Financial Statement Analysis

Submitted by: Courtney Coonen, Natalie Meckstroth, & Danielle Wiedmeyer

Click to edit Master subtitle style

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Executive Summary
After completing your analysis, write an

executive summary of your conclusions here report here as well

Include a link to the companys annual

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Introduction
Chief Executive Officer: Steve Ballmer Headquarters Location: Redmond,

Washington USA
End Date of Latest Fiscal Year: June 30,

2011
Microsofts primary products include the

Microsoft Office Operating System (Windows 7) and the Office Suite (including Word, Excel, PowerPoint, Access, Outlook). Microsoft also sells Windows smartphones and Xbox gaming systems and line of 4/4/12

Audit Report
Microsofts Independent Auditors: Deloitte

& Touche, LLP

According to the independent auditors, as

of June 30, 2011 and 2010, all of Microsoft Corporations financial statements follow and uphold all the guidelines and standards of the Public Company Accounting Oversight Board, as the documents are assured to be free of fraudulence and material fabrication. The information presented on the financial statements in addition to their 4/4/12

Stock Market Information

Most recent price

of your companys stock: $26.79 trading range of the companys stock: $29.46 $23.65 share: $0.80/share
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Twelve month

Twelve-Month Trading Range of Microsoft Corporation (MSFT) Stock from October 2010 October 2011
Chart from money.cnn.com/quotes

Dividend(s) per

Date of the above

Industry & Competition

In the coming months and years ahead

with the advent and development of Cloud Computing, much of the industry including Microsoft with its Office 365 and Windows Azure platforms is creating web applications to entice users and businesses to move their business to the cloud. Furthermore, the invention of tablet PCS especially Apples iPad has changed the industry, moving away from Microsofts industry-dominating operating system of Windows.
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Industry Situation & Company Plans

According to the Letter to the

Shareholders, Microsoft stated their intentions to acquire Skype, which with the movement of business transactions and deals moving to the Cloud, providing a great bolster to Microsofts bottom line with video conferencing between business professionals and everyday people. Windows 8 operating system to become a more user-friendly interface, mimicking the likes of the iPads apps and tiled home 4/4/12

Secondly, Microsofts developing its new

Income Statement
Insert a table

showing the companys sales, gross profit, income from operations, and net income for the last two years (more if available) information in
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Include similar

Income Statement
In your own words, compare the

components for the two (or more) years and comment on any significant changes

Which accounts changed the most Is profitability improving or declining? Why?

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Balance Sheet (In Millions)

June 30 Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable Inventories Deferred Income Taxes Other Property and 2011 $ 9610 43,162 2010 $ 5505 31,283

14,987 13,014 1372 2467 740 2184

3320 2950 4/4/12 7630 8162

Balance Sheet (Continued)

2011 Liabilities Accounts Payable Short-term Debt Accrued Compensation Income Taxes Short-term Unearned Revenue Securities Lending Payable Other $ 4197 0 3575 580 15,722 1208 2010 $ 4025 1000 3283 1074 13,652 182

4/4/12 3492 2931

Balance Sheet (Continued)

2011 Stockholders Equity Common Stock and Paidin Capital Retained Deficit Total Stockholders Equity Total Liability and Stockholders Equity $ 63,415 6332 57,083 $ 108,704 2010 $ 62,856 16,681 46,175 $ 86,113

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Common-Size Comparative Balance Sheet

June 30 2011 2010 CommonSizes Percentages 2011 $ 9610 43,162 14,987 1372 2467 $ 5505 31,283 13,014 740 8.8% 39.7% 13.8% 1.3% 2010 6.4% 36.3% 15.1% 0.9% 2.5%

Assets Cash and Cash Equivalents Short-term Investments Accounts Receivable Inventories Deferred Income Taxes

4/4/12 2.3% 2184

Common-Size Comparative Balance Sheet (Continued)

2011 Liabilities Accounts Payable Short-term Debt Accrued Compensation Income Taxes Short-term Unearned Revenue Securities Lending Payable 2010 Common Size Percentages 2011 2010
3.9% 0.0% 3.3% 0.5% 14.5% 1.1% 4.7% 1.2% 3.8% 1.2% 15.9% 0.2%

4197$ 0 3575 580 15,722 1208

4025 1000 3283 1074 13,652 182

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Common-Size Comparative Balance Sheet (Continued)

2011 2010 Common Size Percentage s 2011 2010
58.3% 5.8% 52.5% 73.0% 19.4% 53.6%

Stockholders Equity Common Stock and Paid-in Capital Retained Deficit Total Stockholders Equity Total Liability and Stockholders Equity $ 63,415$ 6332 57,083 $ 108,704$ 62,856 16,681 46,175

86,113 100.0% 100.0% 4/4/12

Balance Sheet
Insert a table showing what assets,

liabilities, and equity were for the past two years (more if available) format

Include similar information in common size Add any additional, significant individual

components as you deem necessary

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Balance Sheet
In your own words, comment in general on

any trends in the balance sheet accounts

Which accounts changed the most? Is financial position improving or

deteriorating?
Why?

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Statement of Cash Flows

Are cash flows from operations more or

less than net income for the past two years?

What are the primary sources and uses of

cash from operating, investing, & financing activities? or declined over the past two years (more if available)?
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Has the companys cash position improved

Financial Analysis Liquidity Ratios

For the past two years, calculate: (a table

would be nice here)

Working capital Current ratio Acid-test ratio

Accounts receivable turnover Average collection period Inventory turnover Average sales period
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Liquidity
Comment on the companys liquidity from

the ratios you have computed

Is liquidity improving or declining? Whats happening to inventories and

receivables?
How do you interpret these changes?

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Financial Analysis The Common Shareholder

For the past two years calculate:
Earnings per share this can be pulled from

the bottom of the income statement

Price-earnings ratio Dividend payout ratio Dividend yield ratio Return on total assets Return on stockholders equity

(make sure any market prices 4/4/12 use are you

Financial Analysis The Common Shareholder

Comment on what the company has to

offer the common shareholder declining?

Is the shareholders position improving or

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Financial Analysis Solvency Ratios

For the past two years calculate:
Times interest earned Debt to equity

Comment on solvency Is the companys solvency improving or

declining?

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Overall Performance
In general, how well is your company

performing relative to the industry and its primary competitors?

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Recommendation
What is your opinion about the companys

stock as an investment: Buy, Sell, or Hold? Why? your recommendation

Be sure to clearly and thoroughly support

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Sources
List all sources used and include links to

any websites

Microsoft Corporation Annual Report 2011 CNN Money http://money.cnn.com/quotes

http://www.microsoft.com/investor/reports/ar11

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