Basic Questions & Answers about

Balance Sheet
Apple Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, expect number of shares which are reflected in thousands and par value)
September 26, September 28,
ASSETS 2020 2019
Current assets:
Cash and cash equivalents $ 38,016 $ 48,844
Marketable securities 52,927 51,713
Accounts receivable, net 16,120 22,926
Inventories 4,061 4,106
Vendor non-trade receivables 21,325 22,878
Other current assets 11,264 12,352
Total current assets 143,713 162,819
Non-current assets!
Marketable securi�es 100,887 105,341
Property, plant and equipment, net 36,766 37,378
Other non-current assets 42,522 32,978
Total non-current assets 180.175 175,697
Total assets $ 323,888 $ 338.516
LIABILITIES AND SHAREHOLDERS EQUITY:
Current liabilities:
Accounts payable $ 42,296 $ 46,236
Other current liabilities 42,684 37,720
Deferred revenue 6,643 5,522
Commercial paper 4,996 5,980
Term debt 8,773 10,260
Total current liabilities 105,392 105,718
Non-current liabilities:
Term debt 98,667 91,807
Other non-current liabilities 54,490 50,503
Total non-current liabilities 153,157 142,310
Total liabilities 258,549 248.028
Commitments and contingencies
Shareholders' equity:
Common stock and additional paid-in capital, S0.00001 par value:
50,400,000 shares authorized; 16,976,763 and 17,772,945 shares
issued and outstanding, respectively 50,779 45,174
Retained earnings 14,966 45,898
Accumulated other comprehensive income/(loss) (406) (584)
Total shareholders' equity 65.339 90,488
Total liabilities and shareholders' equity $ 323,888 $ 338,516

See accompanying Notes to Consolidated Financial Statements.

Apple Inc. | 2020 From 10-k
1
What is a balance sheet?
A balance sheet is a financial statement that shows a company's assets, liabili�es, and equity at a
specific point in �me.

What is an asset?
An asset is something a company owns or controls that has the poten�al to provide future economic
benefits. Examples include cash, accounts receivable, and property, plant, and equipment.

What is a liability?
A liability is an obliga�on a company owes to others, such as a debt to a creditor. Examples include
accounts payable, loans, and bonds.

What is equity?
Equity represents the residual interest in the assets of a company a�er liabili�es are deducted. It
includes things like common stock, retained earnings, and other comprehensive income.

What is the formula for the balance sheet?

The formula for the balance sheet is: Assets = Liabili�es + Equity.

What is the purpose of a balance sheet?

The purpose of a balance sheet is to provide informa�on about a company's financial posi�on at a
specific point in �me, including its assets, liabili�es, and equity.

What are some limita�ons of the balance sheet?

Some limita�ons of the balance sheet include the fact that it only provides informa�on at a single
point in �me, it does not reflect the market value of assets or liabili�es, and it relies on es�mates and
judgments.

What is working capital?

Working capital is a measure of a company's short-term liquidity and is calculated by subtrac�ng
current liabili�es from current assets.

What is the debt-to-equity ra�o?

The debt-to-equity ra�o is a financial ra�o that measures the propor�on of debt and equity a
company is using to finance its opera�ons. It is calculated by dividing total debt by total equity.

What is goodwill?
Goodwill is an intangible asset that represents the excess of the purchase price over the fair value of
the net assets acquired in a business combina�on.

What is deprecia�on?
Deprecia�on is the systema�c alloca�on of the cost of a tangible asset over its useful life.

What is a con�ngent liability?

A con�ngent liability is a poten�al obliga�on that may arise in the future, depending on the outcome
of a future event. Examples include lawsuits and warran�es.

2
How are assets typically listed on a balance sheet?
Assets are typically listed in order of their liquidity, or how quickly they can be converted into cash.
Current assets, or those expected to be used or converted into cash within one year, are listed first,
followed by long-term assets.

How are liabili�es typically listed on a balance sheet?

Liabili�es are typically listed in order of their maturity, or how soon they need to be paid off. Current
liabili�es, or those expected to be paid within one year, are listed first, followed by long-term
liabili�es.

What is retained earnings?

Retained earnings are a por�on of a company's profits that are kept in the company rather than paid
out as dividends. They represent accumulated earnings that have not been distributed to
shareholders.

What is a capital lease?

A capital lease is a lease that is treated like a purchase of an asset on the balance sheet. The leased
asset is recorded as an asset and the lease payments are recorded as a liability.

What is a contra account?

A contra account is an account that offsets the balance of another account. For example,
accumulated deprecia�on is a contra account that offsets the balance of the asset account it relates
to.

What is book value?

Book value is the value of a company's assets, liabili�es, and equity as reported on the balance sheet.
It represents the historical cost of the assets, adjusted for deprecia�on and amor�za�on.

What is a liquidity ra�o?

Liquidity ra�o is a financial ra�o that measures a company's ability to meet its short-term obliga�ons.
Examples include the current ra�o and the quick ra�o.

What is the difference between a balance sheet and an income statement?

A balance sheet shows a company's financial posi�on at a specific point in �me, while an income
statement shows a company's financial performance over a period. The income statement shows
revenues, expenses, and net income or loss, while the balance sheet shows assets, liabili�es, and
equity.

What is the difference between gross and net income?

Gross income is the total amount of income before any deduc�ons or taxes are taken out. Net income
is the amount of income a�er deduc�ons and taxes are taken out.

What is a non-current asset?

A non-current asset is an asset that is expected to provide economic benefits for more than one year.
Examples include property, plant, and equipment, long-term investments, and intangible assets.

3
What is a current liability?
A current liability is a liability that is expected to be paid within one year. Examples include accounts
payable, salaries and wages payable, and short-term loans.

What is a long-term liability?

A long-term liability is a liability that is not expected to be paid within one year. Examples include
long-term loans, bonds payable, and deferred tax liabili�es.

What is the debt-to-asset ra�o?

The debt-to-asset ra�o is a financial ra�o that measures the propor�on of a company's assets that
are financed by debt. It is calculated by dividing total debt by total assets.

What is the acid-test ra�o?

The acid-test ra�o, also known as the quick ra�o, is a liquidity ra�o that measures a company's ability
to pay off its current liabili�es using its most liquid assets. It is calculated by dividing current assets
minus inventory by current liabili�es.

What is a minority interest?

A minority interest is an ownership stake in a subsidiary that is less than 50%. It is typically reported
as a component of equity on the balance sheet.

What is a con�ngent asset?

A con�ngent asset is a poten�al asset that may arise in the future, depending on the outcome of a
future event. Examples include poten�al legal se�lements or insurance claims.

What is the difference between a tangible and an intangible asset?

A tangible asset is a physical asset that can be seen or touched, such as property, plant, and
equipment. An intangible asset is an asset that does not have a physical form, such as patents,
trademarks, and goodwill.

What is the difference between a secured and an unsecured liability?

A secured liability is a liability that is backed by collateral, such as a mortgage or a car loan. An
unsecured liability is a liability that is not backed by collateral, such as credit card debt or personal
loans.

What is working capital?

Working capital is the difference between a company's current assets and current liabili�es. It
represents the amount of capital that a company has available to fund its day-to-day opera�ons.

What is a deferred tax liability?

A deferred tax liability is a liability that arises because of temporary differences between the
accoun�ng treatment of certain items and their tax treatment. For example, a company may have
higher deprecia�on expense for tax purposes than for accoun�ng purposes, which can create a
deferred tax liability.

4
What is a con�ngent liability?
A con�ngent liability is a poten�al liability that may arise in the future, depending on the outcome
of a future event. Examples include poten�al legal claims or warran�es.

What is equity?
Equity represents the residual interest in the assets of a company a�er deduc�ng its liabili�es. It
represents the ownership interest of shareholders in a company.

What is a treasury stock?

Treasury stock is stock that has been repurchased by the company and is being held in the company's
treasury. It is not considered to be outstanding stock and does not receive dividends or vo�ng rights.

What is a prepaid expense?

A prepaid expense is an expense that has been paid in advance and will be used in a future period.
Examples include prepaid insurance or prepaid rent.

What is goodwill?
Goodwill is an intangible asset that represents the excess of the purchase price of a company over
the fair market value of its iden�fiable net assets. It reflects the value of a company's reputa�on,
brand, and customer base.

What is the difference between par value and market value?

Par value is the face value of a share of stock, which is typically set at a low amount when the compa-
ny is incorporated. Market value is the current market price of a share of stock, which is determined
by supply and demand.

What is a con�ngent asset?

A con�ngent asset is a poten�al asset that may arise in the future, depending on the outcome of a
future event. Examples include poten�al legal se�lements or insurance claims.

What is a stock dividend?

A stock dividend is a dividend paid in the form of addi�onal shares of stock, rather than cash. It
increases the number of shares outstanding but does not affect the total value of the company.

What is the difference between common and preferred stock?

Common stock represents ownership in a company and typically en�tles the shareholder to vote at
shareholder mee�ngs and receive dividends. Preferred stock has a priority claim on dividends and
assets over common stock but usually does not have vo�ng rights.

What is a current ra�o?

The current ra�o is a financial ra�o that measures a company's ability to pay off its current liabili�es
using its current assets. It is calculated by dividing current assets by current liabili�es.

What is a return on equity?

Return on equity is a financial ra�o that measures the amount of net income earned by a company
rela�ve to its equity. It is calculated by dividing net income by equity.

5
What is a net book value?
Net book value is the value of an asset on the balance sheet a�er deduc�ng accumulated
deprecia�on. It represents the es�mated value of the asset based on its current condi�on and
expected remaining useful life.

What is the difference between current and non-current por�ons of long-term debt?
Long-term debt is divided into current and non-current por�ons based on when the debt is due. The
current por�on is the amount of the debt that is due within the next year, while the non-current
por�on is the amount that is due beyond the next year.

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