ACC 222 FSA Power Point Template

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4/4/12

Click to edit Master subtitle styleSubmitted by:Courtney Coonen, NatalieMeckstroth, & Danielle

Wiedmeyer

Financial

Statement

Analysis



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Executive Summary

After completing your analysis, write anexecutive summary of your conclusionshere

Include a link to the company’s annualreport here as well



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Introduction

Chief Executive Officer: Steve Ballmer

Headquarters Location: Redmond,Washington USA

End Date of Latest Fiscal Year: June 30,2011

Microsoft’s primary products include the

Microsoft Office Operating System(Windows 7) and the Office Suite (includingWord, Excel, PowerPoint, Access, Outlook).Microsoft also sells Windows smartphones

and Xbox gaming systems and line of



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Audit Report

Microsoft’s Independent Auditors: Deloitte& Touche, LLP

According to the independent auditors, as

of June 30, 2011 and 2010, all of MicrosoftCorporation’s financial statements followand uphold all the guidelines andstandards of the Public Company

Accounting Oversight Board, as thedocuments are assured to be free of fraudulence and material fabrication. Theinformation presented on the financial

statements in addition to their



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Stock Market Information

Most recent priceof your company’sstock: $26.79

Twelve monthtrading range of the company’sstock: $29.46 -

$23.65

Dividend(s) pershare: $0.80/share

Date of the above

Twelve-Month Trading Range of Microsoft Corporation (MSFT) Stockfrom October 2010 – October 2011

Chart from money.cnn.com/quotes



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Industry & Competition

In the coming months and years aheadwith the advent and development of “Cloud Computing,” much of the industry –including Microsoft with its “Office 365”and “Windows Azure” platforms – iscreating web applications to entice usersand businesses to move their business tothe cloud. Furthermore, the invention of tablet PCS – especially Apple’s iPad – haschanged the industry, moving away fromMicrosoft’s industry-dominating operating

system of Windows.



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Industry Situation & CompanyPlans

According to the Letter to theShareholders, Microsoft stated theirintentions to acquire Skype, which with themovement of business transactions anddeals moving to the “Cloud,” providing agreat bolster to Microsoft’s bottom linewith video conferencing between businessprofessionals and everyday people.

Secondly, Microsoft’s developing its newWindows 8 operating system to become amore user-friendly interface, mimicking the

likes of the iPad’s “apps” and tiled home



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Income Statement

Insert a tableshowing thecompany’s

sales, grossprofit, incomefrom operations,and net income

for the last twoyears (more if available)

Include similarinformation in



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Income Statement

In your own words, compare thecomponents for the two (or more) yearsand comment on any significant changes

Which accounts changed the mostIs profitability improving or declining?

Why?



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Balance Sheet (In Millions)

June 30 2011 2010Assets

Cash and CashEquivalents

$

9610

$

5505

Short-termInvestments

43,162 31,283

Accounts Receivable 14,987 13,014

Inventories 1372 740

Deferred Income Taxes

2467 2184

Other 3320 2950

Property and 8162 7630



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Balance Sheet (Continued)

2011 2010

Liabilities

Accounts Payable $4197

$4025

Short-term Debt 0 1000

AccruedCompensation

3575 3283

Income Taxes 580 1074

Short-termUnearned Revenue

15,722 13,652

Securities LendingPayable

1208 182

Other 3492 2931



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Balance Sheet (Continued)

2011 2010

Stockholders’ Equity

Common Stock and Paid-in Capital

$63,415

$62,856

Retained Deficit 6332 16,681

Total Stockholders’ Equity 57,083 46,175

Total Liability andStockholders’ Equity

$108,704

$86,113



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Common-Size ComparativeBalance Sheet (Continued)

2011 2010 Common SizePercentages

Liabilities 2011 2010

Accounts Payable $ 4197$ 40253.9% 4.7%

Short-term Debt 0 1000 0.0% 1.2%

AccruedCompensation

3575 32833.3% 3.8%

Income Taxes 580 1074 0.5% 1.2%

Short-term UnearnedRevenue

15,722 13,65214.5% 15.9%

Securities Lending

Payable

1208 182

1.1% 0.2%



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Common-Size ComparativeBalance Sheet (Continued)

2011 2010 CommonSize

Percentages

Stockholders’ Equity 20112010

Common Stock andPaid-in Capital $ 63,415$ 62,856 58.3% 73.0%

Retained Deficit 6332 16,681 5.8% 19.4%

Total Stockholders’Equity 57,083 46,175 52.5% 53.6%

Total Liability andStockholders’ Equity $ 108,704$ 86,113 100.0% 100.0%



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Balance Sheet

Insert a table showing what assets,liabilities, and equity were for the past twoyears (more if available)

Include similar information in common sizeformat

Add any additional, significant individualcomponents as you deem necessary



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Balance Sheet

In your own words, comment in general onany trends in the balance sheet accounts

Which accounts changed the most?

Is financial position improving ordeteriorating?

Why?



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Statement of Cash Flows

Are cash flows from operations more orless than net income for the past twoyears?

What are the primary sources and uses of cash from operating, investing, & financingactivities?

Has the company’s cash position improved

or declined over the past two years (moreif available)?



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Financial AnalysisLiquidity Ratios

For the past two years, calculate: (a tablewould be nice here)

Ø Working capital

Ø Current ratio

Ø Acid-test ratio

Ø Accounts receivable turnover

Ø Average collection period

Ø Inventory turnover

Ø Average sales period

Ø Provide a link to a separate document that



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Liquidity

Comment on the company’s liquidity fromthe ratios you have computed

Is liquidity improving or declining?

What’s happening to inventories andreceivables?

How do you interpret these changes?



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Financial AnalysisThe Common Shareholder

For the past two years calculate:

Ø Earnings per share – this can be pulled fromthe bottom of the income statement

Ø Price-earnings ratioØ Dividend payout ratio

Ø Dividend yield ratio

Ø Return on total assetsØ Return on stockholder’s equity

(make sure any market prices you use are



4/4/12

Financial AnalysisThe Common Shareholder

Comment on what the company has tooffer the common shareholder

Is the shareholder’s position improving or

declining?



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Financial AnalysisSolvency Ratios

For the past two years calculate:

Ø Times interest earned

Ø Debt to equity

Comment on solvency

Is the company’s solvency improving ordeclining?



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Overall Performance

In general, how well is your companyperforming relative to the industry and itsprimary competitors?



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Recommendation

What is your opinion about the company’sstock as an investment: Buy, Sell, or Hold?Why?

Be sure to clearly and thoroughly supportyour recommendation



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Sources

List all sources used and include links toany websites

Microsoft Corporation Annual Report 2011

http://www.microsoft.com/investor/reports/ar1CNN Money http://money.cnn.com/quotes

http://www.microsoft.com/investor/reports/ar11/index.html

http://money.cnn.com/quotes

http://money.cnn.com/quotes

http://www.microsoft.com/investor/reports/ar11/index.html

ACC 222 FSA Power Point Template

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