During the course of this class, we have covered and studied Microsoft and IBM from a financial perspective. We have studied their Income and Cash flows statements along with their respective balance sheets. This has allowed us to have a more broad in-depth perspective about the state of current affairs in these companies. Needless to say, these are to two of the world¡¦s biggest and more renowned companies and in a sense, role models to follow when it comes to ethics and financial execution.
With this in mind, we now move on to answer a very interesting question, to say the least; which company is better managed from the perspectives of profitability, asset utilization, risk management, cash flow management. We will first examine Microsoft in all of these phases. Microsoft net assets have been declining over the past years mostly impart to upping the expenditure in all fronts of their business. One quick look at their balance sheet and this becomes very, very clear. At the end of their FY ¡¦06 they had $40,104,000 millions in net tangible assets down from $44,307,000 from FY ¡¦05 and down from $71,141,000 from FY ¡¦04. While this decline looks staggering, we would need to closely examine so additional factors to better understand the reason for the decline.
Looking at the income statement we can see that Microsoft¡¦s total revenue¡¦s has increase over the same period of time as well as their Operating income. So, what does this means? Upon a longer revisal of their fiscal report, we can attribute to mainly six factors.
These are:
?X Continuous bigger spending in charities.
?X Avoiding acquiring long term of long term dept, which means paying everything off with th ...