You will need to use the Standard & Poor's Market Insight Web site (www.mhhe.com/edumarketinsight) for this problem.

a. For fiscal year 2006, what is the largest single asset on General Motors Corp's balance sheet, on Microsoft Corp's balance sheet?

b. Calculate the ratio of cash and equivalents to total assets for General Motors and Microsoft for fiscal year 2006.

c. In general terms, how does Microsoft's huge investment in cash affect its return on equity and its sustainable growth rate?

d. As a Microsoft shareholder, would you endorse Microsoft's invest- ment in cash? As a Microsoft senior executive, how would you defend the policy?

AppendixLO1