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Google Inc.

Consolidated Statements of Income

(in millions, except per share amounts)

Revenues 2012 2013

Google (advertising and other) $ 46,039 $ 55,519

Motorola Mobile (hardware and other) $ 4,136 $ 4,306

Total revenues $ 50,175 $ 59,825

Cost of revenues

Cost of revenues - Google (advertising and other)* $ 17,176 $ 21,993

Cost of revenues - Motorola Mobile (hardware and other)* $ 3,458 $ 3,865

Total cost of revenues $ 20,634 $ 25,858

Gross Profit $ 29,541 $ 33,967

Operating expenses

Research and development $ 6,793 $ 7,952

Sales and marketing $ 6,143 $ 7,253

General and administrative $ 3,845 $ 4,796

Total opearating expenses $ 16,781 $ 20,001

Income from operations $ 12,760 $ 13,96

Interests and other income, net $ 626 $ 530

Income from continuing operations before income taxes $ 13,386 $ 14,496

Income taxes $ 2,598 $ 2,282

Net income $ 10,788 $ 12,214

*Includes stock-based compensation expenses

Requirements:

1. Calculate the $ change and % change from 2012 to 2013. (15 points)

2. Calculate the common size % for each year using total revenues as your base amount (15 points)

3. In what year, was the company able to retain a higher % of gross profit? Why do you think that was the case? (10 points)

4. In what year, was the company able to retain a higher % of net income? Why do you think that is the case? (10 points)

Source: Google's 10K

http://investor.google.com/pdf/20131231_google_10K.pdf

Apple Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except number of shares which are reflected in thousands and per share amount)

September 29, 2012 September 28, 2013

Net sales 156,508 170,910

Cost of sales 87,846 106,606

Gross margin 68,662 64,304

Operating expenses:

Research and development 3,381 4,475

Selling, general and

administrative 10,040 10,830

Total operating expenses 13,421 15,305

Operating income 55,241 48,999

Other income/(expense), net 522 1,156

Income before provision for

income taxes 55,763 50,155

Provision for income taxes 14,030 13,118

Net income 41,733 37,037

Requirements:

1. Calculate the $ change and % change from 2012 to 2013 (15 Points)

2. Calculate the common size % for each year using total revenues as your base amount (15 Points) 3. In what year, was the company able to retain a higher % of gross profit? Why do you think that was the case? (10 Points)

4. In what year, was the company able to retain a higher % of net income? Why do you think that was the case? (10 Points)

Source: Apple's 10K

http://files.shareholder.com/downloads/AAPL/3548470834x0xS1193125-13-416534/320193/filing.pdf

Presented below is Apple's 3 Year Financial Results taken from their 2013 10K (annual report) which can be found on their website under SEC filings and annual reports:

http://investor.apple.com/sec.cfm#filings

All the figures below are presented in millions except for the per share data. So yes, Apple generated $170 billion dollars in net sales in 2013.

2013 2012 2011

Net sales $ 170,910 $ 156,508 $ 108,249

Net income $ 37,037 $ 41,733 $ 25,922

Earnings per share:

Basic $ 40.03 $ 44.64 $ 28.05

Diluted $ 39.75 $ 44.15 $ 27.68

Cash dividends declared per share $ 11.40 $ 2.65 $0

Shares used in computing earnings

per share:

Basic 925,331 934,818 924,258

Diluted 931,662 945,355 936,645

Total cash, cash equivalents and

marketable securities $ 146,761 $ 121,251 $ 81,570

Total assets $ 207,000 $ 176,064 $ 116,371

Long-term debt $ 16,960 $0 $0

Long-term obligations (a) $ 20,208 $ 16,664 $ 10,100

Total liabilities $ 83,451 $ 57,854 $ 39,756

Total shareholders' equity $ 123,549 $ 118,210 $ 76,615

1. Compute the Debt Ratio and the Equity Ratio for all of the years. Explain the ratios. (15 points)

2. Why would a company so cash rich like Apple ($146 billion dollars reported in cash and cash equivalents and marketable securities) take on more long-term debt in 2013? (10 points)

4. Google vs. Apple Competitor Analysis (25 Points)

Requirements:

1. Which company retained a higher % of gross profit in 2013 and why do you think the company was successful in doing that?

2. Which company retained a higher % of net income in 2013 and why do you think the company was successful in doing that?

3. If you had $1 million to invest, which companys stock would you buy and why?

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