Microsoft Corp Power Point Presentation
-
Upload
jang-soo-lee -
Category
Documents
-
view
223 -
download
0
Transcript of Microsoft Corp Power Point Presentation
-
8/6/2019 Microsoft Corp Power Point Presentation
1/26
Financial Analysis of
Jang-Soo LeeStephen Kow Bosomafi
December 1, 2007
MBA 644 Financial Statement AnalysisFall 2007 Marist College
-
8/6/2019 Microsoft Corp Power Point Presentation
2/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
2
Ex ecutive Summary
An American multinational computer corporationLocated in 102 countriesNumber of employees = 79,000Very strong financial condition
High liquidityNo interest-bearing debt,High profit marginSteady growing revenue - $51.1 billion as of 2007 (15% increase from $44.3 billion 2006)Steady growing net income - $14 billion as of 2007 (12% increase from $12.6 billion 2006)Steady growing EPS $1.42 as of 2007 (18% increase from $1.20 of 2006)Microsoft Windows operating system and the Microsoft Office suite have prominentpositions in the desktop computer market, with market share estimates as high as 90% or more.
MissionCreating technology that transforms the way
people work, play and communicate
-
8/6/2019 Microsoft Corp Power Point Presentation
3/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
3
O perating Segments
ClientWindows Vista, Windows XP
Server and toolsWindows Server OS, SQL Server, Visual Studio ...O nline Services Business
MSN Search, MSN Hotmail Plus, Windows Live ...
Microsoft Business DivisionMS Office, MS Project, MS Visio
E ntertainment and Devices DivisionXbox 360, Xbox Live, Zune
-
8/6/2019 Microsoft Corp Power Point Presentation
4/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
4
Foundation for Long-term Growth
D elivering innovative productsCreating opportunities for partnersContinuing investment in R& DImproving customer satisfaction with keyaudiences
Improving Microsofts internal businessprocesses
-
8/6/2019 Microsoft Corp Power Point Presentation
5/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
5
ChallengesIntense competition across all markets for Microsoft products andservicesOpen source software vendors developing software that mimic thefeatures and functionality of Microsofts productsProtecting intellectual property rightsSecurity vulnerabilities affecting revenues
Attracting and retaining talented employeesD elays in product development affecting revenues
Claims and lawsuits leading adverse outcomes Adverse economic conditions & catastrophic events Additional tax liabilities Acquisition and joint ventures resulting in an adverse effectImpaired intangible assets negatively impacting earnings
-
8/6/2019 Microsoft Corp Power Point Presentation
6/26
Liquidity Analysis
-
8/6/2019 Microsoft Corp Power Point Presentation
7/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
7
Breakdown of CR & CL
6 414 3
4 9 6 7 6 1
42 6
46 3
32 9 27 417 3
5 2
5 9
7 2 9 3
11 3
7 2 6 5 7 5 9 1 10 8
0 0
10 0
20 0
30 0
40 0
50 0
60 0
70 0
2003 2004 2005 2006 2007
Year
B i l l i o n
$
Other current liabilities
ecurities lending payable
hort-term unearned re enue
Income ta es
Accrued compensation
Accounts payable
Other current assets
Deferred income ta es
In entories
Accounts recei able
hort-term in estments
Cash and equi alents
-
8/6/2019 Microsoft Corp Power Point Presentation
8/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
8
Liquidity Ratios
4 22
4 7
2 8
2 8
648
2 2
74
88
4 44
2 66
4
4686
24
4 0
2 24
2
0
0
2
4
200 2004 200 2006 2007 n stry A g
ector A g 00
A gear
i
i i t y r a
t i o s
C rrent atioic atio
Cas atio
-
8/6/2019 Microsoft Corp Power Point Presentation
9/26
Activity Analysis
-
8/6/2019 Microsoft Corp Power Point Presentation
10/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
10
Days Sales O utstanding
.16 . 46. 4
.2
10.. 44.
.
7 .767.
0.00
2.00
4.00
6.00
.00
10.00
12.00
200 2004 200 2006 2007
ear
A v g . a c
c o n
t r e c e
i v a
l e i n
i l l i o n
0
1020
0
40
0
60
70
0
D
a y s s al e
s o t s t an
i n g Average acco nt receiva leD ays sales o tstan ing
-
8/6/2019 Microsoft Corp Power Point Presentation
11/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
11
Asset E fficiency Ratios
0 00 6 0 64
0 1
0 27 4 1 0
2 64 6
14 4 1 4 16 6 14 11 7
0 010 020 0
0 040 0
0 0
60 070 0
0 00 0
100 0
200 2004 200 2006 2007
ear
B i l l i o n
0 10
1 00
10 00
100 00
T r n
o er r a
t i o
Total assets
n entoriesFi e assets
e en eTotal asset t rno er n entory t rno er Fi e asset t rno er
-
8/6/2019 Microsoft Corp Power Point Presentation
12/26
Solvency Analysis
-
8/6/2019 Microsoft Corp Power Point Presentation
13/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
13
Breakdown of Liabilities
$1 717 $2 086 $2 909 $3 247$1 339 $1 662
$1 938 $2 325$3 478 $2 020 $1 557 $1 040
$6 514 $7 502$9 138 $10 779
$3 117$2 741
$1 921 $3 607
$3 783$3 622
$1 663$1 665
$1 764 $1 867
$1 979$3 066
$4 194$5 071
$0
$5 000
$10 000
$15 000
$20 000
$25 000
$30 000
$35 000
2004 2005 2006 2007
ear
M i l l i o n
$
ther long term liabilitiesLegal contingencies
a contingenciesLong term unearned re enue
ther current liabilitiesSecurities lending payableShort term unearned re enuencome ta es
Accrued compensation
Accounts payable
-
8/6/2019 Microsoft Corp Power Point Presentation
14/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
14
Debt- E quity Ratio
64 9
74 8
48 1
40 1
31 1
16 8 19 522 7
29 5 32 125 9 26 1
47 2
73 5
103 1
0 010 0
20 0
30 0
40 0
50 0
60 0
70 0
80 0
2003 2004 2005 2006 2007
ear
B i l l i o n
$
0 0
20 0
40 0
60 0
80 0
100 0
120 0
D
e b t e q ui t y r a
t i o
otal toc holders quityotal Liabilities
D ebt equity Ratio
-
8/6/2019 Microsoft Corp Power Point Presentation
15/26
P rofitability Analysis
-
8/6/2019 Microsoft Corp Power Point Presentation
16/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
16
Breakdown of Revenues
60 6 67 2 60 76106
66 0 77 61 0 6
71 27 6
16
2114 6
240 0
4 47 6
0 14 6164 7
1 2
0 0
100 0
200 0
00 0
400 0
00 0
600 0
200 2004 200 2006 2007
ear
B i l l i o n
erating incomeGeneral an a ministrative
ales an marketingesearc an evelo ment
Cost of reven e
-
8/6/2019 Microsoft Corp Power Point Presentation
17/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
17
Breakdown of Incomes
9 5 9 0
14 616 5
18 51 5 3 2
2 11 8
1 6
3 5 4 0 4 45 7 6 0
7 5 8 2
12 312 6
14 1
0 0
5 0
10 0
15 0
20 0
25 0
2003 2004 2005 2006 2007
Year
B i l l i o n
$
et income
ro ision for income ta esIn estment income and other
perating income
-
8/6/2019 Microsoft Corp Power Point Presentation
18/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
18
P rofit Margin Ratios
81 2 81 884 8 82 7
7 174 2
2 644 24
2 724
6 6 7 2 6 2
2 817 44 1 47
2 422 2
0 8 28 27
1 62 14 46 1 40 0
10 0
20 0
0 0
40 0
0 060 0
70 0
80 0
0 0
200 2004 200 2006 2007 n stry A g
ector A g 00 A g
ear
M a r g
i n %
ross MarginO erating Margin
et rofit Margin
-
8/6/2019 Microsoft Corp Power Point Presentation
19/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
19
Changes of Asset and NI
1 7
94 4
70 69 66 264 9
74
4 140 1
1 1
16 1922 7
29 2 1
7 212 12 6 14 1
10 020 0
0 0
40 0
0 0
60 070 0
0 0
90 0
100 0
200 2004 200 2006 2007
ear
B i l l i o n
otal Assetsotal tock ol ers ityotal ia ilitieset ncome
-
8/6/2019 Microsoft Corp Power Point Presentation
20/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
20
RO A and R O E Ratios
6
47
2
064
67
7 66
2 0
2 6 2 47
2 7 2 6
0
0
20
0
40
0
200 2004 200 2006 2007 n stry A g
ector A g 00
A gear
a t i o
e t rn on Assetse t rn on i ty
-
8/6/2019 Microsoft Corp Power Point Presentation
21/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
21
E P S and D P S
10 2 10 4 10 06 10 1 6
0 6 0 7
1 121 20
1 42
0 00 16
0 2 0 40
0 20
0 40
0 60
0 0
1 00
1 20
1 40
1 60
200 2004 200 2006 2007
ear
/
0
2000
4000
6000
000
10000
12000
C omm
on
s t o c o
t s t ani n
g
Common stoc o tstan ingarnings er arei i en s er are
-
8/6/2019 Microsoft Corp Power Point Presentation
22/26
-
8/6/2019 Microsoft Corp Power Point Presentation
23/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
23
E P S Growth Rates
2 76
2 724 6
36 3
2 3
20 3
32 4
23 4
3 2
42
02
23 46
0
0
20
2
30
3
40
M s tr r Ago M s M r Ago r ro t ate
r o t
a t e
Microsoft n stry A g ector A g 00 A g
-
8/6/2019 Microsoft Corp Power Point Presentation
24/26
Summary
-
8/6/2019 Microsoft Corp Power Point Presentation
25/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
25
Strengths and Weaknesses
Strengths Weaknesses
Liquidity - Higher liquidity than industry average - Declining liquidity
Activity
- Small portions of inventory and fixed assets
- Improving asset management efficiency- Much higher asset efficiency than industry
average
- Increasing account receivable and DSO
- Increasing inventories and fixed assets
Solvency - No interest-bearing debt - Increasing liability to equity ratio
Profitability
- Steady increases of revenue and profit- Higher profit margin than industry average- Steady increases of ROI and ROE- Much higher ROI and ROE than industry
average- Steady increases of EPS and DPS- Lower beta (0.8) than S&P500 average (1)- Higher growth expectation than S&P500
average
- Decreasing profit margin
-
8/6/2019 Microsoft Corp Power Point Presentation
26/26
MBA 644 Financial statement Analysis Fall 2007 Marist College
Financial Analysis of Microsoft
26
Recommendations
Focusing on sustainable long-term growth through:- echnological innovation- Engineering excellence- Commitment to delivering high-quality products and services
to customers and partners- Increasing liquidity- D ecreasing D SO and Liabilities
Microsoft Corporation would be the one of the wisest investment choices since it can provide a stable long- term growth of blue-chip companies as well as a
possibility of high growth of high-tech companies.