Financial Ratio Analysis of Microsoft

CASH FLOW STATEMENT ANALYSISOver three years, net notes from operations has exceeded net income creating to a greater extent than enough cash to coer describe depreciation amounts and normal common stock cash dividends. This indicates that Microsoft burn support its cash needs with its operations and points to why the conjunction does not rely on borrowing. Account receivables increased two-fold each year, which indicates potential future growth. Also, deduction trends in legitimate assets and liabilities demonstrate sustained increases in operating(a) assets and decreases in operating liabilities.

Stock repurchase has been more than doubled since 2004. This could possibly be because of undervaluation issues or an effort to boost Microsoft?s P/E ratio. The large net decrease in cash in 2005 can be entirely attributed to the abnormal jump in common stock cash dividends that year. In ?05, Microsoft paid 1400% more in dividends than the yearly average. There is no new(prenominal) epoch-making decrease in any other item for ?05 on the cash flow statement.

Since ?04, Microsoft has steadily increased acquisition of other companies, which is typical of companies as large as Microsoft. This is also a good indicator of future growth. Microsoft?s purchase of investments has declined over the three years whereas the sale of investments has re primary(prenominal)ed relatively stable. In ?06, they sell more investments than they bought.



This may mean the society has less cash to invest because of losses or the money is being utilize elsewhere, such as stock dividends.

COMPETITORSAdobe, Oracle, and CA, Inc. are Microsoft?s main competitors. These companies are the biggest ones in the software application industry of applied science sector.

1. earnability RatiosProfit margin and ROIC are two ratios that relate the earnings of the company to capital that has been sacrificed for more than the company?s operating cycle. Profit margin is a measurement that portrays the effects...

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