1. What is the amount of Apple’s accounts
receivable as of September 30, 2017?
2. Compute Apple’s accounts receivable turnover as
of September 30, 2017.
3. How long does it take, on average, for
the company to collect receivables for fiscal year ended September
4. Apple’s most liquid assets include (a)
cash and cash equivalents, (b) short-term marketable
securities, (c) accounts receivable, and (d)
inventory. Compute the percentage that these liquid assets (in
total) make up of current liabilities as of September 30, 2017, and
as of September 24, 2016.
5. Did Apple’s liquid assets as a percentage of
current liabilities improve or worsen as of its fiscal 2017
year-end compared to its fiscal 2016 year-end?
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 What is the amount of Apple's accounts receivable as of September 30, 2017? (Enter your answer in millions.) Apple's accounts receivable million Required 1 Required 2 >
DOSLO DESDE Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Compute Apple's accounts receivable turnover as of September 30, 2017. (Round your answer to 1 decimal place.) Apple's accounts receivable turnover times < Required 1 Required 3 >
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 How long does it take, on average, for the company to collect receivables for fiscal year ended September 30, 2017? (Use 365 days per year. Round your answer to 1 decimal place.) Average collection period i days < Required 2 Required 4 >
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Apple's most liquid assets include (a) cash and cash equivalents, (b) short-term marketable securities, (c) accounts receivable, and (d) inventory. Compute the percentage that these liquid assets in total) make up of current liabilities as of September 30, 2017, and as of September 24, 2016. (Round your percentage answers to 1 decimal place.) Liquid assets as a percent of current liabilities ($ millions) September 30, 2017 September 24, 2016 < Required 3 Required 5 >
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Did Apple's liquid assets as a percentage of current liabilities improve or worsen as of its fiscal 2017 year-end compared to its fiscal 2016 year-end? Apple's liquid assets as a percentage of current liabilities < Required 4 Required 5 >
Appendix A Financial Statement Information APPLE September 24, 2016 $ Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) September 30, 2017 ASSETS Current assets Cash and cash equivalents 20,289 Short-term marketable securities 53,892 Accounts receivable, less allowances of $58 and $53, respectively 17,874 Inventories 4,855 Vendor non-trade receivables 17,799 Other current assets 13,936 Total current assets 128,645 Long-term marketable securities 194,714 Property, plant and equipment, net 33,783 Goodwill 5,717 Acquired intangible assets, net 2,298 Other non-current assets 10,162 Total assets $ 375,319 20,484 46,671 15,754 2.132 13,545 8,283 106,869 170,430 27,010 5,414 3,206 8,757 321,686 LIABILITIES AND SHAREHOLDERS' EQUITY $ 49.049 25.744 7,548 11,977 6.496 Current liabilities Accounts payable Accrued expenses Deferred revenue Commercial paper Current portion of long-term debt Total current liabilities Deferred revenue, non-current Long-term debt Other non-current liabilities Total liabilities Commitments and contingencies 37.294 22.027 8,080 8,105 3,500 79,006 2.930 75,427 36,074 193,437 100,814 2,836 97,207 40,415 241,272 Shareholders' equity Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,126,201 and 5,336,166 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive income (loss) Total shareholders' equity Total liabilities and shareholders' equity $ See accompanying Notes to Consolidated Financial Statements. 35,867 98,330 (150) 134,047 375,319 31,251 96,364 634 128,249 321,686
September 26, 2015 233,715 140,089 93,626 Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) Years ended September 30, 2017 September 24, 2016 Net sales 229,234 $ 215,639 Cost of sales 141,048 131,376 Gross margin 88,186 84.263 Operating expenses Research and development 11,581 10,045 Selling, general and administrative 15,261 14,194 Total operating expenses 24,239 Operating income 61,344 60,024 Other income (expense), net 2,745 1,348 Income before provision for income taxes 64,089 61,372 Provision for income taxes 15,738 15,685 Net income $ 48,351 45,687 26,842 8,067 14,329 22,396 71,230 1,285 72.515 19,121 53,394 $ $ $ 9.27 9.21 $ $ 8.35 8.31 $ $ 9.28 9.22 Earnings per share: Basic Diluted Shares used in computing earnings per share: Basic Diluted Cash dividends declared per share 5,217,242 5,251,692 2.40 5,470,820 5,500,281 5,753,421 5,793,069 1.98 2.18 $ See accompanying Notes to Consolidated Financial Statements. September 26, 2015 $ 53,394 (411) 2,905 Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Years ended September 30, 2017 September 24, 2016 Net income 48,351 $ 45,687 Other comprehensive income (loss): Change in foreign currency translation, net of tax effects of $(77), $8 and $201, respectively 224 75 Change in unrealized gains/losses on derivative instruments: Change in fair value of derivatives, net of tax benefit (expense) of $(478). $(7) and S(441), respectively 1,315 Adjustment for net (gains) losses realized and included in net income, net of tax expense (benefit) of $475, $131 and $630, respectively (1,477) (741) Total change in unrealized gains/losses on derivative instruments, net of tax (162) (734) Change in unrealized gains/losses on marketable securities: Change in fair value of marketable securities, net of tax benefit (expense) of $425, 8(863) and $264, respectively (782) 1,582 Adjustment for net (gains) losses realized and included in net income. net of tax expense (benefit) of $35, $(31), and $(32), respectively (64) _ Total change in unrealized gains/losses on marketable securities, net of tax (846) 1,638 Total other comprehensive income (loss) (784) 979 Total comprehensive income 47,567 46,666 (3,497) (592) (483) 56 (424) (1,427) $ See accompanying Notes to Consolidated Financial Statements.
Appendix A Pinancial Statement Information APPLE 53,394 53,394 Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except number of shares which are reflected in thousands) Accumulated Other Common Stock and Comprehensive Total Additional Paid-In Capital Retained Income Shareholders Shares Amount Earnings (Loss) Equity Balances as of September 27, 2014 5,866,161 $ 23,313 $ 87,152 $ 1,082 $ 111,547 Net income Other comprehensive income (loss) (1,427) (1,427) Dividends and dividend equivalents declared (11,627) (11,627) Repurchase of common stock (325,032) (36,026) (36,026) Share-based compensation 3.586 3,586 Common stock issued, net of shares withheld for employee taxes 37,624 (231) (609) (840) Tax benefit from equity awards, including transfer pricing adjustments 748 748 Balances as of September 26, 2015 5,578,753 $ 27,416 $ 92.284 $ (345) $ 119,355 Net income 45,687 45,687 Other comprehensive income (loss) - 979 Dividends and dividend equivalents declared (12.188) (12.188) Repurchase of common stock (279,609) (29,000) (29,000) Share-based compensation 4,262 4,262 Common stock issued, net of shares withheld for employee taxes 37,022 (806) (419) (1,225) Tax benefit from equity awards, including transfer pricing adjustments 379 379 Balances as of September 24, 2016 5,336,166 31,251 $ 96,364 634 $ 128,249 Net income 48,351 48,351 Other comprehensive income (loss) (784) (784) Dividends and dividend equivalents declared (12.803) (12.803) Repurchase of common stock (246,496) (33,001) (33,001) Share-based compensation 4,909 4.909 Common stock issued, net of shares withheld for employee taxes (913) (581) (1,494) Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 30, 2017 5,126,201 $ 35,867 S $ (150) $ 134,047 36,531 620 620 98,330 See accompanying Notes to Consolidated Financial Statements.
September 26, 2015 $ 13,844 53,394 11,257 3,586 1,382 385 417 (238) (3,735) (283) 5,001 1,042 9,058 81,266 Apple Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Years ended September 30, 2017 September 24, 2016 Cash and cash equivalents, beginning of the year $ 20,484 $ 21,120 Operating activities: Net income 48,351 45,687 Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization 10,157 10,505 Share-based compensation expense 4,840 4,210 Deferred income tax expense 5,966 4,938 Other (166) 486 Changes in operating assets and liabilities: Accounts receivable, net (2,093) 527 Inventories (2,723) 217 Vendor non-trade receivables (4,254) (51) Other current and non-current assets (5,318) 1,055 Accounts payable 9,618 1,837 Deferred revenue (626) (1,554) Other current and non-current liabilities (154) (2,033) Cash generated by operating activities 63,598 65,824 Investing activities: Purchases of marketable securities (159,486) (142,428) Proceeds from maturities of marketable securities 31,775 21,258 Proceeds from sales of marketable securities 94,564 90,536 Payments made in connection with business acquisitions, net (329) (297) Payments for acquisition of property, plant and equipment (12,451) (12,734) Payments for acquisition of intangible assets (344) (814) Payments for strategic investments, net (395) (1,388) Other 220 (110) Cash used in investing activities (46,446) (45,977) Financing activities: Proceeds from issuance of common stock 555 495 Excess tax benefits from equity awards 627 407 Payments for taxes related to net share settlement of equity awards (1,874) (1,570) Payments for dividends and dividend equivalents (12,769) (12,150) Repurchases of common stock (32,900) (29,722) Proceeds from issuance of term debt, net 28,662 24,954 Repayments of term debt (3,500) (2,500) Change in commercial paper, net 3,852 (397) Cash used in financing activities (17,347) (20,483) Increase (decrease) in cash and cash equivalents (195) (636) Cash and cash equivalents, end of the year $_ 20,289S _ 20,484 (166,402) 14,538 107,447 (343) (11,247) (241) (26) (56,274) 543 749 (1,499) (11,561) (35,253) 27,114 2,191 (17,716) 7.276 21,120 Supplemental cash flow disclosure: Cash paid for income taxes, net Cash paid for interest $ 11,591 2,092 $ $ 10,444 1,316 $ $ 13,252 514 See accompanying Notes to Consolidated Financial Statements.
APE APPLE INC. SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Basis of Presentation and Preparation In the opinion of the Company's management, the consoli- dated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The Company's fiscal year is the 52 or 53-week period that ends on the last Saturday of September. The Company's fiscal year 2017 included 53 weeks and ended on September 30, 2017. A 14th week was included in the first fiscal quarter of 2017, as is done every five or six years, to realign the Company's fiscal quarters With calendar quarters. The Company's fiscal years 2016 and 2015 ended on September 24, 2016 and September 26, 2015, respectively, and spanned 52 weeks each. Unless otherwise stated, references to particu- lar years, quarters, months and periods refer to the Company's fiscal years ended in September and the associated quarters, months and periods of those fiscal years. Revenue Recognition Net sales consist primarily of revenue from the sale of hard- ware, software, digital content and applications, accesso- ries, and service and support contracts. The Company recognizes revenue when persuasive evidence of an ar- rangement exists, delivery has occurred, the sales price is fixed or determinable and collection is probable. Product is considered delivered to the customer once it has been shipped and title, risk of loss and rewards of ownership have been transferred. For most of the Company's product sales, these criteria are met at the time the product is shipped. For online sales to individuals, for some sales to education customers in the U.S., and for certain other sales, the Company defers revenue until the customer receives the product because the Company retains a portion of the risk of loss on these sales during transit. For payment terms in excess of the Company's standard payment terms, revenue ent terms, revenue is recognized as payments become due unless the Company has positive evidence that the sales price is fixed or deter- minable, such as a successful history of collection, without concession, on comparable arrangements. The Company recognizes revenue from the sale of hardware products, software bundled with hardware that is essential to the functionality of the hardware and third-party digital content sold on the iTunes Store in accordance with general revenue recognition accounting guidance. The Company recognizes revenue in accordance with industry-specific software ac- counting guidance for the following types of sales transac- tions: (i) standalone sales of software products, (ii) sales of software upgrades and (iii) sales of software bundled with hardware not essential to the functionality of the hardware. For the sale of most third-party products, the Company recognizes revenue based on the gross amount billed to cus- tomers because the Company establishes its own pricing for such products, retains related inventory risk for physical products, is the primary obligor to the customer and assumes the credit risk for amounts billed to its customers. For third- party applications sold through the App Store and Mac App Store and certain digital content sold through the iTunes Store, the Company does not determine the selling price of the products and is not the primary obligor to the customer. Therefore, the Company accounts for such sales on a net ba- sis by recognizing in net sales only the commission it retains from each sale. The portion of the gross amount billed to customers that is remitted by the Company to third-party app developers and certain digital content owners is not reflected in the Company's Consolidated Statements of Operations. The Company records deferred revenue when it receives payments in advance of the delivery of products or the perfor- mance of services. This includes amounts that have been de- ferred for unspecified and specified software upgrade rights and non-software services that are attached to hardware and software products. The Company sells gift cards redeemable at its retail and online stores, and also sells gift cards redeem- able on iTunes Store, App Store, Mac App Store, TV App Store and iBooks Store for the purchase of digital content and software. The Company records deferred revenue upon the sale of the card, which is relieved upon redemption of the card by the customer. Revenue from AppleCare service and sup- port contracts is deferred and recognized over the service coverage periods. AppleCare service and support contracts typically include extended phone support, repair services, web-based support resources and diagnostic tools offered un- der the Company's standard limited warranty. The Company records reductions to revenue for esti- mated commitments related to price protection and other customer incentive programs. For transactions involving price protection, the Company recognizes revenue net of the estimated amount to be refunded. For the Company's the esti other customer incentive programs, the estimated cost of these programs is recognized at the later of the date at which the Company has sold the product or the date at which the program is offered. The Company also records reductions to revenue for expected future product returns based on the Company's historical experience. Revenue is recorded net of taxes collected from customers that are re- mitted to governmental authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority. For multi-element arrangements that include hardware products containing software essential to the hardware prod- uct's functionality, undelivered software elements that relate to the hardware product's essential software, and undeliv- ered non-software services, the Company allocates revenue to all deliverables based on their relative selling prices. For sales of qualifying versions of iPhone, iPad, iPod touch, Mac, Apple Watch and Apple TV, the Company has
Earnings Per Share Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted- average number of shares of common stock outstanding during the period increased to include the number of addi- tional shares of common stock that would have been out- standing if the potentially dilutive securities had been issued. indicated it may from time to time provide future unspeci- fied software upgrades to the device's essential software and/or non-software services free of charge. The Company has identified up to three deliverables regularly included in arrangements involving the sale of these devices. The Company allocates revenue between these deliverables us- ing the relative selling price method. Revenue allocated to the delivered hardware and the related essential software is recognized at the time of sale, provided the other conditions for revenue recognition have been met. Revenue allocated to the embedded unspecified software upgrade rights and on-software services is deferred and recognized on a straight-line basis over the estimated period the software upgrades and non-software services are expected to be pro- vided. Cost of sales related to delivered hardware and re- lated essential software, including estimated warranty costs, are recognized at the time of sale. Costs incurred to provide non-software services are recognized as cost of sales as in- curred, and engineering and sales and marketing costs are recognized as operating expenses as incurred. Shipping Costs Amounts billed to customers related to shipping and han- dling are classified as revenue, and the Company's shipping and handling costs are classified as cost of sales. Warranty Costs The Company generally provides for the estimated cost of hardware and software warranties in the period the related revenue is recognized. The Company assesses the adequacy of its accrued warranty liabilities and adjusts the amounts as necessary based on actual experience and changes in fu- ture estimates. Software Development Costs Research and development (R&D") costs are expensed as incurred. Development costs of computer software to be sold, leased, or otherwise marketed are subject to capital- ization beginning when a product's technological feasibility has been established and ending when a product is available for general release to customers. In most instances, the Company's products are released soon after technological feasibility has been established and as a result software de- velopment costs were expensed as incurred. Advertising Costs Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Other Income and Expense $ millions 2017 2016 2015 Interest and dividend income $5,201 $3.999 $2.921 Interest expense (2.323) (1,456) (733) Other expense, net (133) (1,195) (903) Total other income (expense), net $ 2,745 $ 1,348 $1,285 Cash Equivalents and Marketable Securities All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equiva- lents. The Company's marketable debt and equity securities have been classified and accounted for as available-for-sale. Management determines the appropriate classification of its investments at the time of purchase and reevaluates the clas- sifications at each balance sheet date. The Company classi- fies its marketable debt securities as either short-term or long-term based on each instrument's underlying contrac- tual maturity date. Marketable debt securities with maturi- ties of 12 months or less are classified as short-term and marketable debt securities with maturities greater than 12 months are classified as long-term. Marketable equity securities, including mutual funds, are classified as either short-term or long-term based on the nature of each secu- rity and its availability for use in current operations. The Company's marketable debt and equity securities are car- ried at fair value, with unrealized gains and losses, net of taxes, reported as a component of accumulated other com- prehensive income/(loss) ("AOCI") in shareholders' equity, with the exception of unrealized losses believed to be other-than-temporary which are reported in earnings in the current period. The cost of securities sold is based upon the specific identification method. Accounts Receivable (Trade Receivables) The Company has considerable trade receivables outstanding with its third-party cellular network carriers, wholesalers, re- tailers, value-added resellers, small and mid-sized businesses and education, enterprise and government customers. As of September 30, 2017, the Company had two cus- tomers that individually represented 10% or more of total trade receivables, each of which accounted for 10%. As of September 24, 2016, the Company had one customer that represented 10% or more of total trade receivables, which accounted for 10%. The Company's cellular network carri- ers accounted for 59% and 63% of trade receivables as of September 30, 2017 and September 24, 2016, respectively. Allowance for Doubtful Accounts The Company records its allowance for doubtful accounts based upon its assessment of various factors, including
Apple Inc. Notes-continued APP historical experience, age of the accounts receivable bal- ances, credit quality of the Company's customers, current economic conditions and other factors that may affect the customers' abilities to pay. Inventories Inventories are stated at the lower of cost, computed using the first-in, first-out method, and net realizable value. Any adjustments to reduce the cost of inventories to their net real- izable value are recognized in earnings in the current period. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which for buildings is the lesser of 30 years or the remaining life of the underlying building; between one and five years for ma- chinery and equipment, including product tooling and man- ufacturing process equipment, and the shorter of lease term or useful life for leasehold improvements. The Company capitalizes eligible costs to acquire or develop internal-use software that are incurred subsequent to the preliminary project stage. Capitalized costs related to internal-use soft- ware are amortized using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Depreciation and amortization expense on property and equipment was $8.2 billion, $8.3 billion and $9.2 billion during 2017, 2016 and 2015, respectively. The Company does not amortize goodwill and intangi- ble assets with indefinite useful lives, rather, such assets are required to be tested for impairment at least annually or sooner if events or changes in circumstances indicate that the assets may be impaired. The Company performs its goodwill and intangible asset impairment tests in the fourth quarter of each year. The Company did not recognize any impairment charges related to goodwill or indefinite lived impairm intangible assets during 2017, 2016 and 2015. For purposes of testing goodwill for impairment, the Company estab- lished reporting units based on its current reporting struc- ture. Goodwill has been allocated to these reporting units to the extent it relates to each reporting unit. In 2017 and 2016, the Company's goodwill was primarily allocated to the Americas and Europe reporting units. The Company amortizes its intangible assets with defi- nite useful lives over their estimated useful lives and re- Views these assets for impairment. The Company typically amortizes its acquired intangible assets with definite useful lives over periods from three to seven years. Acquired Intangible Assets The Company's acquired intangible assets with definite useful lives primarily consist of patents and licenses. The following table summarizes the components of acquired intangible asset balances as of September 30, 2017. Amortization expense related to acquired intangible assets was $1.2 billion in 2017. Gruss Carrying Accumulated Amount Amortization Net Carrying Amount Property, Pant and Equipment, Net ($ millions) 2017 2016 Land and buildings $ 13,587 $ 10,185 Machinery, equipment and internal-use software 54,210 44,543 Leasehold improvements 7,279 6,517 Gross property, plant and equipment 75,076 61,245 Accumulated depreciation and amortization (41,293) (34,235) Total property, plant and equipment, net $33,783 $ 27,010 $ 7,507 $ (5,309) $ 2,198 $ milions Definite-lived and amortizable acquired intangible assets Indefinite-lived and non-amortizable acquired intangible assets Total acquired intangible assets 100 100 (5,309) $ 2,298 $7,607 $ Long-Lived Assets Including Goodwill and Other Acquired Intangible Assets The Company reviews property, plant and equipment, in- ventory component prepayments and identifiable intangi- bles, excluding goodwill and intangible assets with indefinite useful lives, for impairment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is mea- sured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to gener- ate. If property, plant and equipment, inventory component prepayments and certain identifiable intangibles are consid- ered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair value. Fair Value Measurements The Company applies fair value accounting for all finan- cial assets and liabilities and non-financial assets and li- abilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be re- ceived from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk mea- surements or assumptions that market participants would use to price the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy,
Apple Inc. Notes-continued Dividends The Company declared and paid cash dividends per share during the periods presented as follows: 2017 2016 Dividends Amount Dividends Amount Per Share (in millions) Per Share (in millions) Fourth quarter $ 0.63 $ 3.252 $ 0.57 $ 3,071 Third quarter 0.63 3,281 0.57 3.117 Second quarter 0.57 2.988 0.52 2.879 First quarter 0.57 3,042 0.52 2,898 Total cash dividends declared and paid $ 2.40 $ 12,563 $ 2.18 $ 11.965 Segment Information and Geographic Data which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1-Quoted prices in active markets for identical assets or liabilities. Level 24Observable inputs other than quoted prices in ac- tive markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive mar- kets, or other inputs that are observable or can be corrobo- rated by observable market data for substantially the full term of the assets or liabilities. Level 3—Inputs that are generally unobservable and typically reflect management's estimate of assumptions that market participants would use in pricing the asset or liability. The Company's valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of the Company's debt instruments and all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model-driven val- uations using significant inputs derived from or corrobo- rated by observable market data. In accordance with the fair value accounting require ments, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eli- gible financial instruments. Accrued Warranty and Indemnification The following table shows changes in the Company's ac- crued warranties and related costs for 2017 and 2016: Net sales by product (ml.) iPhone iPad Mac Services Other Products Total net sales 2017 $141,319 19,222 25,850 29.980 12,863 $229,234 2016 $136,700 20,628 22,831 24,348 11.132 $215,639 2015 $155,041 23.227 25,471 19.909 10,067 S233.715 2017 2016 2015 $96,600 $30,684 $ 86,613 $28,172 $ 93.864 $31.186 Reportable segment (mil.) Americas: Net sales Operating income Europe: Net sales Operating income Greater China: Net sales Operating income $54,938 $16,514 $49.952 S 15,348 $50,337 $ 16,527 $44,764 $17,032 $ 48,492 $ 18,835 S58,715 $ 23,002 $ millions 2017 Beginning accrued warranty and related costs $ 3,702 Cost of warranty claims (4,322) Accruals for product warranty 4,454 Ending accrued warranty and related costs $ 3.834 2016 $ 4,780 (4,663) 3,585 $ 3,702 $17,733 $ 8,097 $ 16,928 $ 7.165 $ 15,706 $ 7.617 Net sales Operating income Rest of Asia Pacific: Net sales Operating income $15,199 $5,304 $ 13,654 $4,781 S 15,093 $ 5,518 A reconciliation of the Company's segment operating in- come to the Consolidated Statements of Operations for 2017, 2016 and 2015 is as follows: Term Debt As of September 30, 2017, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $104.0 billion (collectively the "Notes"). The Notes are senior unsecured obligations, and interest is payable in arrears. The Company recognized $2.2 billion, $1.4 billion and $722 million of interest expense on its term debt for 2017, 2016 and 2015, respectively. As of September 30, 2017 and September 24, 2016, the fair value of the Company's Notes, based on Level 2 inputs, was $106.1 billion and $81.7 billion, respectively. 2017 $ 77,631 2016 $74,301 2015 $83,850 $ millions Segment operating income Research and development expense Other corporate expenses, net Total operating income (11,581) (4,706) $ 61,344 (10,045) (4.232) $ 60,024 (8,067) (4,553) $71.230