debt ratio: $39,756/$116,371 = 34.2% 2. Google ($ millions) Current year debt ratio: $22,083 / $93,798 = 23.5% Prior year debt ratio: $14,429 / $72,574 = 19.9% 3. Apple has the higher degree of financial leverage. Apple’s debt ratio is markedly higher for the current year than that of Google (32.9% vs.
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