Question 1 (1 point) Please view the 2020 income statements and balance sheets for Microsoft. 1. What does margin measure? Describe this in your own words. Writing a formula is not a sufficient answer. 2. What was Microsoft's 2020 margin? 3. What is one specific way that Microsoft could increase its margin? Please number your responses. PARTI Item 8 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INCOME STATEMENTS (In millions, except per share amounts) Year Ended June 30 2020 2019 2018 Revenue: Product $ 68,041 $ 66,069 $ 64,497 Service and other 74,974 59,774 45,863 Total revenue 143,015 125,843 110,360 Cost of revenue: Product Service and other Total cost of revenue Gross margin Research and development Sales and marketing General and administrative Operating income Other income, net Income before income taxes Provision for income taxes Net income Earnings per share: Basic Diluted Weighted average shares outstanding: Basic Diluted 16,017 16,273 15,420 30,061 26,637 22,933 46,078 42,910 38,353 96,937 82,933 72,007 19,269 16,876 14,726 19,598 18,213 17,469 5,111 4,885 4,754 52,959 42,959 35,058 77 729 1.416 53,036 43,688 36,474 8,755 4.448 19,903 $ 44,281 $ 39,240 S 16,571 $ $ 5.82 $ 5.76 S 5.11 S 5.06 S 2.15 2.13 7,610 7,683 7.673 7,753 7,700 7,794 Refer to accompanying notes. BALANCE SHEETS 2020 2019 $ 13,576 $ 122,951 11.356 122,463 136,527 133,819 32,011 1,895 11,482 29,524 2,063 10,146 175,552 181,915 44,151 8,753 2,965 43,351 7,038 13,138 36,477 7,379 2,649 42,026 7.750 14,723 301,311 $ 286,556 (In millions) June 30 Assets Current assets: Cash and cash equivalents Short-term investments Total cash, cash equivalents, and short-term investments Accounts receivable, net of allowance for doubtful accounts of $788 and $411 Inventories Other current assets Total current assets Property and equipment, net of accumulated depreciation of $43,197 and $35,330 Operating lease right-of-use assets Equity investments Goodwill Intangible assets, net Other long-term assets Total assets Liabilities and stockholders' equity Current liabilities: Accounts payable Current portion of long-term debt Accrued compensation Short-term income taxes Short-term unearned revenue Other current liabilities Total current liabilities Long-term debt Long-term income taxes Long-term uneared revenue Deferred income taxes Operating lease liabilities Other long-term liabilities Total liabilities Commitments and contingencies Stockholders' equity: Common stock and paid-in capital - shares authorized 24,000, outstanding 7,571 and 7,643 Retained earnings Accumulated other comprehensive income (loss) Total stockholders' equity Total liabilities and stockholders' equity 9,382 5,516 6,830 5,665 32,676 9,351 12,530 $ 3,749 7,874 2,130 36,000 10,027 72,310 59,578 29,432 3,180 204 7,671 10,632 69,420 66,662 29,612 4,530 233 6,188 7,581 183,007 184,226 80,552 34,566 3,186 78,520 24,150 (340) 102,330 118,304 301,311 $ 286,556
