Apple Incorporated – Essay

Balance Sheet & Market Value of the Companies Liabilites and Equities

APPLE INCORPORATED (AAPL.O)
The Balance Sheet and Market Value of Apple Incorpoarated Company`s Liabilities and Equity
Refer to your company`s most recent balance sheet. Review the `liabilities and equity side` of the balance sheet.
(a) Short term debt
Find out from the balance sheet of the company the total of the short term debt. You may assume that the market value of the short term debt is equal to the balance sheet or the `book value` of the short term debt.
(b) Long term debt
Perform a search on the Internet in order to find whether the bonds that you company has issued are traded. If they do, examine the current market price of the bonds and yield to maturity on your company`s bonds. If the long term debt of the company is not traded, refer to the yield to maturity on similar corporate bonds and assume that the yield to maturity on your company`s bonds is similar to the yield to maturity on these bonds.
Once you have obtained information on the yield to maturity on your company`s bonds (the yield to maturity on only one of the bonds your company has issued is sufficient for the present Project), compute the present value of a $1,000 face value bond that promises to pay the same coupon payments of one of the bonds issued by your company. Use the concepts of present value computations learned in the previous Module for this calculation.
Once you computed the price of such a bond, perform the following adjustment to the outstanding long term debt of your company: multiply the total amount of long term debt issued by your company as per the most recent balance sheet by the ratio between the price of this bond and $1,000. That is, if you found that the present value of that bond is $990, then multiply the total amount of the outstanding long term bond of your company by (990/1000). If you found that the value of the bond is $1,017 then multiply the total amount of the outstanding long term bonds of your company by (1017/1000). The result will be an estimate of your company`s `market value of the long term bond`.
(c) Equity
The market value of equity is by definition equal to the number of shares outstanding times the market price per share. Find out the number of shares outstanding and the recent price per share. Then multiply one by the other in order to find the market value of equity of your company.
(d) The Market Value of the Enterprise
Now prepare a short table that contains the following:
Company name:………………………
Source of Funds Balance sheet value as of … Market Value as of … Short term debt
Long term debt
Equity
Total
Examine and write a two to three page report on the results of your computations. Consider in particular the debt ratio of your company and the debt to equity ratio, based on balance sheet values and based on `market values`.

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