Annual Report Project- Section 4

 

For this assignment, combine your Annual Report Project from Weeks 1 and 3, along with the following additional requirements:

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  1. Calculate the Current, Debt/Equity, and Inventory Turnover ratios for the company you have chosen.
  2. Locate a competitor that is involved in the same business as your chosen company. Provide an analysis of the same ratios calculated above. What do these ratios tell you? Is the company you have chosen performing better or worse based upon these ratios?
  3. Compare and contrast the GAAP, IFRS, and tax issues that your chosen company and the competitor face.
  4. Read the article, “A Blueprint for Digital Companies’ Financial Reporting,” provided in the study materials. Discuss any “drivers” that may apply to your company and where that information should be disclosed to investors.
  5. Provide an investment recommendation that examines whether your company is a good investment decision.

Create a Word document that summarizes your written commentary from Week 1 and above, and an Excel document that contains the Week 3 work along with the ratios calculated above.

List all resources you used in previous sections of the Annual Report Project, and integrate at least three academic sources into the final summary of your paper.

Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.

This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion. 

You are required to submit this assignment to LopesWrite. Refer to the

LopesWrite Technical Support articles

for assistance. 

Running Head: MICROSOFT

MICROSOFT 2

MICROSOFT

Lakisha Trammel

GCU

1/12/2021

In the MD&A of the 2019 annual report, Microsoft highlighted various factors such as increasing revenues, a potential rise in market-share due to new product (Azure), stiff competition and emergence of artificial intelligence (AI) as the main factors influencing its future business viability. According to Microsoft, the future will be influenced by AI and Microsoft is confident that it will expand market share due to its new product called Azure. The four key issues are business, market for equity, the management and exhibits. These four issues have been expanded significantly in the report and a summary is included in this study.

The first issue is the exhibit that seeks to disclose the schedules for other reports the periods ending as well as the date of release. Among such include the income statement, balance sheet, cash flow statement, shareholders’ equity statements, reports of independent account firms and finally the notes to financial statement (Nadella & London, 2018). These are most import documents to the investors because they give financial position of the company. It is from her that investors know whether company is making profits or losses. Such documents either scars away investors or invites them in.

The second issue is the executive and the management. The company has seven senior management offices. The company is lead by a chief executive officer. Below the chief executive office are five executive vice presidents. The company resident doubles as the chief legal officer. The chief executive office`s name is Satya Nadella who was, according to the 2019 10K report, appoint in the year 2014. The chief marketing officer, one of the vice presidents was appointed in the year 2016. Other vice presidents have always been appointing from the human resource pool that the company has trained over the years.

Business: this issue covers the company mission and vision about the future. It is in this section that the company explains its products. Among the products offered by the company include operating system, server application, tools to manage server and desktop, video games, cross device productivity application and also business solution application. The ambition that drives the business in the to create more personal computing power, to improve on the artificial intelligent and finally to reinvent productive. The latest of its product is the Azure SQL database where AI is incorporated in server management (Microsoft, 2019).

The last issue addressed is the market for registration of the common stock. In this section, the available information is about the prices of the shares sold in the market. In accordance with April 2019, there had been 8, 547, 612 shares that were purchased at $ 122.85 and this was approximated to $ 14.55 billion. The dividend was declared on June 12 the same and after recording on august 15, the were paid on September 12. Each share received $ 0.46 and this total to $ 3.516 billion. The Microsoft continues that $ 7.7 billion was return as repurchases to shareholders.

References

Fitchett, L. (2019). A Strategic Audit of Microsoft Azure.

Microsoft, (2019). Annual Report 2019- Satya Nadella, Chief Executive Officer. Retrieved from

https://www.microsoft.com/investor/reports/ar19/index.html

Nadella, S., & London, S. (2018). Microsoft’s Next Act. The McKinsey Quarterly.

Financial Information

Microsoft

through

(Amounts in millions)

2020

2018 Fiscal Year: 2020 2019 2018

118,304 102,330 82,718

301,311 286,556 258,848

Microsoft
Income Statement
Balance Sheet
For the Years ended

2018 2020
For the Years ended 2018 through 2020
(Amounts in millions)
Fiscal Year: 2019
Total Revenue 143,015 125,843 110,360 Cash, Cash Equivalents and Short Term Investments 136,527 133,819 133,768
Cost of Revenue 46,078 42,910 38,353 Inventories 1,895 2,063 2,662
Gross Profit 96,937 82,933 72,007 Trade and Other Receivables, Current 32,011 29,524 26,481
Selling, General and Administrative Expenses 24,709 23,098 22,223 Other Current Assets 11,482 10,146 6,7

51
Research and Development Expenses 19,269 16,876 14,726 Total Current Assets 181,915 175,552 169,662
Operating Income/Expenses 43,978 39,974 36,949
Deferred Costs/Assets, Current
Total Operating Profit/Loss 52,959 42,959 35,058 Total Non-Current Assets 119,396 111,004 89,186
Non-Operating Income/Expenses, Total 77 729 1,416 Net Property, Plant and Equipment 52,904 43,856 36,146
Pretax Income 53,036 43,688 36,474 Net Intangible Assets 50,389 49,776 43,736
Provision for Income Tax 8,755 4,448 19,903 Total Long Term Investments 2,965 2,649 1,862
Net Income from Continuing Operations 44,281 39,240 16,571 Other Non-Current Assets 13,138 14,723 7,442
Total Assets 301,311 286,556 258,848
Financial Liabilities, Current 3,749 5,516 3,998
Provisions, Current 7,874 6,830 6,103
Deferred Liabilities, Current 36,000 32,

676 28,905
Other Current Liabilities 10,027 9,351 8,744
Total Current Liabilities 72,310 69,420 58,488
Long Term Debt 59,578 66,662 72,242
Capital Lease Obligations, Non-Current 7,671 6,188 5,568
Tax Liabilities, Non-Current 204 233 541
Deferred Income/Customer Advances/Billings in Excess of Cost, Non-Current 3,180 4,530 3,815
Payables and Accrued Expenses, Non-Current 29,432 29,612 30,265
Other Non-Current Liabilities 10,632 7,581 5,211
Total Non-Current Liabilities 110,697 114,806 117,642
Total Liabilities 183,007 184,226 176,130
Equity Attributable to Parent Stockholders 118,304 102,330 82,718
Paid in Capital 80,552 78,520 71,223
Retained Earnings/Accumulated Deficit 34,566 24,150 13,682
Reserves/Accumulated Comprehensive Income/Losses 3,186 (340) (2,187)
Total Equity
Total Equity and Liabiltiies

3-Horizontal Analysis IS

Microsoft

Income Statement

For the Years ended 2018 through 2020
(Amounts in millions)

2019 2018
2020 2019

Change

2019 2018 $ Change % Change

2018 $ Change % Change

Total Revenue 143,015 125,843

6%

125,843 110,360

110,360 110,360

Cost of Revenue 46,078 42,910

42,910 38,353

38,353 38,353 – 0 0.0%

Gross Profit 96,937 82,933

82,933 72,007

72,007 72,007 – 0 0.0%

Selling, General and Administrative Expenses 24,709 23,098

23,098 22,223

22,223 22,223 – 0 0.0%

Research and Development Expenses 19,269 16,876

16,876 14,726

14,726 14,726 – 0 0.0%

Operating Income/Expenses 43,978 39,974 4,004

39,974 36,949

36,949 36,949 – 0 0.0%

Total Operating Profit/Loss 52,959 42,959

42,959 35,058

35,058 35,058 – 0 0.0%

Non-Operating Income/Expenses, Total 77 729

729 1,416

1,416 1,416 – 0 0.0%

Pretax Income 53,036 43,688

43,688 36,474

36,474 36,474 – 0 0.0%

Provision for Income Tax 8,755 4,448

4,448 19,903

19,903 19,903 – 0 0.0%

Net Income from Continuing Operations 44,281 39,240

39,240 16,571

16,571 16,571 – 0 0.0%

$ Change % 208
17,172 1

3

. 15,483 14.0% – 0 0.0%
3,168 7.4% 4,557 1

1.9%
1

4,004 1

6.9% 10,926 15.2%
1,611 7.0% 875 3.9%
2,393 1

4.2% 2,150 1

4.6%
10.0% 3,025 8.2%
10,000 2

 3.3% 7,901 2

2.5%
(652) -89.4% (687) -48.5%
9,348 21.4% 7,214 1

9.8%
4,307 96.8% (15,455) -77.7%
5,041 12.8% 22,669 136.8%

3- Horizontal Analysis BS

Balance Sheet

(Amounts in millions)

2020 2019 $ Change % Change 2019 2018 $ Change % Change 2018 2018 $ Change % Change
Cash, Cash Equivalents and Short Term Investments 136,527 133,819

133,819 133,768 51 0.0% 133,768 133,768 – 0 0.0%

Inventories 1,895 2,063

2,063 2,662

2,662 2,662 – 0 0.0%

Trade and Other Receivables, Current 32,011 29,524

29,524 26,481

26,481 26,481 – 0 0.0%

Other Current Assets 11,482 10,146

10,146

6,751 6,751 – 0 0.0%

Total Current Assets 181,915 175,552

3.6% 175,552 169,662

169,662 169,662 – 0 0.0%

Deferred Costs/Assets, Current

Total Non-Current Assets 119,396 111,004

111,004 89,186

89,186 89,186 – 0 0.0%

Net Property, Plant and Equipment 52,904 43,856

43,856 36,146

36,146 36,146 – 0 0.0%

Net Intangible Assets 50,389 49,776

49,776 43,736

43,736 43,736 – 0 0.0%

Total Long Term Investments 2,965 2,649

2,649 1,862

1,862 1,862 – 0 0.0%

Other Non-Current Assets 13,138 14,723

14,723 7,442

7,442 7,442 – 0 0.0%

Total Assets 301,311 286,556

286,556 258,848

258,848 258,848 – 0 0.0%

Financial Liabilities, Current 3,749 5,516

5,516 3,998

3,998 3,998 – 0 0.0%

Provisions, Current 7,874 6,830

6,830 6,103

11.9% 6,103 6,103 – 0 0.0%

Deferred Liabilities, Current 36,000

32,676 28,905

28,905 28,905 – 0 0.0%

Other Current Liabilities 10,027 9,351 676

9,351 8,744

6.9% 8,744 8,744 – 0 0.0%

Total Current Liabilities 72,310 69,420

4.2% 69,420 58,488

58,488 58,488 – 0 0.0%

Long Term Debt 59,578 66,662

66,662 72,242

72,242 72,242 – 0 0.0%

Capital Lease Obligations, Non-Current 7,671 6,188

6,188 5,568

5,568 5,568 – 0 0.0%

Tax Liabilities, Non-Current 204 233

233 541

541 541 – 0 0.0%

Deferred Income/Customer Advances/Billings in Excess of Cost, Non-Current 3,180 4,530

4,530 3,815

18.7% 3,815 3,815 – 0 0.0%

Payables and Accrued Expenses, Non-Current 29,432 29,612

29,612 30,265

30,265 30,265 – 0 0.0%

Other Non-Current Liabilities 10,632 7,581

7,581 5,211

5,211 5,211 – 0 0.0%

Total Non-Current Liabilities 110,697 114,806

114,806 117,642

117,642 117,642 – 0 0.0%

Total Liabilities 183,007 184,226

184,226 176,130

4.6% 176,130 176,130 – 0 0.0%

Equity Attributable to Parent Stockholders 118,304 102,330

102,330 82,718

82,718 82,718 – 0 0.0%

Paid in Capital 80,552 78,520

78,520 71,223

10.2% 71,223 71,223 – 0 0.0%

Retained Earnings/Accumulated Deficit 34,566 24,150

24,150 13,682

13,682 13,682 – 0 0.0%

Reserves/Accumulated Comprehensive Income/Losses 3,186 (340)

(340) (2,187)

(2,187) (2,187) – 0 0.0%

Total Equity 118,304 102,330 15,974 15.6% 102,330 82,718 19,612 23.7% 82,718 82,718 – 0 0.0%
Total Equity and Liabiltiies 301,311 286,556 14,755 5.1% 286,556 258,848 27,708 10.7% 258,848 258,848 – 0 0.0%
Mircosoft
Horizontal Analysis for the Years ended 2018through 2020
2,708 2.0%
(168) -8.1% (599) -22.5%
2,487 8.4% 3,043 1

 1.5%
1,336 13.2% 6,751 3,395 50.3%
6,363 5,890 3.5%
8,392 7.6% 21,818 24.5%
9,048 2

0.6% 7,710 2

 1.3%
613 1.2% 6,040 1

3.8%
316 11.9% 787 42.3%
(1,585) -10.8% 7,281 97.8%
14,755 5.1% 27,708 1

 0.7%
(1,767) –

 32.0% 1,518 38.0%
1,044 1

5.3% 727
32,676 3,324 1

0.2% 3,771 13.0%
7.2% 607
2,890 10,932 18.7%
(7,084) –

10.6% (5,580) -7.7%
1,483 24.0% 620 1

 1.1%
(29) -1

 2.4% (308) -56.9%
(1,350) -29.8% 715
(180) -0.6% (653) –

 2.2%
3,051 40.2% 2,370 45.5%
(4,109) -3.6% (2,836) -2.4%
(1,219) -0.7% 8,096
15,974 15.6% 19,612 23.7%
2,032 2.6% 7,297
10,416 43.1% 10,468 76.5%
3,526 -10

37.1% 1,847 -84.5%

3 Vertical Analysis IS

Income Statement

(Amounts in millions)

2020 % 2019 % 2018 %
Total Revenue 143,015

110,360 100.0% 110,360 100.0%

Cost of Revenue 46,078

38,353

38,353 34.8%

Gross Profit 96,937

72,007

72,007 65.2%

Selling, General and Administrative Expenses 24,709

22,223

22,223 20.1%

Research and Development Expenses 19,269

14,726

14,726 13.3%

Operating Income/Expenses 43,978

36,949

36,949 33.5%

Total Operating Profit/Loss 52,959

35,058

35,058 31.8%

Non-Operating Income/Expenses, Total 77 0.1% 1,416 1.3% 1,416 1.3%
Pretax Income 53,036 37.1% 36,474

36,474 33.1%

Provision for Income Tax 8,755

19,903

19,903 18.0%

Net Income from Continuing Operations 44,281

16,571

16,571 15.0%

Micorsoft
Vertical Analysis for the Years ended 2018 through 2020
100.0%
32.2% 34.8%
67.8% 65.2%
17.3% 2

 0.1%
13.5% 13.3%
30.8% 33.5%
37.0% 31.8%
33.1%
6.1% 18.0%
3

 1.0% 15.0%

3 Vertical Analysis BS

Microsoft

.

Vertical Analysis for the Years ended 2018 through 2020
(Amounts in millions)

2020 % 2019 % 2018 %

Cash, Cash Equivalents and Short Term Investments 136,527

133,819

133,768

Inventories 1,895 0.6% 2,063 0.7% 2,662 1.0%
Trade and Other Receivables, Current 32,011 10.6% 29,524

26,481 10.2%

Other Current Assets 11,482 3.8% 10,146 3.5% 6,751 2.6%
Total Current Assets 181,915

175,552

169,662

Deferred Costs/Assets, Current

Total Non-Current Assets 119,396

111,004

89,186

Net Property, Plant and Equipment 52,904

43,856 15.3% 36,146 14.0%

Net Intangible Assets 50,389

49,776

43,736

Total Long Term Investments 2,965 1.0% 2,649

1,862 0.7%

Other Non-Current Assets 13,138

14,723 5.1% 7,442

Total Assets 301,311 100.0% 286,556 100.0% 258,848 100.0%
Financial Liabilities, Current 3,749 1.2% 5,516 1.9% 3,998 1.5%
Provisions, Current 7,874 2.6% 6,830 2.4% 6,103 2.4%
Deferred Liabilities, Current 36,000 11.9% 32,676

28,905

Other Current Liabilities 10,027 3.3% 9,351 3.3% 8,744

Total Current Liabilities 72,310 24.0% 69,420

58,488

Long Term Debt 59,578 19.8% 66,662

72,242

Capital Lease Obligations, Non-Current 7,671 2.5% 6,188 2.2% 5,568 2.2%
Tax Liabilities, Non-Current 204 0.1% 233 0.1% 541 0.2%
Deferred Income/Customer Advances/Billings in Excess of Cost, Non-Current 3,180 1.1% 4,530

3,815 1.5%

Payables and Accrued Expenses, Non-Current 29,432 9.8% 29,612 10.3% 30,265

Other Non-Current Liabilities 10,632 3.5% 7,581 2.6% 5,211 2.0%
Total Non-Current Liabilities 110,697

114,806

117,642

Total Liabilities 183,007

184,226

176,130

Equity Attributable to Parent Stockholders 118,304

102,330

82,718 32.0%

Paid in Capital 80,552

78,520

71,223

Retained Earnings/Accumulated Deficit 34,566

24,150 8.4% 13,682 5.3%

Reserves/Accumulated Comprehensive Income/Losses 3,186 1.1% (340)

(2,187)

Total Equity 118,304 39.3% 102,330 35.7% 82,718 32.0%
Total Equity and Liabiltiies 301,311 100.0% 286,556 100.0% 258,848 100.0%
45.3% 46.7% 51.7%
10.3%
60.4% 61.3% 65.5%
39.6% 38.7% 34.5%
17.6%
16.7% 17.4% 16.9%
0.9%
4.4% 2.9%
11.4% 11.2%
3.4%
24.2% 22.6%
23.3% 27.9%
1.6%
11.7%
36.7% 40.1% 45.4%
60.7% 64.3% 68.0%
39.3% 35.7%
26.7% 27.4% 27.5%
11.5%
-0.1% -0.8%

REFERENCES

References:
TAB
FINANCIAL INFORMATION U.S. Securities and Exchange Commission (2019). 2019 Annual SEC Form 10-K Report, Costco Wholesale Corporation. Retrieved from https://www.sec.gov/Archives/edgar/data/909832/000090983219000019/cost10k9119.htm This is an example of your reference. You will use the actual reference from your company. You will create one for each different SEC Form 10K report you will cite

Running Head: MICROSOFT

Annual Report Project 3

1

MICROSOFT 9

Annual Report Project 3

Lakisha Trammel

Dr. Ron Stunda

GUC

ACC-616-0500

January 27, 2021

Introduction

The main purpose of this report is to analyze horizontally and vertically, both income statement and balance sheet within the last three years of Microsoft. The years we are looking for are from 2018 – 2020, with June 30th, year-end date.

Vertical and Horizontal Analysis of Income Statement

Microsoft’s vertical income statement demonstrations that the company has increased its bottom-line profitability, and has done so by improving their controlling expenses. The cost of revenue decreased from 34.8% in 2018 to 34.1% in 2019, and then decreased to 32.2% in the financial year ended on June 30, 2020. That caused the gross profit to increase from 65.2% to 67.8% over the same time period.

The company controlled its expenses by covering them in a regular manner. As a result, the ratio for SG&A expenses decreased from 20.1 % to 18.4 % in 2011, to 17.3 % in 2012, and then further decreased to 16.7 % in 2016 and then further to 16.3 % in 2017.

However, the company has gradually increased its R&D expenses as it is necessary for the development and growth of the company. In turn, operating profits more than doubled from 31.8% in 2018 to 37% in 2020. Non-operating costs also declined by a small amount in the second year compared to the first. The overall amount of taxable income increased from 33.1% in 2018 to 34.7% in 2019, and then to 37.1% in 2020.

Although income tax expenditure as a proportion of federal revenue decreased from 18% in 2018 to 6.1% in 2020, it continues to decrease in figures. With the rise of every fiscal year, the net income rose from 15%, 2018 to more than 31% by the end of the calendar year 2020.

Microsoft’s revenue increased % for 2019 as opposed to 2018, and then increased 13.6 % in 2020. In 2018, the lower sales cost decreased faster than the beginning and advancing of the 2018-2020 period, but in 2019 and 2020, the income revenue jumped by 11.9% in 2019 and 7.4% in 2020, respectively.

Aside from the double-digit increase in revenues and gross profit for both years, the growth in these two segments was also higher than the growth in revenue. As a result of improvements in advertisement, revenues, and general and administrative cost costs, a larger amount of revenue was achieved. However, non-operating income has been declining since last year, and this year’s decrease does not appear to be related to interest income. Income taxes decreased by 78 % in 2018, but jumped back up to an unexpected level in 2020. As a result, net income rose by 136.8% in 201, a further 12.8% in 2020.

Balance Sheet Vertical and Horizontal Analysis

The percentage by which cash and cash equivalents fell in the last three years from more than half to less than half of total deposits. Inventory levels declined as compared to years past while receivables and other current assets increased a tiny amount. Since 2018, total current assets fell by 2%, from $29 billion to $28.4 billion. The decrease in your current assets will help you decrease your current liabilities. Yet liability remains roughly the same over the past three years.

Total liabilities increased, but assets increased. Even more impressive is the increase in net worth since depreciation, and also the increase in property, plant and equipment, because of depreciation. The result of all these factors was that both tangible and intangible assets increased. It rationalizes the decline in assets, mostly cash, as the company has misused some of its internal capital to fund a few acquisitions. The long term investments have been increasing over time, albeit at a slow pace.

Current liabilities have increased substantially, but not enough to offset the large increase in provisions and other current liabilities.

Even though the inventory of current and non-current assets are low, the stocks of non-current assets decreased gradually over the last three years and reached 60.7 % of the total assets.

The amount of long term debt, which is declining, was on a rise up to a number of 28.0%, then it went down to 22.1%. The amount of both payable and accrued liabilities has declined slightly over the last three years, but remains small compared to the total assets of the company. As a result, total liabilities decreased from 45.4% down to 37.7%

The stock price increased due to the issuance of new shares and retained earnings. In short, in 2018, the retained earnings amount decreased to 5.3% while in 2020, the retained earnings percentage continues to rise up to 11.5%.

Overall total current assets increased as the level of current assets increased.

The horizontal review in the balance sheet reveals that cash, inventory, and investments rose marginally in 2020 as compared to 2019.

The total value of non-current assets also increased with the rise in the value of the company’s plant and equipment. Over time the overall investments increased but the percentage of total investments decreased. Some assets are expected to decrease by more than 11% in 2020 compared to the previous year while others are expected to rise by just about 98% in 2019.

The liabilities are expected to grow by 18.7% in the next three years and around 4.2% in the next two years. The main part of the rise came from the summer expense of development due to provisions and borrowing and from other current liabilities.

Long-term liabilities in the company’s balance sheet dropped considerably as the company paid down long-term debt. Other non-current liabilities, however, are actually increasing in the past few years.

Although total equity increased in the first half of this year, half of the increase came from the issuance of new equity.

References

Microsoft, (2020). Annual Report 2020- Satya Nadella, Chief Executive Officer. Retrieved from

https://microsoft.gcs-web.com/static-files/4e7064ed-bbf7-4140-a8cb-79aba77421b9

Microsoft, (2019). Annual Report 2019- Satya Nadella, Chief Executive Officer. Retrieved from

https://www.microsoft.com/investor/reports/ar19/index.html

Nadella, S., & London, S. (2018). Microsoft’s Next Act. The McKinsey Quarterly.

Appendix

Total Current Assets18191517555216966260.4%61.3%65.5%

Deferred Costs/Assets, Current

Total Non-Current Assets1193961110048918639.6%38.7%34.5%

Net Property, Plant and Equipment52904438563614617.6%15.3%14.0%

Net Intangible Assets50389497764373616.7%17.4%16.9%

Total Long Term Investments2965264918621.0%0.9%0.7%

Other Non-Current Assets131381472374424.4%5.1%2.9%

Total Assets

301311286556258848100.0%100.0%100.0%

Financial Liabilities, Current3749551639981.2%1.9%1.5%

Provisions, Current7874683061032.6%2.4%2.4%

Deferred Liabilities, Current36000326762890511.9%11.4%11.2%

Other Current Liabilities10027935187443.3%3.3%3.4%

Total Current Liabilities72310694205848824.0%24.2%22.6%

Long Term Debt59578666627224219.8%23.3%27.9%

Capital Lease Obligations, Non-Current7671618855682.5%2.2%2.2%

Tax Liabilities, Non-Current2042335410.1%0.1%0.2%

Deferred Income/Customer

Advances/Billings in Excess of Cost, Non-Current3180453038151.1%1.6%1.5%

Payables and Accrued Expenses, Non-Current2943229612302659.8%10.3%11.7%

Other Non-Current Liabilities10632758152113.5%2.6%2.0%

Total Non-Current Liabilities11069711480611764236.7%40.1%45.4%

Total Liabilities18300718422617613060.7%64.3%68.0%

Equity Attributable to Parent Stockholders1183041023308271839.3%35.7%32.0%

Paid in Capital80552785207122326.7%27.4%27.5%

Retained Earnings/Accumulated Deficit34566241501368211.5%8.4%5.3%

Reserves/Accumulated Comprehensive Income/Losses3186-340-21871.1%-0.1%-0.8%

Total Equity1183041023308271839.3%35.7%32.0%

Total Equity and Liabiltiies

301311286556258848100.0%100.0%100.0%

MSFT_BalanceSheet_Annua Horizontal

202020192018202020192018

Cash, Cash Equivalents and Short Term Investments136527133819133768102.0%100.0%100.0%

Inventories18952063266291.9%77.5%100.0%

Trade and Other Receivables, Current320112952426481108.4%111.5%100.0%

Other Current Assets11482101466751113.2%150.3%100.0%

Total Current Assets181915175552169662103.6%103.5%100.0%

Deferred Costs/Assets, Current

Net Property, Plant and Equipment529044385636146120.6%121.3%100.0%

Net Intangible Assets503894977643736101.2%113.8%100.0%

Total Long Term Investments296526491862111.9%142.3%100.0%

Other Non-Current Assets1313814723744289.2%197.8%100.0%

Total Non-Current Assets11939611100489186107.6%124.5%100.0%

Total Assets

301311286556258848105.1%110.7%100.0%

Financial Liabilities, Current37495516399868.0%138.0%100.0%

Provisions, Current787468306103115.3%111.9%100.0%

Deferred Liabilities, Current360003267628905110.2%113.0%100.0%

Other Current Liabilities1002793518744107.2%106.9%100.0%

Total Current Liabilities723106942058488104.2%118.7%100.0%

Long Term Debt59578666627224289.4%92.3%100.0%

Capital Lease Obligations, Non-Current767161885568124.0%111.1%100.0%

Tax Liabilities, Non-Current20423354187.6%43.1%100.0%

Deferred Income/Customer Advances/Billings in Excess of Cost, Non-Current31804530381570.2%118.7%100.0%

Payables and Accrued Expenses, Non-Current29432296123026599.4%97.8%100.0%

Other Non-Current Liabilities1063275815211140.2%145.5%100.0%

Total Non-Current Liabilities11069711480611764296.4%97.6%100.0%

Total Liabilities18300718422617613099.3%104.6%100.0%

Equity Attributable to Parent Stockholders11830410233082718115.6%123.7%100.0%

Paid in Capital805527852071223102.6%110.2%100.0%

Retained Earnings/Accumulated Deficit345662415013682143.1%176.5%100.0%

Reserves/Accumulated Comprehensive Income/Losses3186-340-2187-937.1%15.5%100.0%

Total Equity11830410233082718115.6%123.7%100.0%

Total Equity and Liabiltiies
301311286556258848105.1%110.7%100.0%

MSFT_Income Statement Verical

202020192018202020192018

Total Revenue143,015 125,843 110,360 100.0%100.0%100.0%

Cost of Revenue46,078 42,910 38,353 32.2%34.1%34.8%

Gross Profit96,937 82,933 72,007 67.8%65.9%65.2%

Selling, General and Administrative Expenses24,709 23,098 22,223 17.3%18.4%20.1%

Research and Development Expenses19,269 16,876 14,726 13.5%13.4%13.3%

Operating Income/Expenses43,978 39,974 36,949 30.8%31.8%33.5%

Total Operating Profit/Loss52,959 42,959 35,058 37.0%34.1%31.8%

Non-Operating Income/Expenses, Total77 729 1,416 0.1%0.6%1.3%

Pretax Income53,036 43,688 36,474 37.1%34.7%33.1%

Provision for Income Tax8,755 4,448 19,903 6.1%3.5%18.0%

Net Income from Continuing Operations44,281 39,240 16,571 31.0%31.2%15.0%

MSFT_IncomeStatement_Horizontal

202020192018202020192018

Total Revenue143,015 125,843 110,360 113.6%114.0%100.0%

Cost of Revenue46,078 42,910 38,353 107.4%111.9%100.0%

Gross Profit96,937 82,933 72,007 116.9%115.2%100.0%

Selling, General and Administrative Expenses24,709 23,098 22,223 107.0%103.9%100.0%

Research and Development Expenses19,269 16,876 14,726 114.2%114.6%100.0%

Operating Income/Expenses43,978 39,974 36,949 110.0%108.2%100.0%

Total Operating Profit/Loss52,959 42,959 35,058 123.3%122.5%100.0%

Non-Operating Income/Expenses, Total77 729 1,416 10.6%51.5%100.0%

Pretax Income53,036 43,688 36,474 121.4%119.8%100.0%

Provision for Income Tax8,755 4,448 19,903 196.8%22.3%100.0%

Net Income from Continuing Operations44,281 39,240 16,571 112.8%236.8%100.0%

Financial

Information

Microsoft

through

(Amounts in millions)

2020

2018 Fiscal Year: 2020 2019 2018

118,304 102,330 82,718

301,311 286,556 258,848

In this worksheet, you will recreate both the company’s balance sheet and income statement for the past 3 years Don’t forget to note your references for your data in the last

TAB
Microsoft
Income Statement
Balance Sheet
For the Years ended

2018 2020
For the Years ended 2018 through 2020
(Amounts in millions)
Fiscal Year: 2019
Total Revenue 143,015 125,843 110,360 Cash, Cash Equivalents and Short Term Investments 136,527 133,819 133,768
Cost of Revenue 46,078 42,910 38,353 Inventories 1,895 2,063 2,662
Gross Profit 96,937 82,933 72,007 Trade and Other Receivables, Current 32,011 29,524 26,481
Selling, General and Administrative Expenses 24,709 23,098 22,223 Other Current Assets 11,482 10,146 6,7

51
Research and Development Expenses 19,269 16,876 14,726 Total Current Assets 181,915 175,552 169,662
Operating Income/Expenses 43,978 39,974 36,949
Deferred Costs/Assets, Current
Total Operating Profit/Loss 52,959 42,959 35,058 Total Non-Current Assets 119,396 111,004 89,186
Non-Operating Income/Expenses, Total 77 729 1,416 Net Property, Plant and Equipment 52,904 43,856 36,146
Pretax Income 53,036 43,688 36,474 Net Intangible Assets 50,389 49,776 43,736
Provision for Income Tax 8,755 4,448 19,903 Total Long Term Investments 2,965 2,649 1,862
Net Income from Continuing Operations 44,281 39,240 16,571 Other Non-Current Assets 13,138 14,723 7,442
Total Assets 301,311 286,556 258,848
Financial Liabilities, Current 3,749 5,516 3,998
Provisions, Current 7,874 6,830 6,103
Deferred Liabilities, Current 36,000 32,

676 28,905
Other Current Liabilities 10,027 9,351 8,744
Total Current Liabilities 72,310 69,420 58,488
Long Term Debt 59,578 66,662 72,242
Capital Lease Obligations, Non-Current 7,671 6,188 5,568
Tax Liabilities, Non-Current 204 233 541
Deferred Income/Customer Advances/Billings in Excess of Cost, Non-Current 3,180 4,530 3,815
Payables and Accrued Expenses, Non-Current 29,432 29,612 30,265
Other Non-Current Liabilities 10,632 7,581 5,211
Total Non-Current Liabilities 110,697 114,806 117,642
Total Liabilities 183,007 184,226 176,130
Equity Attributable to Parent Stockholders 118,304 102,330 82,718
Paid in Capital 80,552 78,520 71,223
Retained Earnings/Accumulated Deficit 34,566 24,150 13,682
Reserves/Accumulated Comprehensive Income/Losses 3,186 (340) (2,187)
Total Equity
Total Equity and Liabiltiies

3-Horizontal Analysis IS

Microsoft

Income Statement

For the Years ended 2018 through 2020
(Amounts in millions)

2019 2018
2020 2019

Change

2019 2018 $ Change % Change

2018 $ Change % Change

Total Revenue 143,015 125,843

125,843 110,360

110,360 110,360

Cost of Revenue 46,078 42,910

42,910 38,353

38,353 38,353 – 0 0.0%

Gross Profit 96,937 82,933

82,933 72,007

72,007 72,007 – 0 0.0%

Selling, General and Administrative Expenses 24,709 23,098

23,098 22,223

22,223 22,223 – 0 0.0%

Research and Development Expenses 19,269 16,876

16,876 14,726

14,726 14,726 – 0 0.0%

Operating Income/Expenses 43,978 39,974 4,004

39,974 36,949

36,949 36,949 – 0 0.0%

Total Operating Profit/Loss 52,959 42,959

42,959 35,058

35,058 35,058 – 0 0.0%

Non-Operating Income/Expenses, Total 77 729

729 1,416

1,416 1,416 – 0 0.0%

Pretax Income 53,036 43,688

43,688 36,474

36,474 36,474 – 0 0.0%

Provision for Income Tax 8,755 4,448

4,448 19,903

19,903 19,903 – 0 0.0%

Net Income from Continuing Operations 44,281 39,240

39,240 16,571

16,571 16,571 – 0 0.0%

$ Change % 208
17,172 1

3.6% 15,483 14.0% – 0 0.0%
3,168 7.4% 4,557 1

1.9%
1

4,004 1

6.9% 10,926 15.2%
1,611 7.0% 875 3.9%
2,393 1

4.2% 2,150 1

4.6%
10.0% 3,025 8.2%
10,000 2

 3.3% 7,901 2

2.5%
(652) -89.4% (687) -48.5%
9,348 21.4% 7,214 1

9.8%
4,307 96.8% (15,455) -77.7%
5,041 12.8% 22,669 136.8%

3- Horizontal Analysis BS

Balance Sheet

(Amounts in millions)

2020 2019 $ Change % Change 2019 2018 $ Change % Change 2018 2018 $ Change % Change
Cash, Cash Equivalents and Short Term Investments 136,527 133,819

133,819 133,768 51 0.0% 133,768 133,768 – 0 0.0%

Inventories 1,895 2,063

2,063 2,662

2,662 2,662 – 0 0.0%

Trade and Other Receivables, Current 32,011 29,524

29,524 26,481

26,481 26,481 – 0 0.0%

Other Current Assets 11,482 10,146

10,146

6,751 6,751 – 0 0.0%

Total Current Assets 181,915 175,552

3.6% 175,552 169,662

169,662 169,662 – 0 0.0%

Deferred Costs/Assets, Current

Total Non-Current Assets 119,396 111,004

111,004 89,186

89,186 89,186 – 0 0.0%

Net Property, Plant and Equipment 52,904 43,856

43,856 36,146

36,146 36,146 – 0 0.0%

Net Intangible Assets 50,389 49,776

49,776 43,736

43,736 43,736 – 0 0.0%

Total Long Term Investments 2,965 2,649

2,649 1,862

1,862 1,862 – 0 0.0%

Other Non-Current Assets 13,138 14,723

14,723 7,442

7,442 7,442 – 0 0.0%

Total Assets 301,311 286,556

286,556 258,848

258,848 258,848 – 0 0.0%

Financial Liabilities, Current 3,749 5,516

5,516 3,998

3,998 3,998 – 0 0.0%

Provisions, Current 7,874 6,830

6,830 6,103

11.9% 6,103 6,103 – 0 0.0%

Deferred Liabilities, Current 36,000

32,676 28,905

28,905 28,905 – 0 0.0%

Other Current Liabilities 10,027 9,351 676

9,351 8,744

6.9% 8,744 8,744 – 0 0.0%

Total Current Liabilities 72,310 69,420

4.2% 69,420 58,488

58,488 58,488 – 0 0.0%

Long Term Debt 59,578 66,662

66,662 72,242

72,242 72,242 – 0 0.0%

Capital Lease Obligations, Non-Current 7,671 6,188

6,188 5,568

5,568 5,568 – 0 0.0%

Tax Liabilities, Non-Current 204 233

233 541

541 541 – 0 0.0%

Deferred Income/Customer Advances/Billings in Excess of Cost, Non-Current 3,180 4,530

4,530 3,815

18.7% 3,815 3,815 – 0 0.0%

Payables and Accrued Expenses, Non-Current 29,432 29,612

29,612 30,265

30,265 30,265 – 0 0.0%

Other Non-Current Liabilities 10,632 7,581

7,581 5,211

5,211 5,211 – 0 0.0%

Total Non-Current Liabilities 110,697 114,806

114,806 117,642

117,642 117,642 – 0 0.0%

Total Liabilities 183,007 184,226

184,226 176,130

4.6% 176,130 176,130 – 0 0.0%

Equity Attributable to Parent Stockholders 118,304 102,330

102,330 82,718

82,718 82,718 – 0 0.0%

Paid in Capital 80,552 78,520

78,520 71,223

10.2% 71,223 71,223 – 0 0.0%

Retained Earnings/Accumulated Deficit 34,566 24,150

24,150 13,682

13,682 13,682 – 0 0.0%

Reserves/Accumulated Comprehensive Income/Losses 3,186 (340)

(340) (2,187)

(2,187) (2,187) – 0 0.0%

Total Equity 118,304 102,330 15,974 15.6% 102,330 82,718 19,612 23.7% 82,718 82,718 – 0 0.0%
Total Equity and Liabiltiies 301,311 286,556 14,755 5.1% 286,556 258,848 27,708 10.7% 258,848 258,848 – 0 0.0%
Mircosoft
Horizontal Analysis for the Years ended 2018through 2020
2,708 2.0%
(168) -8.1% (599) -22.5%
2,487 8.4% 3,043 1

 1.5%
1,336 13.2% 6,751 3,395 50.3%
6,363 5,890 3.5%
8,392 7.6% 21,818 24.5%
9,048 2

0.6% 7,710 2

 1.3%
613 1.2% 6,040 1

3.8%
316 11.9% 787 42.3%
(1,585) -10.8% 7,281 97.8%
14,755 5.1% 27,708 1

 0.7%
(1,767) –

 32.0% 1,518 38.0%
1,044 1

5.3% 727
32,676 3,324 1

0.2% 3,771 13.0%
7.2% 607
2,890 10,932 18.7%
(7,084) –

10.6% (5,580) -7.7%
1,483 24.0% 620 1

 1.1%
(29) -1

 2.4% (308) -56.9%
(1,350) -29.8% 715
(180) -0.6% (653) –

 2.2%
3,051 40.2% 2,370 45.5%
(4,109) -3.6% (2,836) -2.4%
(1,219) -0.7% 8,096
15,974 15.6% 19,612 23.7%
2,032 2.6% 7,297
10,416 43.1% 10,468 76.5%
3,526 -10

37.1% 1,847 -84.5%

3 Vertical Analysis IS

Income Statement

(Amounts in millions)

2020 % 2019 % 2018 %
Total Revenue 143,015

110,360 100.0% 110,360 100.0%

Cost of Revenue 46,078

38,353

38,353 34.8%

Gross Profit 96,937

72,007

72,007 65.2%

Selling, General and Administrative Expenses 24,709

22,223

22,223 20.1%

Research and Development Expenses 19,269

14,726

14,726 13.3%

Operating Income/Expenses 43,978

36,949

36,949 33.5%

Total Operating Profit/Loss 52,959

35,058

35,058 31.8%

Non-Operating Income/Expenses, Total 77 0.1% 1,416 1.3% 1,416 1.3%
Pretax Income 53,036 37.1% 36,474

36,474 33.1%

Provision for Income Tax 8,755

19,903

19,903 18.0%

Net Income from Continuing Operations 44,281

16,571

16,571 15.0%

Micorsoft
Vertical Analysis for the Years ended 2018 through 2020
100.0%
32.2% 34.8%
67.8% 65.2%
17.3% 2

 0.1%
13.5% 13.3%
30.8% 33.5%
37.0% 31.8%
33.1%
6.1% 18.0%
3

 1.0% 15.0%

3 Vertical Analysis BS

Microsoft
Balance Sheet
Vertical Analysis for the Years ended 2018 through 2020
(Amounts in millions)

2020 % 2019 % 2018 %

Cash, Cash Equivalents and Short Term Investments 136,527

133,819

133,768

Inventories 1,895 0.6% 2,063 0.7% 2,662 1.0%
Trade and Other Receivables, Current 32,011 10.6% 29,524

26,481 10.2%

Other Current Assets 11,482 3.8% 10,146 3.5% 6,751 2.6%
Total Current Assets 181,915

175,552

169,662

Deferred Costs/Assets, Current

Total Non-Current Assets 119,396

111,004

89,186

Net Property, Plant and Equipment 52,904

43,856 15.3% 36,146 14.0%

Net Intangible Assets 50,389

49,776

43,736

Total Long Term Investments 2,965 1.0% 2,649

1,862 0.7%

Other Non-Current Assets 13,138

14,723 5.1% 7,442

Total Assets 301,311 100.0% 286,556 100.0% 258,848 100.0%
Financial Liabilities, Current 3,749 1.2% 5,516 1.9% 3,998 1.5%
Provisions, Current 7,874 2.6% 6,830 2.4% 6,103 2.4%
Deferred Liabilities, Current 36,000 11.9% 32,676

28,905

Other Current Liabilities 10,027 3.3% 9,351 3.3% 8,744

Total Current Liabilities 72,310 24.0% 69,420

58,488

Long Term Debt 59,578 19.8% 66,662

72,242

Capital Lease Obligations, Non-Current 7,671 2.5% 6,188 2.2% 5,568 2.2%
Tax Liabilities, Non-Current 204 0.1% 233 0.1% 541 0.2%
Deferred Income/Customer Advances/Billings in Excess of Cost, Non-Current 3,180 1.1% 4,530

3,815 1.5%

Payables and Accrued Expenses, Non-Current 29,432 9.8% 29,612 10.3% 30,265

Other Non-Current Liabilities 10,632 3.5% 7,581 2.6% 5,211 2.0%
Total Non-Current Liabilities 110,697

114,806

117,642

Total Liabilities 183,007

184,226

176,130

Equity Attributable to Parent Stockholders 118,304

102,330

82,718 32.0%

Paid in Capital 80,552

78,520

71,223

Retained Earnings/Accumulated Deficit 34,566

24,150 8.4% 13,682 5.3%

Reserves/Accumulated Comprehensive Income/Losses 3,186 1.1% (340)

(2,187)

Total Equity 118,304 39.3% 102,330 35.7% 82,718 32.0%
Total Equity and Liabiltiies 301,311 100.0% 286,556 100.0% 258,848 100.0%
45.3% 46.7% 51.7%
10.3%
60.4% 61.3% 65.5%
39.6% 38.7% 34.5%
17.6%
16.7% 17.4% 16.9%
0.9%
4.4% 2.9%
11.4% 11.2%
3.4%
24.2% 22.6%
23.3% 27.9%
1.6%
11.7%
36.7% 40.1% 45.4%
60.7% 64.3% 68.0%
39.3% 35.7%
26.7% 27.4% 27.5%
11.5%
-0.1% -0.8%

4-Liquidity Ratio

Fiscal Year:

YYYY YYYY

NAME OF RATIO AND FORMULA

NAME OF RATIO AND FORMULA

LIQUIDITY RATIOS
YYYY
NAME OF RATIO AND FORMULA

4-Coverage Ratio

Fiscal Year: YYYY YYYY YYYY
NAME OF RATIO AND FORMULA

NAME OF RATIO AND FORMULA

NAME OF RATIO AND FORMULA

LONG-TERM DEBT PAYING (COVERAGE RATIOS)

5-Activity Ratio

Fiscal Year: YYYY YYYY YYYY
NAME OF RATIO AND FORMULA

NAME OF RATIO AND FORMULA

NAME OF RATIO AND FORMULA

ACTIVITY RATIO

5-Profitability Ratio

Fiscal Year: YYYY YYYY YYYY
NAME OF RATIO AND FORMULA

NAME OF RATIO AND FORMULA

NAME OF RATIO AND FORMULA

PROFITABILITY RATIOS

REFERENCES

TAB
References:
FINANCIAL INFORMATION U.S. Securities and Exchange Commission (2019). 2019 Annual SEC Form 10-K Report, Costco Wholesale Corporation. Retrieved from https://www.sec.gov/Archives/edgar/data/909832/000090983219000019/cost10k9119.htm This is an example of your reference. You will use the actual reference from your company. You will create one for each different SEC Form 10K report you will cite

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