Financial Accounting Company Overview Microsoft Research Proposal

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The only observation that could be made here is that one would expect a larger proportion of the total expenses to be allocated to research and development, given the fact that this is such an important part of Microsoft's activity and essential in order to obtain a competitive advantage on the market.

Asset and Capital Structure

2008

Cash and cash equivalents

$10,339

Accounts receivable

$13,589

Inventories

$985

Total fixed assets

$29,551

The asset structure at Microsoft reflects some of the particularities in the industry, notably the fact that the inventory levels tend to be quite low, as compared to the other assets. This means that the IT industry is not one supporting production on stock. At the same time, the value of the total fixed assets is significantly high, which can be partly explained by the size of the company and the investments in land, buildings and equipment.

Part III -- Ratio Analysis The current ratio in 2008 was 1.45, as compared to 1.69 in 2007.

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The current ratio has slightly decreased from 2007, but, given the fact that it still retains a value greater than 1, it is clear that the short-term financial solvability of the company is solid.

The total asset turnover at Microsoft was 0.83 in 2008, as compared to 0.81 in 2007. The figures denote a slight increase, which shows that Microsoft is using its asset somewhat more efficiently.

The net profit margin at Microsoft was 29.26% in 2008, as compared to 27.5% in 2007. With an increase from the previous year, the company remains a very profitable one, apparently not affected by the economic crisis that started in 2007.

The return on assets at Microsoft was 0.24 in 2008, as compared to 0.22 in 2007. As most of the other profitability and asset management figures, the return on assets also shows a better performance in 2008.

Part IV -- Conclusions and Recommendations

Microsoft's results, both.....

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