Financial statement analysis
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Financial statement analysis
Below are links to the annual reports for Microsoft, Adobe and Oracle:
http://www.microsoft.com/investor/AnnualReports/default.aspx
http://investor.oracle.com/overview/highlights/default.aspx
Microsoft Corporation is a well-known company engaged in developing, licensing
and supporting a range of software products and services. It also designs and sells
hardware, and delivers online advertising. Microsoft dominates the market in PCcompatible
operating systems and office software suite. Its main competitors include
Oracle Corporation.
With reference to appropriate financial ratios and an analysis of the information in
the annual report, analyse and assess the financial performance and position of
Microsoft Corporation.
Your analysis should be undertaken from the perspective of a potential investor and
should include a consideration of:
Profitability
Liquidity
Efficiency
Financing structure
The investors' specific perspective
Your analysis and assessment should include a comparison with the financial
performance and position of two of Microsoft Corporation's main competitors,
Oracle Corporation and Adobe Systems Incorporated.
Required:
a) Prepare a business report that includes an analysis, assessment and interpretation of
the financial performance and position of Microsoft Corporation and its two main
competitors.
b) Using the links to the information that is provided in question one, identify and
critically discuss the risks that exist in the financial environment in which Microsoft,
Oracle and Adobe operate.
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Solution Summary
With reference to appropriate financial ratios and an analysis of the information in
the annual report, analyse and assess the financial performance and position of
Microsoft Corporation
Solution Preview
Financial performance and position of Microsoft Corporation
Microsoft Corporation is a well-known company engaged in developing, licensing and supporting a range of software products and services. It also designs and sells hardware, and delivers online advertising. Microsoft dominates the market in PC compatible operating systems and office software suite. Its main competitors include Oracle Corporation.
With reference to appropriate financial ratios and an analysis of the information in the annual report, analyse and assess the financial performance and position of Microsoft Corporation.
Our analysis should be undertaken from the perspective of a potential investor and should include a consideration of:
1. Profitability
2. Liquidity
3. Efficiency
4. Financing structure
5. The investors' specific perspective
1. Profitability
Profitability ratios (also referred to as profit margin ratios) compare components of income with sales.
They give us an idea of what makes up a company's income and are usually expressed as a portion of each dollar of sales. The profit margin ratios we discuss here differ only by the numerator. It's in the numerator that we reflect and thus evaluate performance for different aspects of the business.
i) The gross profit margin is the ratio of gross income or profit to sales. This ratio indicates how much of every dollar of sales is left after costs of goods sold:
ii) Operating profit margin is the ratio of operating profit (a.k.a. EBIT, operating income, income before interest and taxes) to sales. This is a ratio that indicates how much of each dollar of sales is left over after operating expenses:
iii) The net profit margin is the ratio of net income (a.k.a. net profit) to sales, and indicates how much of each dollar of sales is left over after all expenses:
Microsoft Profit Margin 2015
i)
ii)
iii)
Oracle Profit Margin 2015
i)
ii)
iii)
2. Liquidity
Liquidity ratio is a measure which show sus the ability of a company to meet some immediate needs. ...
Education
- BSc, University of Bucharest
- MSc, Ovidius
- MSc, Stony Brook
- PhD (IP), Stony Brook
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