If Microsoft were to recognize revenue upon the receipt of cash, what would their revenue have been in the fiscal years ended June 30, 2016 and 2017? Compare the reported growth rate in revenues to the growth rate from your calculated cash collections from customers in the fiscal years ended June 30, 2016 and 2017. Which is more likely to be used by investors and why?

Exhibit 2

Microsoft Corp. Financial Statements and related footnotes fiscal year ended June 30, 2017

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INCOME STATEMENTS

(In millions, except per share amounts)
Year Ended June30,	2017	2016	2015
Revenue:
Product	$ 57,190	$ 61,502	$ 75,956
Service and other	32,760	23,818	17,624
Total revenue	89,950	85,320	93,580
Cost of revenue:
Product	15,175	17,880	21,410
Service and other	19,086	14,900	11,628
Total cost of revenue	34,261	32,780	33,038
Gross margin	55,689	52,540	60,542
Research and development	13,037	11,988	12,046
Sales and marketing	15,539	14,697	15,713
General and administrative	4,481	4,563	4,611
Impairment, integration, and restructuring	306	1,110	10,011
Operating income	22,326	20,182	18,161
Other income (expense), net	823	(431 )	346
Income before income taxes	23,149	19,751	18,507
Provision for income taxes	1,945	2,953	6,314
Net income	$ 21,204	$ 16,798	$ 12,193
Earnings per share:
Basic	$ 2.74	$ 2.12	$ 1.49
Diluted	$ 2.71	$ 2.10	$ 1.48
Weighted average shares outstanding:
Basic	7,746	7,925	8,177
Diluted	7,832	8,013	8,254
Cash dividends declared per common share	$ 1.56	$ 1.44	$ 1.24

See accompanying notes.

BALANCE SHEETS

(In millions)
June30,	2017	2016
Assets
Current assets:
Cash and cash equivalents	$ 7,663	$ 6,510
Short-term investments (including securities loaned of$3,694and $204)	125,318	106,730
Total cash, cash equivalents, and short-term investments	132,981	113,240
Accounts receivable, net of allowance for doubtful accounts of$405and $426	19,792	18,277
Inventories	2,181	2,251
Other	4,897	5,892
Total current assets	159,851	139,660
Property and equipment, net of accumulated depreciation of$24,179and $19,800	23,734	18,356
Equity and other investments	6,023	10,431
Goodwill	35,122	17,872
Intangible assets, net	10,106	3,733
Other long-term assets	6,250	3,416
Total assets	$ 241,086	$ 193,468
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$ 7,390	$ 6,898
Short-term debt	9,072	12,904
Current portion of long-term debt	1,049	0
Accrued compensation	5,819	5,264
Income taxes	718	580
Short-term unearned revenue	34,102	27,468
Securities lending payable	97	294
Other	6,280	5,949
Total current liabilities	64,527	59,357
Long-term debt	76,073	40,557
Long-term unearned revenue	10,377	6,441
Deferred income taxes	531	1,476
Other long-term liabilities	17,184	13,640
Total liabilities	168,692	121,471
Commitments and contingencies
Stockholders' equity:
Common stock and paid-in capital - shares authorized 24,000; outstanding7,708and 7,808	69,315	68,178
Retained earnings	2,648	2,282
Accumulated other comprehensive income	431	1,537
Total stockholders' equity	72,394	71,997
Total liabilities and stockholders' equity	$ 241,086	$ 193,468