For the Annual Report Assignment you must first locate the annual audited financ
ID: 2739553 • Letter: F
Question
For the Annual Report Assignment you must first locate the annual audited financial statements of Microsoft Corporation for the year ended June 30, 2015. You can locate the financial statements by searching the internet for the website entitled "Microsoft Investor Relations Home Page". Required: Using the June 30, 2015 audited financial statements and other information at this website, please answer questions # 1 through and including # 4 below: Who is responsible for preparation of financial statements? How is this responsibility fulfilled? What are the responsibilities of the auditors and how do they fulfill their responsibilities? Which audit firm performs the audit of the company? What is the main business of the company? Compute the following ratios or amounts: The rate of return on shareholders' equity for 2015 The debt to equity ratio at June 30, 2015 The accounts receivable turnover for 2015. The net profit margin for 2015. The net change in cash flows for 2015. The amount of common stock cash dividends paid in 2015. The gross profit ratio for 2015.Explanation / Answer
1. Management is responsible for the preparation of the consolidated financial statements and related information that are presented in this report. The consolidated financial statements, which include amounts based on management’s estimates and judgments, have been prepared in conformity with accounting principles generally accepted in the United States of America.
The Company designs and maintains accounting and internal control systems to provide reasonable assurance at reasonable cost that assets are safeguarded against loss from unauthorized use or disposition, and that the financial records are reliable for preparing consolidated financial statements and maintaining accountability for assets. These systems are augmented by written policies, an organizational structure providing division of responsibilities, careful selection and training of qualified personnel, and a program of internal audits.
2. The responsibility of the auditor is to express an opinion on these financial statements based on their audits.
Auditors conducted the audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that they plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Auditors believe that our audits provide a reasonable basis for our opinion.
The auditor is DELOITTE & TOUCHE, LLP.
3. Microsoft is a technology company whose mission is to empower every person and every organization on the planet to achieve more. Our strategy is to build best-in-class platforms and productivity services for a mobile-first, cloud-first world.
The mobile-first, cloud-first world is transforming the way individuals and organizations use and interact with technology. Cloud computing and storage solutions provide users and enterprises with various capabilities to store and process their data in third-party data centers. Mobility encompasses the rich collection of data, applications, and services that accompany our customers as they move from setting to setting in their lives. They are transforming their businesses to enable Microsoft to lead the direction of this transformation, and enable their customers and partners to thrive in this evolving world.
4.1 The rate of return on shareholder's equity will be
(net income less prefence dividend, if any)/Average common stockholder's equity * 100
i.e. 12193-0/80083 *100
i.e. 15.225 %
4.2 Debt to equity ratio will be Total liabilities/total equity
i.e. 46282/80083
i.e. 0.578
4.3 account receivable turnover = net annual credit sales/average detors
and average debtors = (opening debtors + closing debtors) /2
Average debtors = (17908+19544)/2
i.e. 18726
Account receivable turnover = 93580/18726
i.e. 5 accounts receivable turnover
4.4 Net profit margin is (net income /sales revenue)*100
i.e. (12193/93580)*100
i.e. 13%
4.5 The net change in cash is calculated with the following formula:
Now Cash flow from operations is 29080
less cash used in financing activities 9080
less cash used in investing activities 23001
less effect of exchange rate 73
i.e. (3074.00)
4.7 gross profit ratio is gross profit/net sales
i.e. 18161/93580
i.e. 0.194