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FINANCIAL REPORTING
WHAT THE COMPANY REPORTED (EXCERPT)
Apple Reports Second Quarter Results
Record March Quarter Sales of iPhones, iPads and Macs
Net Profit Increases 94% Year-over-Year
CUPERTINO, CaliforniaApril 24, 2012Apple today announced financial results for
its fiscal 2012 second quarter ended March 31, 2012. The Company posted quarterly
revenue of $39.2 billion and quarterly net profit of $11.6 billion, or $12.30 per diluted
share. These results compare to revenue of $24.7 billion and net profit of $6.0 billion, or
$6.40 per diluted share, in the year-ago quarter. Gross margin was 47.4 percent compared to
41.4 percent in the year-ago quarter. International sales accounted for 64 percent of the
quarters revenue.
FINANCIAL ANALYSIS
ANALYSTS RESPONSE (EXCERPT)
On April 24, 2012, Apple (AAPL) reported results that blew
past everyone's expectations, including our expectations.
Apple reported quarterly revenue of $39.2B and quarterly
profit of $11.6B, or $12.30 EPS. This surpassed the $10.07
consensus estimates from the analyst community. Apple
saw growth due to strong sales growth from all of its
product lines. Revenue enjoyed a mammoth 59% increase
versus Q2 2011 and EPS grew by over 92%. EPS Growth
was also aided by a higher gross margin, which was aided
by lower commodity input costs associated with Apple's
products.
Saibus Research , Seeking Alpha (25 April 2012)
FINANCIAL STATEMENTS
Statement of Financial Position
Statement of Comprehensive Income
Statement of Changes in Equity
Statement of Cash Flows
Notes
FINANCIAL STATEMENTS
STATEMENT OF FINANCIAL POSITION
Statement of Financial Position (the Balance Sheet)
Assets = Liabilities + Owners equity
FINANCIAL STATEMENTS:
STATEMENT OF COMPREHENSIVE INCOME
Also known as the income statement, statement of earnings, or profit
and loss statement
Comprehensive income: All items that affect owners equity but are not
the result of transactions with shareholders
Comprehensive income = Net income + Other comprehensive income
Presentation permitted
Single statement of comprehensive income
Two consecutive statements
Net Income = Income Expenses
Period of time
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FINANCIAL STATEMENTS:
STATEMENT OF CHANGES IN EQUITY
Also known as statement of changes in owners equity or
statement of shareholders equity
Period of time
Beginning equity + Changes in equity = Ending equity
Basic components of owners equity are paid-in capital and
retained earnings.
Beginning common stock + Issuances Repurchases =
Ending common stock
Beginning retained earnings + Net Income Dividends =
Ending retained earnings
Beginning AOCI + OCI = Ending AOCI
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FINANCIAL STATEMENTS
STATEMENT OF CASH FLOWS
Period of time
Beginning Cash + Changes in cash = Ending cash
Changes in cash from
Operating
Investing
Financing
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Portions omitted
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ACCOMPANYING NOTES
The notes (also sometimes referred to as footnotes) that accompany
the four financial statements are required and form an integral part of
the statements.
Notes include information on
- Significant accounting choices (policies, methods, and estimates).
- Explanatory detail about line items on the face of the financial
statements.
- Other disclosures, such as commitments and contingencies.
Based on notes disclosures, analysts can understand whether
accounting choices are similar for the companies being compared. If
the policies differ, an analyst can often make necessary adjustments so
that the financial statement data used are more comparable.
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EXAMPLE OF DISCLOSURE OF
ACCOUNTING PRINCIPLES IN NOTES
Property, plant, and equipment Property, plant, and equipment are valued at
historical cost, less the accumulated depreciation. The assets are depreciated using the
straight-line method over the period of their expected useful economic life.
Historical cost includes all costs associated with the acquisition. Subsequent costs
increasing the value of an asset are, depending on the case, either recorded in the book
value of the asset or as a separate asset, to the extent that it can be assumed that it is
likely that the Group will benefit from it in the future and that its costs can be calculated
in a reliable manner. All other repair or maintenance costs are reflected in the income
statement in the year of their occurrence.
Land is not depreciated. Depreciation on other assets is calculated using the
straight-line method to write down their cost to their residual values. The following
useful lives have been applied:
Buildings (incl. installations): 5 40 years
Machinery: 10 15 years
Other fixed assets: 3 8 years
Profits and losses from disposals are recorded in the income statement.
Excerpt from Lindt & Sprngli Group, Annual Report (2011)
Copyright 2013 CFA Institute
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Net sales increased 7.2% in 2011 compared with 2010 due to net price
realization and sales volume increases in the U.S. and for our international
businesses. Net price realization contributed approximately 3.5% to the net sales
increase primarily due to the impact of list price increases, offset somewhat by
higher promotional rates. Sales volume increased net sales by approximately
3.4% due primarily to sales of new products in the U.S. The favorable impact of
foreign currency exchange rates increased net sales by approximately 0.3%.
Excerpt from Hersheys MD&A, Annual Report (2011)
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AUDITORS REPORTS
Financial statements presented in companies annual reports are
generally required to be audited (examined) by an independent
accounting firm in accordance with specified auditing standards.
An audit report is a written opinion on the financial statements
prepared by the independent auditor.
Objectives of the independent auditor in conducting an audit:
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FOLLOW-UP
If an equity investment is made or a credit rating is
assigned, periodic review is required to determine whether
the original conclusions and recommendations are still
valid.
Follow-up may involve repeating all the previous steps in
the process on a periodic basis.
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SUMMARY
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