Company: Microsoft
1) A summary analysis of the company's performance over the last five years - Include a simplified Balance Sheet and Income Statement - To simplify these statements, summarize all non-essential lines into "Other" - Example: "Other Assets", "Other Liabilities", "Other Expenses", "Other Revenue" - Non-essential lines would be anything with low dollars values or not relevant to your analysis 2) A projected Balance Sheet and Income Statement over the next five years - Look at three possible scenarios: - Steady growth - The average growth rate for each account over the last five years. - Significant growth - A growth rate above the average. You determine what this rate should be, and must document the assumptions used to create this rate. - Stagnation - A lower growth rate than the average. - For all three, assume expenses and liabilities will grow at an inflation rate of 3%. - Provide a recommendation on which scenario you believe is most likely for your company. Justify your recommendation 3) An investment recommendation - Look at three possible investments: - The investment from Project Assignment \#4 - Project $2 using the following assumptions: - The initial R\&D will be 10% of their average Total Liabilities over the last five years, split between Current Year and Year 1 - To clarify: (Average Total Liabilities over the last 5 years) * .10, divided by 2 - Estimated Sales start in Year 3. Years 3 through 7 are equal to 20% of the Net Revenue in 2021. It then decreases by 7% each year for years 8.9, and 10 . - To clarify: Year 8 - Year 7 (1-07), Year 9= Year 8(1.07), Year 10= Year 9(1.07) - Increase in Cost of Goods Sold is equal to 30% of Estimated Sales Simplified Balance Sheet \begin{tabular}{|l|r|r|r|r|r|} \hline & 2021 & 2020 & 2019 & 2018 & 2017 \\ \hline & \multicolumn{5}{|c|}{ Assets } \\ \hline & & & & & \\ \hline Other current asset & $184,406 & $181,915 & $175,552 & $169,662 & $162,696 \\ \hline Other long term asset & 149,373 & 119,396 & 111,004 & 89,186 & 87,616 \\ \hline Total asset & $333,779 & $301,311 & $286,556 & $258,848 & $250,312 \\ \hline \end{tabular} Liabilities \begin{tabular}{|l|r|c|c|c|r|} \hline Other current liabilities & $88,657 & $72,310 & $69,420 & $58,488 & $55,745 \\ \hline Other long term liabilities & 103,134 & 110,697 & 114,806 & 117,642 & 106,856 \\ \hline Total liabilitics & $191,791 & $183,007 & $184,226 & $176,130 & $162,601 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|r|r|r|} \hline Total stockholders' equity & 141,988 & 118,304 & 102,330 & 82,718 & 87,711 \\ \hline \end{tabular} Simplified Income Statement \begin{tabular}{|l|cc|c|c|c|c|c|c|} \hline \multicolumn{1}{|c|}{} & 2021 & 2020 & 2019 & 2018 & \multicolumn{2}{c|}{2017} \\ \hline \multicolumn{1}{|c|}{ Total revenue } & $ & 168,088 & $143,015 & $125,843 & $110,360 & $9 & 96,571 \\ \hline Cost of revenue & $ & (52,232) & $(46,078) & $(42,910) & $(38,353) & $(34,261) \\ \hline Gross Margin & $ & 115,856 & $96,937 & $82,933 & $72,007 & $ & 62,310 \\ \hline \end{tabular} 2) A projected Balance Sheet and Income Statement over the next five years - Look at three possible scenarios: - Steady growth - The average growth rate for each account over the last five years. - Significant growth- A growth rate above the average, You determine what this rate should be, and must document the assumptions used to create this rate. - Stagnation - A lower growth rate than the average. - For all three, assume expenses and liabilities will grow at an inflation rate of 3% - Provide a recommendation on which scenario you believe is most likely for your company. Justify your recommendation 1) A summary analysis of the company's performance over the last five years - Include a simplified Balance Sheet and Income Statement - To simplify these statements, summarize all non-essential lines into "Other" - Example: "Other Assets", "Other Liabilities", "Other Expenses", "Other Revenue" - Non-essential lines would be anything with low dollars values or not relevant to your analysis 2) A projected Balance Sheet and Income Statement over the next five years - Look at three possible scenarios: - Steady growth - The average growth rate for each account over the last five years. - Significant growth - A growth rate above the average. You determine what this rate should be, and must document the assumptions used to create this rate. - Stagnation - A lower growth rate than the average. - For all three, assume expenses and liabilities will grow at an inflation rate of 3%. - Provide a recommendation on which scenario you believe is most likely for your company. Justify your recommendation 3) An investment recommendation - Look at three possible investments: - The investment from Project Assignment \#4 - Project $2 using the following assumptions: - The initial R\&D will be 10% of their average Total Liabilities over the last five years, split between Current Year and Year 1 - To clarify: (Average Total Liabilities over the last 5 years) * .10, divided by 2 - Estimated Sales start in Year 3. Years 3 through 7 are equal to 20% of the Net Revenue in 2021. It then decreases by 7% each year for years 8.9, and 10 . - To clarify: Year 8 - Year 7 (1-07), Year 9= Year 8(1.07), Year 10= Year 9(1.07) - Increase in Cost of Goods Sold is equal to 30% of Estimated Sales Simplified Balance Sheet \begin{tabular}{|l|r|r|r|r|r|} \hline & 2021 & 2020 & 2019 & 2018 & 2017 \\ \hline & \multicolumn{5}{|c|}{ Assets } \\ \hline & & & & & \\ \hline Other current asset & $184,406 & $181,915 & $175,552 & $169,662 & $162,696 \\ \hline Other long term asset & 149,373 & 119,396 & 111,004 & 89,186 & 87,616 \\ \hline Total asset & $333,779 & $301,311 & $286,556 & $258,848 & $250,312 \\ \hline \end{tabular} Liabilities \begin{tabular}{|l|r|c|c|c|r|} \hline Other current liabilities & $88,657 & $72,310 & $69,420 & $58,488 & $55,745 \\ \hline Other long term liabilities & 103,134 & 110,697 & 114,806 & 117,642 & 106,856 \\ \hline Total liabilitics & $191,791 & $183,007 & $184,226 & $176,130 & $162,601 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|r|r|r|} \hline Total stockholders' equity & 141,988 & 118,304 & 102,330 & 82,718 & 87,711 \\ \hline \end{tabular} Simplified Income Statement \begin{tabular}{|l|cc|c|c|c|c|c|c|} \hline \multicolumn{1}{|c|}{} & 2021 & 2020 & 2019 & 2018 & \multicolumn{2}{c|}{2017} \\ \hline \multicolumn{1}{|c|}{ Total revenue } & $ & 168,088 & $143,015 & $125,843 & $110,360 & $9 & 96,571 \\ \hline Cost of revenue & $ & (52,232) & $(46,078) & $(42,910) & $(38,353) & $(34,261) \\ \hline Gross Margin & $ & 115,856 & $96,937 & $82,933 & $72,007 & $ & 62,310 \\ \hline \end{tabular} 2) A projected Balance Sheet and Income Statement over the next five years - Look at three possible scenarios: - Steady growth - The average growth rate for each account over the last five years. - Significant growth- A growth rate above the average, You determine what this rate should be, and must document the assumptions used to create this rate. - Stagnation - A lower growth rate than the average. - For all three, assume expenses and liabilities will grow at an inflation rate of 3% - Provide a recommendation on which scenario you believe is most likely for your company. Justify your recommendation
