In this assignment, you will calculate various ratios from the financial stateme
ID: 2740510 • Letter: I
Question
In this assignment, you will calculate various ratios from the financial statements of the Microsoft Corporation (MSFT). The income statement, balance sheet, and cash flow statement are provided for you.
Ratios:
Liquidity Ratios
Current Ratio = Current Assets / Current Liabilities
Quick Ratio = (Current Assets Inventory) / Current Liabilities
Leverage Ratios
Long-term Debt/Equity Ratio = Long-term Debt / Equity
Total Debt/Equity Ratio = (Short-term Debts + Long-term Debts) / Equity
Profitability Ratios
Net Profit Margin = Net Profit after Taxation / Sales
Operating Profit Margin = Operating Profit / Sales
Return on Equity = Net Profit after Taxation / Equity
Return on Total Assets = Net Profit after Taxation / Total Assets
Return on Capital Employed = Net Profit after Taxation / (Total Assets Current Liabilities)
Efficiency Ratios
Inventory Turnover = Sales / Inventory
Assets Turnover = Sales / Total Assets
Market Value Ratios
Price Earning Ratio = Current Stock Price / Earnings Per Share (EPS)
Other Fundamental Indicators
Earnings Per Share (EPS) = Net Profit after Taxation / Issued Common Shares
Net Asset Value (NAV) = (Total Assets Total Liabilities) / Issued Common Shares
BALANCE SHEET
FIN 325: Microsoft Corporation (MSFT)
46.75 0.78(1.70%) 6/18/15 3:29PM EDT - Nasdaq Real Time Price
Balance Sheet
All numbers in thousands; Currency in USD
Period Ending
Jun 30, 2014
Jun 30, 2013
Jun 30, 2012
Assets
Current Assets
Cash And Cash Equivalents
8,669,000
3,804,000
6,938,000
Short Term Investments
77,040,000
73,218,000
56,102,000
Net Receivables
21,485,000
19,118,000
17,815,000
Inventory
2,660,000
1,938,000
1,137,000
Other Current Assets
4,392,000
3,388,000
3,092,000
Total Current Assets
114,246,000
101,466,000
85,084,000
Long Term Investments
14,597,000
10,844,000
9,776,000
Property Plant and Equipment
13,011,000
9,991,000
8,269,000
Goodwill
20,127,000
14,655,000
13,452,000
Intangible Assets
6,981,000
3,083,000
3,170,000
Accumulated Amortization
-
-
-
Other Assets
3,422,000
2,392,000
1,520,000
Deferred Long Term Asset Charges
-
-
-
Total Assets
172,384,000
142,431,000
121,271,000
Liabilities
Current Liabilities
Accounts Payable
13,569,000
10,182,000
9,653,000
Short/Current Long Term Debt
2,000,000
2,999,000
1,231,000
Other Current Liabilities
30,056,000
24,236,000
21,804,000
Total Current Liabilities
45,625,000
37,417,000
32,688,000
Long Term Debt
20,645,000
12,601,000
10,713,000
Other Liabilities
11,594,000
10,000,000
8,208,000
Deferred Long Term Liability Charges
4,736,000
3,469,000
3,299,000
Minority Interest
-
-
-
Negative Goodwill
-
-
-
Total Liabilities
82,600,000
63,487,000
54,908,000
Stockholders' Equity
Misc Stocks Options Warrants
-
-
-
Redeemable Preferred Stock
-
-
-
Preferred Stock
-
-
-
Common Stock
68,366,000
67,306,000
65,797,000
Retained Earnings
17,710,000
9,895,000
(856,000)
Treasury Stock
-
-
-
Capital Surplus
-
-
-
Other Stockholder Equity
3,708,000
1,743,000
1,422,000
Total Stockholder Equity
89,784,000
78,944,000
66,363,000
Net Tangible Assets
62,676,000
61,206,000
49,741,000
INCOME STATEMENT
Period Ending
Jun 30, 2014
Jun 30, 2013
Jun 30, 2012
Total Revenue
86,833,000
77,849,000
73,723,000
Cost of Revenue
26,934,000
20,249,000
17,530,000
Gross Profit
59,899,000
57,600,000
56,193,000
Operating Expenses
Research Development
11,381,000
10,411,000
9,811,000
Selling General and Administrative
20,632,000
20,425,000
18,426,000
Non Recurring
127,000
-
6,193,000
Others
-
-
-
Total Operating Expenses
-
-
-
Operating Income or Loss
27,759,000
26,764,000
21,763,000
Income from Continuing Operations
Total Other Income/Expenses Net
61,000
288,000
504,000
Earnings Before Interest And Taxes
27,820,000
27,052,000
22,267,000
Interest Expense
-
-
-
Income Before Tax
27,820,000
27,052,000
22,267,000
Income Tax Expense
5,746,000
5,189,000
5,289,000
Minority Interest
-
-
-
Net Income From Continuing Ops
22,074,000
21,863,000
16,978,000
Non-recurring Events
Discontinued Operations
-
-
-
Extraordinary Items
-
-
-
Effect Of Accounting Changes
-
-
-
Other Items
-
-
-
Net Income
22,074,000
21,863,000
16,978,000
Preferred Stock And Other Adjustments
-
-
-
Net Income Applicable To Common Shares
22,074,000
21,863,000
16,978,000
CASH FLOW STATEMENT
46.72 0.75(1.63%) 36/18/15 3:34PM EDT - Nasdaq Real Time Price
Cash Flow
All numbers in thousands; Currency in USD
All numbers in thousands
Period Ending
Jun 30, 2014
Jun 30, 2013
Jun 30, 2012
Net Income
22,074,000
21,863,000
16,978,000
Operating Activities, Cash Flows Provided By or Used In
Depreciation
5,212,000
3,755,000
2,967,000
Adjustments To Net Income
4,321,000
4,590,000
11,855,000
Changes In Accounts Receivables
(1,120,000)
(1,807,000)
(1,156,000)
Changes In Liabilities
2,562,000
1,841,000
553,000
Changes In Inventories
(161,000)
(802,000)
184,000
Changes In Other Operating Activities
(657,000)
(607,000)
245,000
Total Cash Flow From Operating Activities
32,231,000
28,833,000
31,626,000
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures
(5,485,000)
(4,257,000)
(2,305,000)
Investments
(7,324,000)
(17,802,000)
(11,975,000)
Other Cash flows from Investing Activities
(6,024,000)
(1,752,000)
(10,506,000)
Total Cash Flows From Investing Activities
(18,833,000)
(23,811,000)
(24,786,000)
Financing Activities, Cash Flows Provided By or Used In
Dividends Paid
(8,879,000)
(7,455,000)
(6,385,000)
Sale Purchase of Stock
(6,709,000)
(4,429,000)
(3,116,000)
Net Borrowings
6,962,000
3,537,000
-
Other Cash Flows from Financing Activities
(39,000)
(10,000)
-
Total Cash Flows From Financing Activities
(8,394,000)
(8,148,000)
(9,408,000)
Effect Of Exchange Rate Changes
(139,000)
(8,000)
(104,000)
Change In Cash and Cash Equivalents
4,865,000
(3,134,000)
(2,672,000)
Balance Sheet
All numbers in thousands; Currency in USD
Period Ending
Jun 30, 2014
Jun 30, 2013
Jun 30, 2012
Assets
Current Assets
Cash And Cash Equivalents
8,669,000
3,804,000
6,938,000
Short Term Investments
77,040,000
73,218,000
56,102,000
Net Receivables
21,485,000
19,118,000
17,815,000
Inventory
2,660,000
1,938,000
1,137,000
Other Current Assets
4,392,000
3,388,000
3,092,000
Total Current Assets
114,246,000
101,466,000
85,084,000
Long Term Investments
14,597,000
10,844,000
9,776,000
Property Plant and Equipment
13,011,000
9,991,000
8,269,000
Goodwill
20,127,000
14,655,000
13,452,000
Intangible Assets
6,981,000
3,083,000
3,170,000
Accumulated Amortization
-
-
-
Other Assets
3,422,000
2,392,000
1,520,000
Deferred Long Term Asset Charges
-
-
-
Total Assets
172,384,000
142,431,000
121,271,000
Liabilities
Current Liabilities
Accounts Payable
13,569,000
10,182,000
9,653,000
Short/Current Long Term Debt
2,000,000
2,999,000
1,231,000
Other Current Liabilities
30,056,000
24,236,000
21,804,000
Total Current Liabilities
45,625,000
37,417,000
32,688,000
Long Term Debt
20,645,000
12,601,000
10,713,000
Other Liabilities
11,594,000
10,000,000
8,208,000
Deferred Long Term Liability Charges
4,736,000
3,469,000
3,299,000
Minority Interest
-
-
-
Negative Goodwill
-
-
-
Total Liabilities
82,600,000
63,487,000
54,908,000
Stockholders' Equity
Misc Stocks Options Warrants
-
-
-
Redeemable Preferred Stock
-
-
-
Preferred Stock
-
-
-
Common Stock
68,366,000
67,306,000
65,797,000
Retained Earnings
17,710,000
9,895,000
(856,000)
Treasury Stock
-
-
-
Capital Surplus
-
-
-
Other Stockholder Equity
3,708,000
1,743,000
1,422,000
Total Stockholder Equity
89,784,000
78,944,000
66,363,000
Net Tangible Assets
62,676,000
61,206,000
49,741,000
Explanation / Answer
Liquidity Ratio All numbers in thausands; Currency in USD Current Ratio = Current Assets/Current Liability 30-Jun-14 = 114246000/45625000 2.50 30-Jun-13 = 101466000/37417000 2.71 30-Jun-12 = 85084000/32688000 2.60 Quick Ratio = (current assets-inventory)/current liability 30-Jun-14 = (114246000-2660000)/45625000 2.45 30-Jun-13 = (101466000-1938000)/37417000 2.66 30-Jun-12 = (85084000-1137000)/32688000 2.57 Leverage Ratios Long term debt/Equity ratio = Long term debt/Equity 30-Jun-14 = 20645000/89784000 0.23 30-Jun-13 = 12601000/78944000 0.16 30-Jun-12 = 10713000/66363000 0.16 Total debt/equity ratio = (short term debts + Long term debts)/Equity 30-Jun-14 = (2000000+20645000)/89784000 0.25 30-Jun-13 = (2999000+12601000)/78944000 0.20 30-Jun-12 = (1231000+10713000)/66363000 0.18 Profitibility Ratio Net profit margin = Net profit after taxation /sales 30-Jun-14 = 22074000/86833000 0.25 30-Jun-13 = 21863000/77849000 0.28 30-Jun-12 = 16978000/73723000 0.23 Operating profit margin = Operating profit/sales 30-Jun-14 = 27759000/86833000 0.32 30-Jun-13 = 26764000/77849000 0.34 30-Jun-12 = 21763000/73723000 0.30 Return on equity = Net profit after taxation / equity 30-Jun-14 = 22074000/89784000 0.25 30-Jun-13 = 21863000/78944000 0.28 30-Jun-12 = 16978000/66363000 0.26 Return on total assets = Net profit after taxation/total assets 30-Jun-14 = 22074000/172384000 0.13 30-Jun-13 = 21863000/142431000 0.15 30-Jun-12 = 16978000/121271000 0.14 Return on capital employed = Net profit after taxation/(total assets-current liability) 30-Jun-14 = 22074000/(172384000-45625000) 0.17 30-Jun-13 = 21863000/(142431000-37417000) 0.21 30-Jun-12 = 16978000/(121271000-32688000) 0.19 Efficiency Ratio Inventory Turnover = Sale/Inventory 30-Jun-14 = 86833000/2660000 32.64 30-Jun-13 = 77849000/1938000 40.17 30-Jun-12 = 73723000/1137000 64.84 Assets Turnover = Sales/total assets 30-Jun-14 = 86833000/172384000 0.50 30-Jun-13 = 77849000/142431000 0.55 30-Jun-12 = 73723000/121271000 0.61 Market value ratio Price earning ratio = Current stock price / earning per share 30-Jun-14 = 10/3.23 3.10 30-Jun-13 = 10/3.25 3.08 30-Jun-12 = 10/2.58 3.88 Other fundamental indicators Earning per share = net profit after taxation/issued common shares 30-Jun-14 = 22074000/6836600 3.23 30-Jun-13 = 21863000/6730600 3.25 30-Jun-12 = 16978000/6579700 2.58 Net assets value = (Total assets-total liability)/issued common shares 30-Jun-14 = (172384000-82600000)/6836600 13.13 30-Jun-13 = (142431000-63487000)/6730600 11.73 30-Jun-12 = (121271000-54908000)6579700 10.09 Working note Calculation of issued common shares = Isuued common stock value/price per share 30-Jun-14 = 68366000/10 6836600 shares 30-Jun-13 = 67306000/10 6730600 shares 30-Jun-12 = 65797000/10 6579700 shares Note : assuming common stock price $10 each common stock