PURPOSE OF ASSIGNMENT
The purpose of this assignment is to apply the concepts of the income statement to calculate year-over-year data and analyze the factors that influence the change. While challenging at times, the calculations portion of this and the next several assignments will enhance your understanding of the concepts and provide a valuable skill that all HR professionals must have in their “toolbox”. In order to remain solvent, every organization must generate revenues that are equal to or greater than their expenses. This foundational equation will enable HR professionals to prioritize their work and design systems that support the organization’s goals.
We will use Apple’s financial data from 2011, 2012, and 2013 because they had a large level of activity within the organization during that time, so there is a good amount of information available on that activity.
ASSIGNMENT INSTRUCTIONS
The assignment this week is to calculate and analyze an Income Statement.
If you have not done the Income Statement exercise in the textbook now would be a good time to do it as it will greatly help you with the assignment. The assignment specifics are similar to the Income Statement exercises for Kimberly-Clark and FedEx) in Appendix B. You should work through the two exercises.
The assignment has two parts. Both parts involve using the Income Statement from Apple. See attachment.
PART ONE
Using the Apple Income Statement, perform the following calculations. Create a table or spreadsheet for your answers. You should include the formulas you use to make your calculations as well as the results.
Percentage change in revenue for 2012 to 2013 and 2011 to 2012 (revenue growth)
Your answer will be two percentages
Gross profit as a percentage of revenue (gross profit margin percentage) for 2011, 2012 and 2013.
Your answer will be three percentages
Operating income as a percent of revenue (operating income margin percentage) for 2011, 2012 and 2013.
Your answer will be three percentages
Note: Be sure of the figures you use for your numerator and denominator. There is a nice reference on page 73 of your textbook (Berman, Karen and Joe Knight. 2008. Financial Intelligence for HR Professionals: What You Really Need to Know about the Numbers. Boston: Harvard Business Press. ISBN-13: 9781422119136)
PART TWO
Based on your results, answer the following question:
1. What trends do you see by looking at the Income Statement itself, the raw numbers and the percent change results? In other words, what is happening at Apple that created the change?
IMPORTANT: You need to show what is causing the numbers to change. Don’t simply say the numbers went up or down. You need to go beyond the numbers and do some analysis. There is a great deal of literature on what was happening at Apple during this period. Remember to cite your sources.
THE PAPER WILL CONTAIN THE FOLLOWING:
1. Calculations. Show formulas and results. Grading will be based on using the correct formula and correct results. You can use a Word table or Excel spreadsheet for your calculations. Remember I MUST see you use the formulas.
2. Analysis. Restate the questions and your responses. Grading will be based on your level of insight. This will require some research. Show at least three external references. There are many articles on Apple so you should not have any problem finding material.
As for your analysis volume, think about two paragraphs per question. This is the minimum.
Your submission should be in MS Word. If you are using Excel for the calculations, you can embed it in the document or create two separate documents.
Grading for this assignment will depend on three things:
1. Using the correct formulas
2. Obtaining the correct results
3. The quality of your analysis. Meaning, did you use three references, and did your analysis provide insights vs. simply repeating the results. I am interested in you learning about what was driving/impacting the financial results.
This pattern will be repeated in the next few weeks, meaning we will be referencing the Apple financials for the Balance Sheet, Cash Flow, and Ratio assignments.
