Accounting and Corporate Finance Is Term Paper

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5% for FY2003 to 25.26% in FY2007. From this specific financial ratio it is clear that Microsoft is performing significantly above their competitors in terms of managing the long-term value of shareholder's equity. Another critical profitability ratio, Return on Assets (ROA), Microsoft again shows exceptionally strong performance relative to Google and Oracle. For FY2002, Microsoft deliver 11.52% on asset utilization, rising to 18.1% for FY2006. Google's ROA was 34.74% for FY2002 dropping to 1.66% in FY2006. For Oracle, ROA also dropped, from 20.85% in FY2003 to 12.36% in FY2007. Oracle's many acquisitions during these years has significantly dropped ROA. Oracle acquired PeopleSoft, Siebel Systems, Retek, and several smaller software companies, which has also diluted their Return on Equity (ROE) as well.

Another key profitability ratio, Net Profit Margin (%), shows the volatility of Google as an investment relative to Microsoft or Oracle.

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Microsoft's Net Profit Margin (%) showed stability in the years included in this analysis, starting at 27.6% for FY2002, rising to 28.45% in FY2006. Oracle's Net Profit Margin (%) dropped slightly yet stayed flat during the analysis period, moving from 24.35% in FY2003 to 23.75% in FY2007. Google's volatility is shown in their performance on Net Profit Margin (%). From 22.67% in FY2002, dropping to 7.21% in 2003, then rising to 29.02% in FY2006 shows how volatile the Google business model can be when analyzed using profitability ratios.

When these three companies are compared on key liquidity indicators, Google's dominance on the Quick Ratio shows how well their advertising-based business model is working. On the Current Ratio, Google increased from 2.59 in FY2002 to 10 in FY2006. For Microsoft, their Current Ratio.....

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