Microsoft Corporation is analyzing the quality of its earnings for the quarter. The following data

is provided:

● Net Income: $10,000,000

● Cash Flow from Operating Activities: $12,000,000

● Changes in Accounts Receivable: $1,000,000

● Changes in Accounts Payable: $500,000

a) Calculate the Accruals. b) Determine the Cash Flow Accruals Ratio. c) Analyze the quality of

Microsoft's earnings based on accruals. d) Evaluate the implications of high cash flow accruals.

e) Assess strategies to improve earnings quality for Microsoft.