Question

Select one (1) U.S. publicly traded company and review its most recent Annual Report. (You may use one (1) of the three (3) companies you selected for your Stock Journal assignment.)

Use the Income Statement and Balance Sheet to determine the changes in:

• assets, liabilities, and equity
• total revenue and net income

Briefly describe the change from the current and prior years in each of these key areas and determine if the changes would be positive or negative from an investor / stockholder's view.

Answer 1

Revenue:

Revenue increased $15.5 billion or 14%, driven by growth across each of our segments. Intelligent Cloud revenue increased, driven by server products and cloud services. Productivity and Business Processes revenue increased, driven by Office and LinkedIn. More Personal Computing revenue increased, driven by Surface, Gaming, and Windows.

Office Commercial revenue increased $3.2 billion or 13%, driven by Office 365 Commercial, offset in part by lower revenue from products licensed on-premises, reflecting a continued shift to cloud offerings. Office 365 Commercial grew 33%, due to growth in seats and higher average revenue per user.

Net Income:

Net Income grew by $ 22,669mn or 136.8%. The growth by driven by following factors –

Gross margin increased $10.9 billion or 15%, driven by growth across each of our segments.

Current year net income included a $2.6 billion net income tax benefit related to intangible property transfers and a $157 million net charge related to the enactment of the TCJA, which together resulted in an increase to net income of $2.4 billion.

Assets

Company’s total assets stood at $286.556bn, an increase of 10.7% over 2018. Net investment in Property and Equipments grew by 7.01bn or 23.8% over previous year which shows that company is actively investing in new technologies, there is increase in Goodwill of $ 6.34bn due to new acquisitions. Other long term assets grew by $ 7.28bn

Liabilities: -

Total liabilities grew by $8.09bn or 4.6bn, primarily on account of increase in unearned revenue of $ 3.77bn and Short term tax payable of $3.5bn

Equity:-

Company equity has grown by $19.61bn or 23.7bn, primarily on account of increase in profits during the year as explained above. Also, company issued new shares worth $ 7.29bn during the year which also contributed to increase in equity.

The changes above are positive from investors or stock holders view as company profits have grown and its equity has also grown over previous year. This gets reflected in the shape in increase in value of shareholding of the investors by increase in in share price of the company.