Microsoft corporation

Financial statement

INCOME STATEMENT 2002 2003

Sales Revenue $1,818,500 $1,750,500
Less: Cost of Goods Sold $1,005,500 $996,000
Gross Profits $813,000 $754,500
Less: Operating Expenses:
Selling Expense $506,000 $479,000
General / Admin. Exp.
Lease Expense
Depreciation Expense
Total Operating Expenses $506,000 $479,000
Operating Profits $307,000 $275,500
Less: Interest Expense $27,000 $19,000
Net
Profits Before Taxes $280,000 $256,500
Less: Taxes $84,000 $77,000
Net Profit After Taxes $196,000 $179,500
Less: Pref. Stock Divds.
Earnings Available for Common
Stockholders $196,000 $179,500
BALANCE SHEET
Current Assets: 2009 2010
Cash $60,100 $64,200
Marketable Securities $54,000 $50,000
Accounts Receivable $107,800 $102,800
Inventories $123,000 $115,500
Total Current Assets $344,900 $332,500
Gross Fixed Assets (at cost):
Land & Buildings $625,300 $520,300
Machinery and Equipment $0 $0
Furniture & Fixtures $0 $0
Vehicles $0 $0
Other (Inc. Fin. Leases) $0 $0
Total Gross Fixed Assets $625,300 $520,300
Less: Accumulated Depreciation
Net Fixed Assets $625,300 $520,300
Other Assets $0 $0
Total Assets $970,200 $852,800

Current Liabilities: 2002 2003

Accounts Payable 160000 145400
Notes Payable
Accruals
Taxes Payable 43500 42000
Other Current Liabilities 0 0
Total Current Liabilities 203500 187400
L / T Debt (Inc. Financial Leases) 200000 200000
Total Liabilities 403500 387400
Preferred Stock 0 0
Common Stock 280000 300000
Paid-In Capital In Excess of Par
Retained Earnings 286700 165400
Total Stockholders' Equity 566700 465400
Total Liabs. & Stockhldrs' Equity 970200 852800
Reconciliation TA & TL/SE 0 0
Number of Common Shares 57000 500
End-of-Year Stock Price 3 5
 STATEMENT OF CASH FLOWS

CASH FLOW FROM OPERATING ACTIVITIES 2009 2010

Net Profit After Taxes 179500.0
Depreciation 0.0
Decrease in Accts. Receiv. 5000.0
Decrease in Inventories 7500.0
Decrease in Other Assets 0.0
Increase in Accounts Pay. -14600.0
Increase in Accruals 0.0
Increase in Taxes Payable -1500.0
Increase in Other Cur. Lia. 0.0
Cash Flow from Oper. Act. 175900.0

CASH FLOW FROM INVESTMENT ACTIVITIES

Increase in Gross Fixed Assets 105000.0
Cash Flow from Investments 105000.0

CASH FLOW FROM FINANCING ACTIVITIES

Increase in Notes Payable 0.0
Increase in Long-Term Debt 0.0
Changes in Stockholders' Equity 20000.0
Preferred Dividends Paid 0.0
Common Dividends Paid (-) -5.0

Cash Flow from Financing Activities 19995.0

Net Incr. in Cash / Mark. Securities 300895.0

 Liquidity ratios

1- Current ratio=Total current assets/total current liabilites

(2009) =344900/203500=1.69

(2010) =332500/187400=1.77 (good)

Comment: Shows the company can cover its short term obligation by its current assets

2-Quick ratio=Total current assets-inventory/total current liabilities

(2009) =344900-123000/203500=1.09

(2010)=332500-115500/187400=1.58

Comment: this ratio means that the firm can cover each one dollar of it's current liabilites by it's most
liquid asset.

The liquidation position is in improvement .

Activity ratios
1- Inventory turnover=Cost of goods sold/Inventory

(2009) =1005500/123000=8.17

(2010)=996000/115500=8.62

Comment : Measures the activity, or liquidity, of a firm’s inventory.

The position is in improvement from 2009 to 2010 .

2- Average collection period=Accounts recievables/Average sales per day

(2009) =107800/1818500/365=7.71day

(2010)=102800/1750500/365=8.70day

Comment : The average amount of time needed to collect accounts receivable.

The position is improving because the company may be concern on the cash sales .
3- Total asset turnover=sales/Total asset

(2009) =1818500/970200=1.464

(2010)=1750500/852800=1.39

Comment : Indicates the efficiency with which the firm uses its assets to generate sales.

Shows the decrease in efficiency in use assets to generated sales .

Debt ratios

1- Debt ratio=Total current liabilities+ long term Debt/total assets

(2009) =403500/970200=0.26

(2010)=387400/852800=0.25

Comment :Measures the proportion of total assets financed by the firm’s creditors.

Shows the company try to decrease in depend on debts .

2- Debt equity ratio=long term debt/Total equity

(2009) =200000/566700=0.14

(2010)=200000/465400=0.12

Comment : shows the percentage debt to equity

Shows the increase on depend on equity as funds of resources .

3- Times interest earned=Net profit before interest/Interest

(2009) =307000/27000=8.96

(2010)=275000/19000=24.9

Comment : Measures the firm’s ability to make contractual interest payments.

Shows the increase ability to repay the interest to debtors may because debts and increase operating
profit .

Profitability ratios
1- Gross profit margin=Gross profit/sales
(2009) =813000/1818500=0.64

(2010)=754000/1750500=1.91

Comment: Measures the percentage of each sales dollar remaining after the firm has paid for its goods.

Improvement position Shows the increase profit may be because decrease price or decrease cost of
goods sold

2- Net profit margin=Net profit after taxes/sales

(2009) =196000/1818500=0.002

(2010)=179500/1750500=0.03

Comment : Measures the percentage of each sales dollar remaining after all costs and expenses,
including interest, taxes, and preferred stock dividends, have been deducted.

Improvement position because increase profit after all costs