Question

1.) The information about Microsoft, given earlier in this chapter, is quite old. You have just found a good position in the finance department at Microsoft, at their headquarters office in Redmond, WA. Your first assignment is to find the current values of the financial ratios. You should focus on the ratios related to the short-term financial management of the company. Do you find any significant changes in these values, compared to the numbers for 2001? Comment on the significance of these changes.

2.) Indicate whether the following actions will increase, decrease, or make no change in the cash position of Neva Company:

1. The firm collects payments from previous sales.

2. The company buys a piece of machinery by using long-term debt.

3. The company buys raw material for inventory on credit.

4. The company issues common stock.

5. The firm sells merchandise on credit.

6. The company declares a dividend.

7. The company purchases raw materials for inventory and pays in cash.

8. The firm pays interest on long-term debt.

9. This year's tax liability is increased.

10. The firm pays last year's taxes.

11. The firm uses retained earnings to buy marketable securities.

12. The corporation buys a piece of furniture using a short-term note.

13. The company increases the allowance for bad debts.

14. The company buys back its own stock.

15. The firm borrows on a short-term note.

16. The company pays for a previous purchase.

17. The company sells some merchandise for cash.

18. The firm increases the accumulated depreciation.

19. The firm gives away some merchandise to charity.

20. The firm receives an insurance payment after a fire loss.

Answer 1