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Oracle And Microsoft Essay

1088 words - 5 pages

Financial Statement Analysis: Oracle Corporation and Microsoft Corporation ACCT-504-10236: Acct Fin: Managerial Use,Anlys Professor: Leonard Hope

Oracle Corporation is a US based company that headquarter in Redwood city, CA. It is a multinational computer technology company that develops and markets computer hardware systems. Oracle is second only to Microsoft as the largest software maker by revenue. The company was founded in 1977 under the name of Software Development Laboratories. It went through many name changes only to land the name Oracle Corporation in 1995. They offer many products and services such as software, hardware, middleware, Oracle Beehive, and many applications. ...view middle of the document...

Then compare the two companies on this basis. Remember—each ratio below requires a comparison.

Earnings per Share of Common Stock (basic - common)

As given in the income statement

$

1.69

$

2.73

Current Ratio

Current assets Current liabilities

$39,174 $14,192

=

2.76

$108,704 $51,621

=

2.11

Gross Profit Margin

Gross profit Net Sales

$27,036 $35,623

=

75.9%

$54,366 $69,943

=

77.7%

Rate of Return (Net Profit Margin) on Sales

Net Income Net Sales

$8,547 $35,623

=

24.0%

$23,150 $69,943

=

33.1%

Inventory Turnover

Cost of Goods Sold Average Inventory

$10,830 $1,672

6.5 times

$15,577 $1,372

11.4 times

Days' inventory outstanding (DIO)

365 days Inventory turnover

365 70.4

=

5 days

365 11.7

=

31 days

Accounts Receivable Turnover

Net credit sales Average Net Accounts Receivable 365 Receivable Turnover Ratio

$35,623 $6,063 365 11.0

=

5.9

$69,943 $10,023 365 4.7

=

7.0

Days' sales outstanding (DSO)

=

33.2 days

=

77.7 days

Asset turnover

Net Sales Average Total Assets

$35,623 $73,535

=

0.48

$69,943 $108,704

=

0.64

Rate of Return on Total Assets (ROA)

Rate of return on sales times Asset Turnover

$8,547 $73,535

=

11.6%

$23,150 $108,704

=

21.3%

Debt Ratio

Total Liabilities Total Assets

$14,192 $73,535

=

19.3%

$28,774 $108,704

=

26.5%

Times-Interest-Earned Ratio

Net Income + Int Expense + Tax Expense Interest Expense

$9,825 -$808

=

-12.2

26,947 -295

=

-91.3

Dividend Yield

Dividend per share of common stock (Yahoo Finance 11/1/2013) Market price per share of common stock (Yahoo Finance 11/1/2013) Net income - Preferred dividends Average common stockholders' equity

$0.05

=

#DIV/0!

$0.16

=

#DIV/0!

Rate of Return on Common Stockholders' Equity (ROE)

=

#DIV/0!

=

#DIV/0!

Free cash flow

Net cash provided by operating activities minus cash payments earmarked for investments in plant assets

= =

Price/Earnings Ratio (Multiple) (please see the instructions for the dates to use for this ratio)

12/31/2012 EPS as of 12/31/2012

=

#DIV/0!

=

#DIV/0!

You all get the chance to play the role of financial analyst below. The summary should be a comparison of each company's performance for each major category of ratios (liquidity,...

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