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Profile - Apple Corporation Consolidated P&L Statement Earnings Per Gross Margin for each of the last three fiscal years are as follows (in millions, except percentages): September 29, 2007 September 30, 2006 September 24, 2005 Net sales . . . . . . . . . . . . . . . . . $24,006 $19,315 $13,931 Cost of sales . . . . . . . . . . . . . . . 15,852 13,717 9,889 Gross margin . . . . . . . . . . . . . $ 8,154 $ 5,598 $ 4,042 Gross margin percentage . . . . . 34.0% 29.0% 29.0% Gross margin percentage of 34.0% in 2007 increased significantly from 29.0% in 2006. The primary drivers of this increase were more favorable costs on certain commodity components, including NAND flash memory and DRAM memory, higher overall revenue that provided for more leverage on fixed production costs and a higher percentage of revenue from the Company’s direct sales channels. Liquidity and Capital Resources Cash, equivalents, investments . $15,386 $10,110 $8,261 Accounts receivable, net . . . . . . . . . $ 1,637 $ 1,252 $ 895 Inventory . . . . . . . . . . . . . . . . . . . . . $ 346 $ 270 $ 165 Working capital . . . . . . . . . . . . . . . . $12,657 $ 8,066 $6,813 Annual operating cash flow . . . . . . . $ 5,470 $ 2,220 $2,535 As of September 29, 2007, the Company had $15.4 billion in cash, cash equivalents, and short-term investments, an increase of $5.3 billion over the same balance at the end of September 30, 2006.