Microsoft's Income Statement: Revenue Growth & Ratios - Paper Example

The Ratios and What They Reflect

Looking at Microsoft’s income statement for the fiscal year ending in 2019, the revenue of the company increased from 2018 to 2019; it had also increased from 2017 to 2018; the same can also be sad for the operating income. The income before income taxes also increased from 2017 to 2018 and further increased in 2019. However, the net income of the company lessened from 2017 to 2018. Nonetheless, it grew from in 2019, surpassing the levels it had reached even in 2017. Looking at Microsoft’s balance sheet for the fiscal year ending in 2019, the current assets improved from 2017 to 2018 and did the same from in 2019. The same applies to the long-term assets, which corresponded to the calculations for the total assets. It amplified from 2018 from the previous year and also increased in 2019. The current liabilities of the company decreased in 2018 from the previous year but then increased in 2019, even bettering the levels achieved in 2017. The long-term liabilities amplified in 2018 from the previous year but then diminished in 2019. The company’s stakeholder’s equity increased from 2017 to 2018 and did the same from 2018 to 2019 to 114.5 billion dollars (Stock on Net, 2020).

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

These numbers can tell the profitability, solvency, and liquidity ratios, which can then understand what they reflect. Looking at profitability ratios, the gross profit ratio of Microsoft Corp’s gross increased in 2018 from the previous year and did the same in 2019; the gross profit indicates the available percentage to cover operations of the company and other expenditures (Mishkin and Eakins, 2019). In 2018, the company’s net profit decreased but then increased in 2019, exceeding the 2018 levels to the solvency ratios, where the financial leverage ratio decreased in 2018 from the past year and then increased significantly in 2019. For the liquidity ratios, there was an improvement in the cash ratio. It improved in 2018 from the past year, but then there was a decrease in 2019. Most of the company’s ratios keep on increasing, which reflects the growth of the company; the company keeps on making profits.

Is the Company Headed in the Right Direction?

Looking at these numbers, the company is heading in the right direction. The company is still on top of its competitors, and it keeps on growing, the revenue is increasing each year. The company is also well-positioned to remain on top. Microsoft Corp continues to grow in almost every business and continues to see high demand for its innovative services. The fiscal year 2019 saw an increase in nearly all ratios, including revenue, operating income, income before taxes, equity, etc. this means that the company is heading in the right direction.

Comparison with Competitors

Microsoft and Apple are among the world’s largest companies; they are in the same industry, which means they are constantly competing with each other. By comparing these two companies, we can tell how Microsoft is performing in comparison to its competitors. Over the past few years, the stock for both companies has more than doubled. Apple is currently worth 993.8 billion dollars, while Microsoft’s present value is at more than 1 billion dollars. Taking a look at the third quarter of the fiscal year 2019, Apple earnings as of June 30th was $2.18 per share, which was a 6.8% decline from 2018. The revenue increased by 1% to 53.8 billion.

In comparison, Microsoft's earnings per share stood at $1.37, a 21% increase from 2018. The revenue increased by 12.1% to $33.7 billion. These numbers are enough to tell how Microsoft is fairing in comparison with its competitors; the company well placed in the industry.

References

Mishkin, F. S., & Eakins, S. G. (2019). Financial Markets. Pearson Italia.

Stock Analysis on Net (2020) Microsoft Corp. (NASDAQ: MSFT) 2019. Retrieved on June 26th, 2020 from https://www.stock-analysis-on.net/NASDAQ/Company/Microsoft-Corp