Analyze and compare Alphabet (Google) and Microsoft Alphabet Inc. (GOOG) and Microsoft Corporation (MSFT) design and distribute consumer and enterprise software, including overlaps in search, business productivity, and mobile operating systems. Alphabet's primary source of revenue is from advertising, while Microsoft's is from software subscription and support fees. The following year-end data (in millions) were taken from recent balance sheets for both companies: Microsoft Year 2 $175,552 69,420 Microsoft Year 1 Alphabet Year 2 Alphabet Year 1 Current assets Current liabilities $152,578 45,221 a. Compute the working capital for each company for both years. $169,662 58,488 $135,676 34,620 Year 2 Year 11 Microsoft Alphabet b. Which company has the larger working capital at the end of Year 2? 1. Microsoft and Alphabet have similar amounts of working capital. Alphabet had slightly more at the end of Year 2, but slightly less at the end of Year 1. 2. Microsoft and Alphabet have similar amounts of working capital. Microsoft had slightly more at the end of Year 2, but slightly less at the end of Year 1. 3. Microsoft has higher working capital than Alphabet. Microsoft had slightly more at the end of Year 2, but slightly less at the end of Year 1. 4. Alphabet has higher working capital than Microsoft. Alphabet had slightly more at the end of Year 2, but slightly less at the end of Year 1. c. Is working capital a good measure of relative liquidity in comparing the two companies? 1. Working capital does not measure the "relative" liquidity between two companies. Size differences can result in large differences in amounts, which are difficult to compare Ratios provide better relative measures of performance between companies; thus, the current ratio provides a better relative measure of liquidity between Microsoft and Alphabet. 2. Working capital measures the "relative" liquidity between two companies. Size differences can be smoothened and data is comparable. Ratios provide better relative measures of performance between companies; but, the working capital provides a better relative measure of liquidity between Microsoft and Alphabet