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Mini-Case: The information about Microsoft, given below is quite old. You have just found a good position in the finance department at Microsoft, at their headquarters office in Redmond, WA. Your first assignment is to find the current values of the financial ratios. You should focus on the ratios related to the short-term financial management of the company. Do you find any significant changes in these values, compared to the numbers for 2001? Comment on the significance of these changes. http://www.microsoft.com/en-us/default.aspx Determine about 4 ratios related to short term financial management of the company for 2014 or 2015 and provide insight as to how they have changed compared to the ratios from 2001 on the attachment. Many thanks! Microsoft Profile, January 1, 2001 One Microsoft Way Redmond, WA 98052 Tel: (452) 882-8080, Fax: (425) 936-7329 Website - http://www.microsoft.com Company Calendar Earnings report announcement: January 15, 2001 Profile Microsoft Corporation, incorporated in 1981, develops, manufactures, licenses and supports a wide range of software products for a multitude of computing devices. Microsoft software includes scalable operating systems for servers, personal computers (PCs) and intelligent devices, server applications for client/server environments, knowledge worker productivity applications, and software development tools. The Company's online efforts include the MSN network of Internet products and services and alliances with companies involved with broadband access and various forms of digital interactivity. Microsoft also licenses consumer software programs, sells hardware devices, provides consulting services, trains and certifies system integrators, and researches and develops advanced technologies for future software products. The Company is divided into three main areas: the Business Divisions, the Sales, Marketing and Support Group, and the Operations Group. The Business Divisions work in close partnership in order to create powerful software services and solutions built around the Internet, Windows and new devices. The product segments, based on these business divisions, are the Windows Platforms segment, the Business Productivity Applications and Developer segment, and the Consumer and other segment. The Sales, Marketing and Support Group is responsible for building long-term business relationships with original equipment manufacturers (OEMs), enterprises, small and medium-sized businesses, application developers, educational institutions and consumers. Enterprises are offered tailored license programs, enterprise-wide support, consulting services and other specialized services. The Operations Group is responsible for managing business operations and overall business planning. This includes the process of manufacturing and delivering finished goods and licenses, corporate functions such as finance, administration, human resources and legal. Microsoft, January 1, 2001 Ratios & Statistics Ratios Company Industry S&P 500 P/E Ratio (TTM) 27.81 28.93 32.46 P/E High - Last 5 Yrs. 86.12 85.56 48.25 P/E Low - Last 5 Yrs. 32.43 27.35 17.13 Beta 1.80 1.71 1.00 Price to Sales (TTM) 11.67 17.04 5.48 Price to Book (MRQ) 5.77 13.25 7.84 Price to Tangible Book (MRQ) 5.77 16.20 11.63 Price to Cash Flow (TTM) 26.07 28.65 25.43 Price to Free Cash Flow (TTM) 20.86 45.99 45.81 % Owned Institutions 41.01 38.20 57.72 Dividends Company Industry S&P 500 Dividend Yield 0.00 0.27 1.60 Dividend Yield - 5 Year Avg. 0.00 0.02 1.26 Dividend 5 Year Growth Rate - (10.39) 8.87 Payout Ratio 0.00 0.21 24.73 Growth Rates (%) Company Industry S&P 500 Revenue (MRQ) vs Qtr 1 Yr. Ago 7.73 37.28 22.83 Revenue (TTM) vs TTM 1 Yr Ago 16.25 40.76 22.34 Revenue - 5 Yr. Growth Rate 30.46 43.19 19.73 EPS (MRQ) vs Qtr. 1 Yr. Ago 17.72 34.94 31.16 EPS (TTM) vs TTM 1 Yr. Ago 17.78 19.15 26.31 EPS - 5 Yr. Growth Rate 42.42 47.91 20.41 Capital Spending - 5 Yr. Growth Rate 12.17 20.35 17.18 Financial Strength Company Industry S&P 500 Quick Ratio (MRQ) 3.00 2.99 1.21 Current Ratio (MRQ) 3.37 3.22 1.71 LT Debt to Equity (MRQ) 0.00 0.11 0.60 Total Debt to Equity 0.00 0.12 0.91 Interest Coverage (TTM) - (12.55) 10.65 Profitability Ratios (%) Company Industry S&P 500 Gross Margin (TTM) 86.53 77.35 50.12 Gross Margin 5 Yr. Avg. 2.23 74.98 48.27 EBITD Margin (TTM) 49.54 25.17 23.77 EBITD - 5 Yr. Avg. 47.92 23.78 21.69 Operating Margin (TTM) 46.74 19.38 18.53 Operating Margin 5 - Yr. Avg 42.91 16.07 17.64
