Question

Explain the difference between financial reporting and financial statements. Review Apple’s Consolidated Balance Sheet for 2015 and 2016. (The can be found at: http://investor.apple.com/) Calculate Apple’s current ratio for the most recent two years. Pick any other ratio discussed in the chapters and calculate and explain that. What do the ratios tell you about Apple? Explain the three factors that would influence your evaluation as to whether Apple’s current ratio for 2015 and 2016 is good or bad.

Answer 1

Financial statements are the product of the financial reporting and are more formal nad sytematically defined in the approach. Financial reporting whereas describes the financial status and activities undertaken by the company during the year abounding various laws and frameworks.

Current Ratio for 2016 and 2017 has been 1.35 and 1.28 respectively where Quick Ratio was 1.22 and 1.09 for 2016 and 2017. These ratio indicate the company have enough current assets in hand to pay their current liabilities.

Three factors would be:

• Comparison with industry average
• Comparison with past year's ratio
• Whether the assets and liabilities in CA and CL were interest bearing. Interest bearing current assets will give good influence like notes receivables.