Fin. Analysis of Microsoft Co.
FINANCIAL ANALYSIS OF MICROSOFT CORPORATION Years 2001 vs. 2002The purpose of the analysis which follows is to indicate the financial status of Microsoft for the year 2001 compared to 2002 in order to assess the company's strengths and weaknesses and to consider what changes may be needed to strengthen the company's financial standing. The report will be organized as follows: (1) Analysis of liquidity, (2) Activity Levels, (3) Profitability, (4) Coverage of Debt, and (5) Conclusions and other information from published sources. Our general conclusions were, with liquidity strong, profit margin and return on assets at or above industry standards, and future growth expected to be good, Microsoft stock, overall, would be a decent buy.The table below shows the Liquidity ratios for the years studied. These figures indicate that the company was fairly strong on liquidity. In 2001 they had over four times as many current assets available as current liabilities..Collecting receivables and selling inventory support the liquidity ratio above. The turnover ratios, which can also be expressed in days, indicate the company's sp
00% Coverage of Debt Debt to total assets 19. 57%Rate of return on common stk equity 15. MICROSOFT CORPORATION 2001 vs. The company's profit margin is very close to the industry standard, this indicates that the company is able to withstand either higher expenses or lower revenue. Inventory turnover declined sharply in 2002. According to businessweek online, Microsoft stock has become a "value-priced laggard" because of slower growth, this does not enthuse Microsoft's base of growth investors. Coverage of Debt The ratios below measure the amount of debt the firm has and its ability to make payments on this debt. 2002 INPUT AREA: In Millions 2001 2002Current Assets 39210 48576Inventory 83 673Accounts Receivable 3671 5129Current Liabilities 9254 12744Quick Assets 35271 43781Cash from operations 13422 14509Net sales 25296 28365Cost of goods sold 3455 5191Total Assets 58830 67646Net Income 7346 7829Preferred dividends, if any 0 0Common stock equity 47289 52180Cash Dividends for common stock 0 0Total Liabilities 11541 15466Earnings Before Interest & Tax (EBIT) 11525 11513Interest expense (or int. Also the company is "sitting on a pile of cash" that is believed will be distributed to shareholders over the next year.
Common topics in this essay:
Levels Collecting,
Inventory Turnover,
Coverage Debt,
Profitability Profitability,
Overview/Executive Summary,
Analysis Liquidity,
Ratios Receivable,
Overall Microsoft,
Ratios Profit,
Debt Debt,
return assets,
receivable turnover,
inventory turnover,
total assets,
debt coverage ratio,
assets industry,
common stock,
microsoft stock,
2001 2002,
coverage ratio,
return assets industry,
cash debt coverage,
debt coverage,
asset turnover low,
1 analysis liquidity,
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