Financial Accounting 504 Final Project Essay

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Financial Accounting 504 23-Jun-13 Professor Chung Oracle v Microsoft Final Course Project

As noted in Wikipedia Oracle is headquartered in Redwood, California. It was founded in 1977 and is the world's third largest soft wear developer in sales. According to Yahoo Finance Oracle is a multi-faceted operation. Oracle provides a vast amount of services for the internet and computer. It provides cloud applications, IT consulting services, licenses middleware software which includes database and database management. It has 115,000 full time employees and is run by co-founder, CEO Larry Ellison who has been the only CEO of the company since it's inception. Also noted in Wikipedia he is the top paid CEO in the world. In 2013 Oracle
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Times Interest Earned Ratio

Net Income + Int Expense + Tax Expense Interest Expense

$12,219 $808

=

15.1

28,366 295

96.2

Microsoft has a much healthier ratio than Oracle.

Payout ratio

Cash dividend declared on common stock Net income

$1,061 $8,547

=

12.4%

$5,180 $23,150

22.4%

Microsoft has a higher rate of dividend pay outs

Return on Common Stockholders' Equity

Net income - Preferred stock dividend Average common stockholders' equity Oracle Avg SE: 40245 + 31199/2 Microsoft Avg SE: 57083 + 46175/2

8,547 35,722.00

=

23.9%

$23,150 $51,629

44.8%

Microsoft earned more on the dollar of their net income for each dollar of the stockholder's equity.

Free cash flow

Cash provided by operations minus capital expenditures minus cash dividends paid

$9,703

=

$9,703

$19,459

$

Microsoft has a considerable amount more Free cash 19,459 flow than Oracle

Current cash debt coverage ratio

Cash provided by operations Average current liabilities

$11,214 $14,442

=

0.78

$26,994 $27,461

0.98

Microsoft has a better ratio of paying debt within the year.

Cash debt coverage ratio

Cash provided by operations Average total liabilities

$11,214 $31,835

=

0.35

$26,994 $45,780

0.59

Microsoft has a

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