Apple (NASDAQ:AAPL) is scheduled to report earnings for the crucially important December-ended quarter on Tuesday, Jan. 27 after the market close. Earnings reports from Apple are major events attracting a lot of attention from the media and producing big market reactions across the board, so investors need to know ahead of time what might be in the cards when the news hits the wires. Let´s take a look at the coming earnings release from Apple and the most important aspects to watch.

All eyes will be on the iPhone

The December-ended quarter, which is the first quarter of fiscal year 2015 for Apple, is a particularly important period for the company, as the holiday season is a big contributor in terms of overall annual sales and profits.

In addition, the new iPhone 6 and iPhone 6 Plus models were only available for sale toward the end of the September-ended quarter, so the December period will be key when it comes to evaluating demand for the company's latest smartphone devices. The iPhone brings in more than half of Apple´s sales, so all eyes will be focused on this product.

During the previous quarter, Apple reported a year-over-year increase of 16% in iPhone unit sales, reaching 39.27 million devices. Wall Street analysts are generally optimistic regarding demand for Apple's main product, and they expect accelerating growth in the coming release. According to Forbes, the average forecast is 66.5 million iPhone units, representing a whopping increase of 30.4% versus the same quarter in the prior year.

iPhone sales are hard to predict with precision, since they depend not only on customer demand, but also on factors such as availability in different markets, inventories, and other supply chain considerations. For this reason, there is a considerable degree of variability when it comes to iPhone sales forecasts, the lowest estimate is at 61 million units, while the most optimistic one is expecting 71.5 million devices sold during the quarter.

Keeping this in mind, investors may want to look beyond the main headline numbers, focusing on the underlying demand trends and what they mean for Apple going forward. If sales are below expectations because of supply constraints, this should not be a reason for despair, as the company should be able to overcome this limitation over time.

Watching the cash flows

Apple is a cash-flow-generating machine, the company produced more than $50 billion in free cash flows through the year ended in September. Management allocated $45 billion to share buybacks and more than $11 billion to dividends during the year, so cash flow distributions are a major return driver for investors in Apple stock.

For this reason, investors may want to keep a close eye on Apple's cash flows. Not only how much money the company brings in, but also how management is allocating those financial resources. Apple raised dividends by 8% in April of last year, so the company will most likely announce a new dividend hike when it reports earnings for the March quarter.

Rising expectations

Apple delivered better-than-expected sales and earnings during the last quarter, and Wall Street analysts are noticing vigorous sales trends in recent weeks, so expectations are quite high leading to Apple´s coming release.

Wall Street analysts are on average expecting $67.3 billion in sales, a 17% increase versus $57.6 billion in revenues during the December-ended quarter in 2013. The figure is above Apple´s own guidance, and management is expecting sales in the range of $63.5 billion-$66.5 billion during the period.

Earnings per share are forecast to come in at $2.59, a big year-over-year increase of more than 25%. Importantly, earnings forecasts are on the rise leading to the report. There have been nine upward revisions and no downward adjustments to forecasts in the last month. Pointing in the same direction, the average earnings estimate has risen 4% in the last 90 days.

Rising earnings forecasts are reflecting encouraging signs regarding demand and product availability, which is obviously a big positive for investors in Apple stock. On the other hand, the bar is getting higher, so Apple will need to deliver a broadly solid quarter in order to satisfy these demanding expectations.

Editor's note: This story has been updated to clarify when Apple seems likely to announce a dividend increase.