Financial Analysis of Microsoft Corp. Essay

Profitability ratios are used to measure the overall efficiency of thebusiness, as well as management effectiveness. Examples of profitability ratios include the gross margin ratio and the net margin ratios.

Interpretation: 53% of the total assets are financed through debts; the remaining 39% is financed through equity.

The solvency ratio is the ability for a company to repay debts shown in a percentage. The ratio shows if a business can meet goals of a long term loan by calculating the current and long term liabilities divided by net profit after taxes plus depreciation. In years one through four the

Each company must prepare financial statements to provide a comprehensive picture about its past performance and situation for the owners, the managers, the state and other stakeholders as well. In the case of enormous, international public limited companies like Ford and Microsoft these statements and data are public, so anybody can reach them through the internet. Moreover, we can also compute a lot of financial ratios based on these data. If we want to get an authentic frame about the firms, we have to know what these statement and ratios mean. In addition, it’s difficult for the companies that they want to give other picture about their financial status to

Profitability ratios are basically figures to measure if the company is doing well in the terms of profit[13]. ROCE ratio has increased in 2011 but in 2012 it deteriorates by 3%. This fall indicates that company was not successfully getting high returns as a percentage of its resources available, compared to 2011.

Apple, Inc. (formerly known as Apple Computer, Inc.) was incorporated in the State of California in 1977. Apple currently designs, manufactures, and markets a variety of computer and personal electronic products, including Macintosh computers, and the iPod digital music player. AppleÕs key markets are consumers, creative professionals, educational institutions, and business users.

The liquidity ratios assess debt financing. Retaining a larger amount of higher working capital, Google has a greater current ratio that Apple. Similarly, the

The financial analysis expressed in this paper shows a comparison of two large firms in the communication and technology industry. Microsoft and Apple Inc. both deal in telecommunication gadgets and accessories within the United States and around the world. The paper focuses on the financial comparison of the two companies for two fiscal years of the year 2014 and 2015. A close analysis of the financial ratios is employed in bringing up the comparison. These rates are derived from the balance sheet and statement of income of both firms.

Profitability (performance) ratios are used to assess a company’s ability to create equity as compared to its debt and other appropriate expenses created during a particular time frame. A favorable analysis of profitability ratios will reveal that a company’s value is higher than a competitor’s value.

In fiscal year 2015, the Current Ratio was 2.50 compared to their leading competitor Oracle with a 4.13. Meanwhile, the Quick Ratio for both companies saw a decrease, with Microsoft at 2.50 and at Oracle 3.92. This goes to show that the larger the liquidity ratios are, the better the company’s position to meet its immediate financial obligations. Both companies will hope to see the continual improvement in efficiency over the next five years, specifically, with Microsoft using its cash to launch new operating system “Windows 10,”and the laptop, “Surface Book” that was released to the public during the fall of 2015.

Overview Microsoft Corporation (Microsoft) is one of the leading providers of software and storage products and services. The company is engaged in developing, manufacturing, licensing, and supporting software products worldwide. Coupled with these activities Microsoft also offers Project Management consultancy services. As one of the largest technology firms in the world Microsoft is at the cutting edge of new technology development and innovation, and as such both existing and potential shareholders expect a return on their investment. It is therefore important for the firm to make efficient use of the resources at their disposal. The following financial analysis of the Fiscal Years 2008 and 2009 will show that over the period Microsoft

The three statements that were provided in this section provide possible investors, competitors, and even those within the company with useful information to make important decisions that could affect their livelihood or the livelihood of Microsoft. Keep in mind that even though financial statements are a solid indicator of how a company is performing, one key principle about must be known when viewing them to make decisions. They do not always provide all of the information that you may need. There are usually underlying topics that could affect the company that are not necessarily showing up on their financial statements. These topics are discussed in other sections of this report on Microsoft.

Microsoft Corporation started with two close friends who were total computer enthusiasts named Bill Gates and Paul Allen. Despite difficulties accessing computers and other sophisticated technology, they were both computer geeks. In 1970, Gates and Allen started a small firm that specialized in creating small applications for local clients. This company, Traf-O-Data, sold computers to the city of Seattle for counting city traffic. In 1973, Bill Gates left Seattle to study at Harvard University; however, he ultimately dropped out to concentrate on his project with Allen. In 1975, Altair, at the time a famous software company, employed Bill Gates and Paul Allen to write a version of the

During the last few years, Microsoft has had its ups and downs but has managed to do well even during the current state of the economy. Microsoft withstood a two million dollar drop in their revenue going from going from 60 million in 2008 to 58 million at the time of the 2009 report and a similar drop in their operating income. Until 2009 Microsoft had enjoyed a steady increase in their revenue and operating income. The operating income according to Microsoft’s annual report increased on average about two million dollars a year starting in 2005 at a little over 14 million and increasing to 22 million in 2008 and plunged to $20,360,000 in 2009 (Financial Highlights,2009). Revenue had increased as well from 2005 until 2009 with the largest increase from 2007 to 2008 with an almost eight million dollar increase going from $51,122,000 in 2007 to $60,420,000 in 2008. The net income for Microsoft although considerably higher when compared to the 2005 figure of $12,254,000 did drop in 2009 to $14,569,000 that was a three million loss compared to 2008 (Financial Highlights, 2009).

Microsoft became the global leader of software services and internet technologies for the computing industry in the early 90’s. It provides wide range of products & services and is involved in developing manufacturing, licensing and supporting software support. Microsoft’s software product includes operating system, business solution aps, computer and server applications as well as software development tools. Microsoft offers different range of services from its five