Question

With a Microsoft's financial statement (any sources are accept!) please make

Financial analysis with

·      Trend analysis

·      Common size analysis

·      Ratio analysis

·      Dupond analysis
(long-answer)

Answer 1

Microsoft corporation is a technology company that develops licensed software products, services and devices to include operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools etc with over an employee bases of 0.2 Million as on Dec 2019.

Financial Performance of the company is as follows :

Comparing Quarter on Quarter from Dec 2018 till Dec 2019 for 5 quarters the numbers seem to have an upward trajectory in terms of revenue growth by over 12 % when you compare Dec 2018 VS Dec 2019 and also mainating the Net profit at higher level as compared to Dec 2018 by around 4.5 % . Gross margin for dec 2019 qtr was as high as 68% with a Net opertaing margin of around 32% compared to dec 2018 which was around 25 %.

Also the Return on investment i.e ROI for the FY 2019 was around 16% as compared to industry benchmark of 14% , supported with strong opertaional cashflow ratio of around 42% for Dec 2019 Qtr . A quick ratio of around 2.77 as comapred to industry standard of 2.88 was lil disappointing due to ageing inventory and receivables , whereas the Current ratio of 2.8 was fairly higher than industry standard of 2.5 fairly symbolising a strong operational ratio backing the company . Both ROE (retrun on equity) and ROA (return on assets ) were highly satisfactory at 29.93% & 11.32% respetively convincingly beating the peers / industry numbers .

Also the average EPS growth was around 12.55 % as comapred to industry peers of 3.77% backed by strong dividend yield at 1.92% thereby helping the retail investors / minority investors with robust equity returns.