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Pages:
3 pages/≈825 words
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2 Sources
Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Case Study
Language:
English (U.S.)
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MS Word
Date:
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Topic:

Microsoft Corporation’s Fiscal Quarter Comparison, Comparison Analysis, and Short-Term Financing

Case Study Instructions:

Overview

To prepare for your report in Project Two, you must calculate the nancial ratios needed to determine your chosen business’s current nancial health. Once you’ve calculated these ratios, you will use the results to analyze the business’s current nancial position. This will help you make decisions about how to improve or maintain their nancial health. Pay close attention to working capital management. If liquidity is an issue, think about how the company will meet its short-term obligations. Directions For the company you chose in the Module Two journal assignment, open the following documents: The balance sheet, income statement, and cash ow statement from the most recent scal quarter (from Mergent Online) The Ratios Most Recent Fiscal Qtr worksheet in the Project Two Financial Formulas workbook. For example, if the most recent scal quarter available is the third quarter in 2022, you’ll compare those results to the same nancial calculations from the third quarter in 2021. Use the documents to calculate key nancial ratios. Then open the following documents: The balance sheet, income statement, and cash ow statement from the same scal quarter one year ago

The Ratios Same Fiscal Qtr 1 Year Ago worksheet Use the documents to calculate the same nancial ratios. Finally, compare those ratios and analyze your results. Specifically, you must address the following rubric criteria:

1. Financial Calculations. Calculate accurate nancial formulas to assess the business’s current nancial health. Speci cally, calculate the following formulas using the Ratios Most Recent Fiscal Qtr and the Ratios Same Fiscal Qtr 1 Year Ago worksheets in the Project Two Financial Formulas workbook:

A. Working capital

B. Current ratio

C. Debt ratio

D. Earnings per share

E. Price/earnings ratio

F. Total asset turnover ratio

G. Financial leverage

H. Net prot margin

I. Return on assets

J. Return on equity

2. Fiscal Quarter Comparison. Summarize the differences between the following:

A. The results from your nancial calculations of the most recent scal quarter

B. The results of the same nancial calculations of the same scal quarter from one year ago

i. For example, if the most recent scal quarter available is the third quarter in 2022, you’ll compare those results to the same nancial calculations from the third quarter in 2021.

3. Comparison Analysis. Explain what your calculations and comparison show about the business’s current nancial health. Give examples to support your explanation for the following questions:

A. Do the results show the business is nancially healthy or unhealthy? Which results indicate this?

B. What might be the causes of the business’s nancial success or failure?

C. Is more information needed to determine the business’s nancial health? If so, which pieces of information might still be needed?

4. Short-Term Financing. Explain how potential short-term nancing sources could help the business raise funds needed to improve its nancial health. Base your response on the business’s current nancial information.

What to Submit Y

our submission should be a 2- to 3 page Word document with 12-point Times New Roman font, double spacing, and one-inch margins. You must also submit the following: The Ratios Most Recent Fiscal Qtr worksheet from the Project Two Financial Formulas workbook The Ratios Same Fiscal Qtr1 Year Ago worksheet from the Project Two Financial Formulas workbook The Excel les for your downloaded balance sheet, income statements, and cash ow statements from Mergent Online

Case Study Sample Content Preview:

Microsoft Corporation’s Fiscal Quarter Comparison, Comparison Analysis, and Short-Term Financing
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Microsoft Corporation’s Fiscal Quarter Comparison, Comparison Analysis, and Short-Term Financing
Fiscal Quarter Comparison
The following are the summaries of the differences between the results of the financial ratios of Microsoft Corporation’s fiscal quarters ending 30th June 2022 and 30th June 2021.
The working capital for 2022 was $74,602,000,000, while that of 2021 was $95,749,000,000. On the other hand, the current ratios for 2022 and 2021 were 1.78 and 2.08, respectively. The debt ratios for 2022 and 2021 were 0.54 and 0.57, respectively. The Corporation’s earnings per share for 2022 was 9.70, while that of 2021 was 8.12. The price/earnings ratios for 2022 and 2021 were 1.20 and 1.36, respectively. The Company’s total asset turnover ratio for 2022 was 0.54, while that of 2021 was 0.50. The financial leverage ratios for 2022 and 2021 were 2.19 and 2.35, respectively. The net profit margin for 2022 was 0.37, while that of 2021 was 0.36. The return on assets for 2022 was 0.20, and that for 2021 was 0.18. Finally, the Corporation’s return on equity for 2022 was 0.44, and that for 2021 was 0.43.
Comparison Analysis
Whether the Results Show the Business is Financially Healthy or Unhealthy
From the analysis, Microsoft Corporation’s results show the business is financially healthy. This assertion is true because the current ratios for 2022 and 2021 were 1.78 and 2.08, respectively. Pattiruhu and Paais (2020) state that the ideal current ratio is 1.50, helping administrators efficiently manage their firms’ working capital. The above ratios mean that Microsoft Corporation had 1.78 and 2.08 times more short-term assets than current liabilities to cover its debts. However, the firm’s liquid assets available to cover its current obligations reduced in 2022 from those in 2021.
Additionally, the debt ratios for both years are below 0.6, meaning the firm can borrow money effortlessly. The debt ratio for 2022 was better than that of 2021 since it decreased from 0.57 to 0.54. Kliestik et al. (2020) assert that “a high liabilities-to-total-assets ratio can be negative, which indicates the shareholder equity is low and potential solvency issues” (p. 82). Therefore, financially healthy companie...
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