...Microsoft Financial Statement Analysis Written by: William Panagos Table of Contents Introduction 3 Deferred Taxes 4 Temporary/Permanent Differences 5 Tax Provisions 5 Defined Retirement Plans 6 EPS (Earnings per Share) 6 Share-Based Compensation…………………………………………………………………………………………………………………….7 Cash Flow………………………………………………………………………………………………………………………………………………..7 Investing and Financing ………………………………………………………………………………………………………………………..7 Non-Cash Transaction………….………………………………………………………………………………………………………………..8 Conclusion …………………………………………………………………………………………………………………………………………………………….9 Introduction The following report will be a financial report analysis of Microsoft Corporation. Microsoft’s fiscal year ends on June 30th of every year. So the most recent financial information available is from 2010 and 2011. Microsoft has been a global leader in providing some of the best computer software available to the public. They help people increase productivity and efficiency as the workplace becomes more demanding. This report will include analysis of the financial and accounting aspects of their Annual Report of the Microsoft Corporation, including information from Income Statements, Balance sheets, Cash Flow Statements, and Equity. Microsoft has transformed how we share and obtain information. Microsoft has changed the way businesses and institutions operate. They have made the world a faster and easier by place making instant access to information possible...
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... ON FINANCIAL STATEMENT ANALYSIS OF MBA Spring 2012 Course Title: Financial Accounting Course No : MBA 505 Date of Submission: 27th April, 2012 Table of Contents No | Descriptive Topic | Page no | 1 | Introduction | 4 | 2 | Objective | 4 | 3 | Overview of The Company | 5 | 4 | The Significant Recent Events | 6 | 5 | Auditors Report | 8 | 6 | Financial Highlights of Each Company | 9 | 7 | Horizontal Analysis | 10-14 | 8 | Trend Analysis | 15-18 | 9 | Vertical Analysis | 19-20 | 10 | Cash Flow Analysis | 21 | 11 | SWOT Analysis | 23 | 12 | Conclusion & Recommendation | 24 | 13 | References | 25 | 14 | Appendix | 26 | 1. Introduction: Microsoft provides software and services that help people communicate, do their work, be entertained, and manage their personal lives. Over the past 30 years, innovative technology has transformed how we access and share information, changed the way of businesses and institutions operate, and made the world smaller by giving us instant access to people and resources everywhere. Microsoft was founded in 1975 and remains a leader in the wave of innovation that has created so much new opportunity, convenience, and value over the past three decades. Financial statement analysis is an analysis that highlights the important relationship in the financial statements. Financial statement analysis focuses on...
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...Microsoft’s Financial Reporting Strategy Objective • Understanding financial reporting strategy of selecting conservative accounting policies • Discuss controversial accounting issue in the software industry—software capitalization and revenue recognition • Discuss various incentives that motivate managers to select one accounting method over another • Learn how to use accounting analysis method to better reflect economic reality Microsoft’s Financial Reporting Strategy Introduction • Phenomenal financial success over the past years Founded in 1975 by Bill Gates and Paul Allen Went public in 1986 at $25.75 per share. Revenue and operating income grew an average of 43% and 49% per year. Stable growth in stock price ( Exhibit 5 ) Report higher than expected financial performance Asset totaling $37 billion,book value of equity equal to $28 billion and market value about $460 billion on June 30,1999. Microsoft’s Financial Reporting Strategy Introduction • Conservative accounting policies GAAP allow managerial discretion in accounting policies In two key areas, Microsoft choose a rather conservative method of reporting (1) Software development costs (2) Revenue recognition Microsoft’s Financial Reporting Strategy Software development costs • FASB’s guideline (SFAS NO.86) Require capitalization once technological feasibility has been established. • Microsoft’s policy Expensed as incurred FASB’s guideline does not materially affect the company • Note From 1986 to 1999...
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...research I ‘_ Marries fundamental analysis and financial statement analysis – Exploits accounting as a system for measuring value added – Exposes good (and “bad”) accounting from a valuation perspective L Financial Statement Analysis and Security Valuation • • • Integrates financial statement analysis with corporate finance Focuses on technologies that can be used in practice – Based on real world examples Adopts activist point of view to investing – The market may be inefficient 0-1 What Will You Learn from the Course Part I Financial statements and valuation Ch. 1-7 • How intrinsic values are calculated • What determines a firm’s value • How businesses are analyzed to assess the value they create • How financial analysis is developed for strategy and planning • The role of financial statements in determining firms’ values • How to pull apart the financial statements to get at the relevant information • How ratio analysis is employed in valuation • How growth is analyzed and valued • How to calculate the P/E and P/B ratio and what they should be • The value of operations • How to make forecasts and develop valuations • How to assess the quality of the accounting 0-2 _c I- By the end of the course, students should be able to develop earnings forecasts and then use the forecasts to value equity and form investment recommendations, much the same as what financial analysts do in the market. Microsoft Corporation MSI-T lNa=d~1l |*** mlllum 310009...
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...been asked to compare and contrast Google’s business model and financial management with Microsoft’s, launched Bing. Additionally, I have been asked to analyze Google and Microsoft’s annual reports and financial statement at their websites. 1. Calculate or identify from each company’s most recent annual report the six (6) specific financial ratios listed and provide as an appendix to the paper. • Liquidity measurement ratio: • Current ratio Profitability indicator ratios: • Return on assets Return on equity Debt ratio: • Debt ratio Operating performance ratio: • Fixed asset turnover ratio Cash flow indicator ratio: • Dividend payout ratio Investment valuation ratio: • Price / Earnings ratio 2. Compare and contrast each company’s business model: (1) core business, (2) leading products and/or services, (3) management/leadership style, and (4) innovation track record. 3. Use the financial ratio analysis and explain which company is better able to withstand a major recession. 4. Explain what the profitability ratios can tell about Google and Microsoft’s performance and how that information would influence investing decisions. 5. Identify and explain three (3) primary financial-based guidelines that should be used when selecting which of these two companies to invest in. Analysis 1. Calculate or identify from each company’s most recent annual report the six (6) specific financial ratios listed and provide as an appendix to the paper. In this...
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...Ratio analysis of Intel and Microsoft in 2013 LNU SWIBS Management 3 Ellie 126602308 The two companies I chose are Microsoft Inc.’s and Intel Corporation’s. Microsoft. Based on the compare with these ratios, we could do some fundamental analysis of risk level and profitability of Intel and Microsoft, to appraise the financial performance and financial position of two companies. The relative ratios of two companies are calculated as follows： Ratio | Intel | Microsoft | return on equity=net profitsharesholder's funds(equity)×100% | 962058256=0.17 | 496578944=0.06 | asset turnover=salessharesholder's funds(equity)×100% | 5270858256=0.90 | 1989678944=0.25 | net profit margin=net profit (before or) after taxsales×100% | 962052708=0.18 | 496519896=0.25 | gross profit=gross profitsales×100% | 3152152708=0.60 | 1429419896=0.72 | operating profit=operating profitsales×100% | 1229152708=0.23 | 607319896=0.31 | current ratio=current assetscurrent liability×100% | 3208413568=2.36 | 7491828774=2.60 | stock-holding period=inventorycosts of sales×365 | 417221187×365=71.8 | 19385602×365=126 | average debtors collection period=trade receivablessales×365days | 617652708×365=42.8 | 1911819896×365=350.7 | average creditors payment period=trade payablessales×365days | 1119121187×365=192.8 | 101825602×365=663.4 | gearing=all borrowingssharesholder;s funds(equity)×100% | 1316558256=0.23 | 1260178944=0.16 | The ratio will be analyzed from four areas of interest: profitability, liquidity...
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... | | |School of Business | | |ACC/230 (11/05/2012 – 01/20/2013) | | |Financial Reporting: Peeking Under the Financial Hood | Copyright © 2009, 2007 by University of Phoenix. All rights reserved. Course Description In this course, students will learn to analyze financial statements and methods used to value companies. Financial reports help managers choose between business paths. They also help investors and analysts evaluate the financial health of companies. This course is a practical means of discovering how financial data are generated and their limitations; techniques for analyzing the flow of business funds; and methods for selecting and interpreting financial ratios. It also presents analytical tools for predicting and testing assumptions about a firm’s performance. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: • University policies: You must be logged into the student website to view this document. • Instructor policies: This document is posted in the Course Materials...
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...Microsoft Corporation (NASDAQ: MSFT) --A Review of Capital Structure and Internal/External Analysis Introduction Bill Gates and Paul Allen had founded Microsoft in 1975 to develop and sell computer languages and microcomputers in Redmond, Washington State. The company had pioneered in operating system business and had been able to invent new technology and acquiring subsidiaries in order to produce a large range of personal computer solutions. Microsoft is currently reporting a rate of return on book assets of 13.41% last year. IPO of the company started in 1986 and has been trading on NASDAQ. Internal Financial Analysis The capital structure of Microsoft Corporation in the past 5 years have been selected and shown as in Appendix figure 1. With regards to the company’s current financial performance, the debt ratio has been reducing in the past 5 years and currently at 45.28%. That indicate a reducing risk associated with Microsoft’s operation. Compare to its competitor Apple Inc, which have a ratio of 32.86 with a similar rate of reduction, this may also indicating Microsoft have a lower borrowing capacity, which will affect the corporation’s financial flexibility. On the investor’s side, currently the stock price is $28.15, which expected return is at 3.1%. Weighted Average Cost of Capital is 11.49%. WACC considers Debt (taxable), Preferred stock and Common stock (Equity). If Microsoft’s borrowing increases, the lenders would demand a higher rate of interest on the...
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...Kettering University Department of Business MGMT 659 - Strategy Summer 2013 Prof. Irish BUS Project – Microsoft Rakan Mogaddam Contents 1 Current Situation Analysis 3 1.1 Past Performance Indexes 3 1.1.1 Ratios 3 1.1.2 Industry Competitor Comparison 4 1.2 Strategic Posture 4 1.2.1 Mission Statement 5 1.2.2 Vision Statement 5 1.2.3 Strategies and Policies 5 2 Corporate Governance 6 2.1 Board of Directors 6 2.2 Top Management 7 2.3 Stakeholders 8 3 External Environment 9 4 Internal Environment 10 5 Analysis of Strategic Factors 14 6 Alternatives & Recommendations 15 7 Implementation and Control 17 8 Evaluation Scorecard (Kaplan) 18 References: 20 Current Situation Analysis 1 Past Performance Indexes 1 Ratios The ratios of Microsoft can be used to analyze how well the company is performing according to its investments and recent profits. The following are a few ratios for the year ended June 30, 2013: 1 Credit Ratios 1. Current Ratio: 271% This ratio tells us the relation between the current assets and liabilities of the company. 2. Quick Ratio 266% This ratio tells us how liquid our assets are. This means how quickly we can change our assets into cash. 2 Profitability Ratios 1. Return on Assets 12.69% It tells about...
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...Microsoft Corporation Future Business and Economic Prospects Analysis by Team 4 Group Members: Lewis Bullock Daniel Fuller Erica Jaume Tim Trenkle Rebekah Vandegrift Date of Submission: April 21, 2013 Table of Contents 1. Executive Summary 5 2. Company Introduction 6 3. Financial Analysis 7 3.1. Statement of Cash Flow Analysis 7 3.2. Liquidity Ratios 12 3.3. Asset Management Ratios 13 3.4. Debt Management Ratio 14 3.5. Profitability Ratios 15 3.6. Market Value Ratios 17 3.7. Du Pont Equation 18 3.8. Microsoft to Industry Analysis 18 4. Weighted Average Cost of Capital (WACC) 19 5. Future Cash Flows 22 Net Income before Extraordinaries 25 Net Income Growth 25 Depreciation, Depletion & Amortization 25 Depreciation and Depletion 25 Deferred Taxes & Investment Tax Credit 25 Deferred Taxes 25 Other Funds 25 Funds from Operations 25 Extraordinaries 25 Changes in Working Capital 25 Receivables 25 Accounts Payable 25 Other Assets/Liabilities 25 Net Operating Cash Flow 26 Net Operating Cash Flow Growth 26 Net Operating Cash Flow / Sales 26 2010 – 2012 Investing Activities 26 Capital Expenditures 26 Capital Expenditures (Fixed Assets) 26 Capital Expenditures (Other Assets) 26 Capital Expenditures Growth 26 Capital Expenditures / Sales 26 Net Assets from Acquisitions 26 Sale of Fixed Assets & Businesses 26 Purchase/Sale of Investments 26 Purchase of Investments 26 Sale/Maturity...
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...Microsoft Name Institution Microsoft 1.0 Introduction Financial management is the efficient management of funds in such a way that an organization can achieve its objectives (Brigham & Ehrhardt, 2014).A Company either has short-term objectives or long-term goals. However, these depend on the planning phase of a particular Company. Several U.S publicly traded Companies provide attractive investment opportunities to investors. One of my clients seeks to invest in Microsoft Corporation. Microsoft is a multinational Corporation based in America. It specializes in technology products. The headquarters for Microsoft are in Washington a place known as Redmond. This Company manufactures, develops, licenses, sells and supports consumer electronics, computer software, services and personal computers. Bill Gates and Paul Allen initiated this Company way back in 1975. My client wishes to invest in Microsoft. Analyzing Microsoft stock and financial performance is critical to allow me advice my client appropriately. 2.0 An Overview of Microsoft Corporation Microsoft is best known for its software products such as the line of operating systems, Microsoft Windows, Internet Explorer, Microsoft Office suite, Skype and Edge web browsers. Microsoft is the world’s largest software producer or maker by revenue. Microsoft is one of the most valuable companies in the world (MSFT: Summary for Microsoft Corporation- Yahoo! Finance). Microsoft...
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...Running head: FINANCIAL MANAGEMENT Financial Management: Comparing Google’s Business Model/ Financial Management with Microsoft By: Zanthe Gillison Strayer University Financial Management: Comparing Google’s Business Model/ Financial Management with Bing Google is doing bigger and better things in the world of internet media searching. Despite the challenges with other big names in Internet technology, Google and Microsoft have still remained to be leaders. In this paper, I will show comparison views of Google’s business model and financial management with Microsoft’s launch with Bing. Taking a look into Google and Microsoft core business, leading products and services, management and leadership styles, and innovation track record we will have the opportunity to compare the two businesses in and appendix. Google is known to be the leading internet media website’s in the world. Google and Microsoft are well-known internet information websites. Although, Microsoft is in business for more than searching the internet, Microsoft is known to be the world’s leading producer and marketer of computer software. Google’s product line and services are for Google products only. Google’s products include services that will enhance your desktop features such as Google Chrome and Google desktop which is an organizational tool that gives the customer the option to design and edit photos, organize personal and business information, search, and communicate with...
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...Contents 1. Executive Summary 4 2. Introduction 5 3. Industry Analysis 6 3.1 Market Value 6 3.2 SWOT Analysis for the Technology Sector 7 4. Non-Financial Analysis 8 4.1 Google Inc. 8 4.1.1 Company Profile 8 4.1.2 Strategic Target 8 4.1.3 SWOT Analysis 9 4.1.4 Others 10 4.2 Microsoft Corp. 11 4.2.1 Company Profile 11 4.2.2 Strategic Target 12 4.2.3 SWOT Analysis 13 4.2.4 Others 13 4.3 Amazon.com 14 4.3.1 Company Profile 14 4.3.2 Strategic Target 14 4.3.3 SWOT Analysis 15 4.3.4 Others 15 5. Financial Analysis 16 5.1 Profitability 16 5.1.1 Year-on-Year (YoY) Revenue Distribution 16 5.1.2 Net Income 19 5.1.3 Return on Total Asset (ROTA) 20 5.1.4 Return on Equity (ROE) 21 5.2 Liquidity and Financing 22 5.2.1 Short-Term: Current Ratio 22 5.2.2 Long-Term: Gearing 23 5.3 Shareholder Value 24 5.3.1 Earning Per Share (EPS) 24 5.3.2 Price Earning Ratio (PE Ratio) 25 5.3.3 Dividend Per Share 26 5.4 Risk and Discounting 26 5.4.1 CAPM and NPV on Google Inc. 27 5.4.2 CAPM and NPV on Amazon.com 29 5.4.3 CAPM and NPV on Microsoft Corp. 31 6. Investment Decision and Conclusion 34 6.1 Investment Evaluation’s Matrix 34 6.2 Investment Decision and Conclusion 38 7. References 39 8. Appendix 40 Figures and Tables Figure 51: Amazon YOY Revenue, Cost, and Operating Income 16 Figure 52: Microsoft YOY Revenue, Cost, and Operating Income 17 Figure 53: Google YOY Revenue...
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...Introduction This report presents the financial analysis of Microsoft Corporation. The firm’s financial status is evaluated using ratio analysis and suggestions on improvement are provided. The risk and return of Microsoft common stocks are studied and the fundamental value of stock is estimated…… Company Profile Microsoft is a high tech company providing computer software products worldwide. The firm is founded in 1975 by ……. Financial Analysis Comparing to its competitor – Apple, Microsoft’s assets have higher liquidity and also high returns (See table 1)...... Stock Analysis Microsoft now has about 9 billion outstanding common shares. Table 2 shows that the average monthly return from July 2004 to August 2009 is 0.32% with a standard deviation of 7.21%....... Corporate Governance Microsoft stocks are mainly held by institutions and mutual funds. 63% of the company’s common shares are held by institutions and mutual funds, and 12% of the company’s common shares are held by insiders …… Corporate Policies – Payout Policy Microsoft as a growth firm didn’t pay dividend until 2003. Before that, the firm split stocks several times (see Table 3)……. Conclusion Based on the analysis presented above, Microsoft appears to have a good financial standing……. Appendix: Table 1: Financial Ratios Ratio Analysis 2009 2008 Liquidity Ratios Current Ratio x x Quick Ratio x x Asset Management Ratios Inventory Turnover...
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...Financial Management ------------------------------------------------- BUS508 Dr. Etido Akpan, Professor Financial Management Financial Statements and annual reports are crucial tools for evaluating a business and deciding whether or not to invest in that company. Google and Microsoft are two major corporations that lead Internet technology and information retrieval. Both corporations list their financial information on their respective websites (www.google.com and www.microsoft.com) on their Investor Relations pages for easy access. Google Incorporated (Google) was founded in 1998 by Larry Page and Sergey Brin and was incorporated on September 04, 2008. It was named as a play on the term “googol” which is the mathematical word for the number 10 followed by 100 zeros or 10 100. Google started primarily as a search engine, which is a website that searches the Internet for other websites based on terms entered by the user. Other lines of business include advertising, apps (such as Google Docs, Calendar, and email which Google calls Gmail), mobile and the Android operating system, Chrome (Google’s answer to the internet browser), along with various other products. There are approximately 32,400 full time employees with the majority split between research & development and sales & marketing, the remainder being in general or admin and operations ("Company," n.d.). Advertising is Google’s primary source of income, generating 96% of their 2011 revenue, with the...
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