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: a. Compute the working capital for each company for both years. 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. 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. d. Compute the current ratio for both companies. Round to one decimal place. e. Which company has the larger relative liquidity based on the current ratio? has greater short-term liquidity as measured by the current ratio than does very profitable and generate a large amount of cash from their operations. Thus, the difference in the current ratio is not a concern and can be influenced by working capital and investment strategies. f. Based on your analysis, comment on the short-term debt-paying ability of these two companies. 1. Both companies have very high current ratios. Both companies exhibit a strong solvency position and should have no difficulties in meeting their short-term obligations. 2. Alphabet has very high current ratios. Alphabet exhibit a strong solvency position and should have no difficulties in meeting their short-term obligations. 3. Microsoft has very high current ratios. Microsoft exhibit a strong solvency position and should have no difficulties in meeting their short-term obligations