Question

For its fiscal year ending on June​ 30, 2018, Microsoft reported net income of ​$15.3315.33 billion from sales of $107.07107.07 billion. The company also reported total assets of

​$230.53230.53 billion.

a. Calculate​ Microsoft's total asset turnover and its net profit margin.

b. Find the​ company's ROA,​ ROE, and book value per​ share, given that it has a total net​ stockolders' equity of ​$77.3177.31 billion and 4.024.02 billion shares of common stock outstanding.

Answer 1

(a) Formula for total assets turnover ratio is:

Total assets turnover ratio = Net Sales / Total assets * 100

Total assets = $230.53

Net sales = $107.07

Now, putting these values in the above formula, we get,

Total assets turnover ratio = $107.07 / $230.53 * 100 = 46.44%

Net Profit ratio = Net income / Sales * 100

Given: Net income = $15.33, Sales = $107.07

Putting the given values in the above formula, we get,

Net Profit margin ratio = $15.33 / $107.07 * 100 = 14.32%

(b) Formula for return on assets (ROA) is:

Return on assets (ROA) = Net income / Total assets * 100

Total assets = $230.53

Net income = $15.33

Now, putting these values in the above ROA formula, we get,

Return on assets (ROA) = $15.33 / $230.53 * 100 = 6.65%

Formula for return on equity (ROE) is:

Return on equity (ROE) = Net income / Stockholder's equity * 100

Stockholder's equity = $77.31, Net income = $15.33

Now, putting these values in the above ROE formula, we get,

Return on equity (ROE) = $15.33 / $77.31 * 100 = 19.83%

Formula for book value per share is:

Book value per share = Stockholder's equity / Total number of shares outstanding

Stockholder's equity = $77.31, Total number of shares outstanding = 4.02

Now, putting these values in the above formula, we get,

Book value per share = $77.31 / 4.02 = $19.23