Free Essay Example - Microsoft Project

In the report analysis of the financials provided at hand, there has been the selection of Microsoft company. It is an American multinational company which operates and provides its products and services to all markets across the world. It deals kin technology products and is headquartered in Redmond, Washington DC. It can be established that the company primarily operates through dealership in such products as computer software, consumer electronic products, personal computers such as laptops, alongside some other related products and services. it undergoes all the processes such as development, manufacturing, licensing, supporting, and finally the selling of the products and services dealt in. the company has been chosen for its financial information of the year 2016 to be analyzed and its operational mechanisms and financial health to be determined since it is a worldwide multinational company poised by most of the publications that it is making outrageous profits out of its transactions across the world (Tsay, 2014). It is also in the publications that the company s quite competitive, with skepticisms arising that there could be some false reporting of its financial performance and profitability with the interest of evading the payment of some huge amounts of taxes that could accrue form such transactions. There is, thus, the calculation and analysis of most of its financial information, which also have some parallel calculations and analyses of other competing companies that include Apple and Google.

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Also, there is the use of Microsoft company as a tool whose financial information will be extracted for use in the analysis, alongside those of its two competitors, for a better understanding of the performances as organizations. It is mainly because they have been ranked as the world leading technology companies and the rationale behind it need to be established o satisfy the curiosity. Also, there is need to understand the little differences in the financial performances of Microsoft company and some of its competitors soa s lto deermne what makes them to differ, and hence establish a genuine reason on what its competitors can do to outdo it in the market. Finally, there is the selection of Microsoft company for financial analysis to facilitate the measurement and management of the respective values of its tangible as well as intangible assets that characterize its stature as a leading technological company in the world. Thus, there shall be enough information on financial analysis on Microsoft company to the public on its performances as also provided by statistics from other analytical bureaus.

There are various incentives, according to the analyses by the team members, which are believed to have been employed by Microsoft company to bias the financial statements in the year 2016. One of the potential incentives for biases of the financial statements by the company in 2016 is that of pleasing the current and potential investors that it is operating well. In this case, it can be understood that the executives of the company would be having the interest of wanting to portray the activities of the company in a very polite way, to obtain the goal of shedding a positive light of the company in the eyes of the entire public. Thus, it can be concluded that even if the year was not quite lucrative as required, the true financial information which reflects the turnouts of the company might not be presented as they are. They, therefore, will have been subject to manipulation where some of the losses have been turned unprofessionally to portray enticing results to investors, hence maintain their interests with the company in the log run, they would be thrown and made to belief Microsoft company was making a healthy progress as per its objectives, and also to reflect the huge amounts of resources employed to keep it operating and going on well, alongside the satisfaction of the expectation of the investors that their investments are performing well as per the requirement.

Also, the financial statements of Microsoft company might have been altered with the incentive of evading some obligations required to be fulfilled as per the law of the land, it can be established that there are laws dictating on the remuneration levels of employees and the amounts of taxes required by the national, federal, and state governments in line with the amount of profits generated the course of operations. Thus, the company, which can be understood to be making enormous amounts of profits as well as the asset turnovers and market capitalizations form its traded stocks, has a high probability and likelihood of forging the documents and presenting falsified financial information to evade the need to pay huge amounts of taxes that come with the huge fortunes realized by the company in the long run.

The adversely altered financial information of the Microsoft company, believably, could also have been presented with the incentive of satisfying the views of the management. It can be understood that in so far as honesty and truthfulness is highly recommended for the annual reports, the messages form the chief executive officer as well as the articles which have been written by the managers of the organization can include the sentiments and assumptions that the authors are poised to believe in quite unquestionably (Gertler & Kiyotaki, 2010). Thus, there can be some weaknesses registered in certain areas of the organization, such as failing to meet the customer expectation thresholds unlike the competitors, and yet the top level management does not want to admit the failures, it will still want to believe that the organization is thriving since there has been the creation of profits. Thus, the growth of the company, as presented by the executives, might not be based on the holistic perspective. It can be observed that such views from the top-level management might, therefore, not be based on some reality happenings as reflected in the era life situations and operations of the company, and also those of the market trends, but have been based on some true beliefs in the viability of the company. The optimism by the managers can easily create some biased impressions to the favor of the company. Thus, the top-level managers can have aligned their optimism stature to manipulate the data to suit their beliefs, which can be unprofessional in the long run.

Following the application of various techniques, there is the analysis of Microsoft company's financial information reported. There is the assessment of profitability, credit risk, revenue, and assets of the company. There are also the analyses which are sources of concern with the specific reasons as to why they raise concerns in the long run. For the case of profitability, the return on equity of the business is 0.316. In this regard, it can be observed that the assets of the company are turning out to be beneficial to the organization, such that there is the noted usefulness of the capital invested by the company to be used in various projects along its technological line. It can be observed that the earnings of a region of 31% were generated in the year 2016 using the invested financial resources. It signifies that the invested finances of the company are being well utilized a percentage above 30% in terms of utilization of the funds is healthy for any given business. The return on assets of the company is 0.3865. it signifies that there is a region of 38% net incomes and profits generated form each unit of the invested assets by the company, as of the financial reports of the year 2016. Thus, Microsoft Company is on the right track in terms of permanent asset utilization. It can be compared with the 0.3676 and 0.3475 ratios for the Apple and Google companies respectively. The above statistics serve to indicate that that Microsoft company is at the fore front in terms of the unit volumes of net profits generated form the invested assets in its various business, as of the 2016 statistics.

Asset turnover Microsoft Apple Google

There is the 2.4522 financial leverage of Microsoft company. Those of Apple and Google are 2.1545 and 1.9866 respectively. It can be observed that the Microsoft company was at the front in terms of utilization of the debts in the acquisition of new assets, as opposed to its top competitors in the industry. Therefore, the company is able to use a greater amount of its debts with its debtors in such transactions as borrowing the money: that, in the long run, served to cause the cash of the owners invested to get amplified in the process, an attribute which could have enormously boosted its profitability and worth as witnessed in its top ranking in the year 2016. The return on sales of Microsoft Company is 0.1656, while those of Apple and Google are 0.1786 and 0.14986 respectively. It can be observed that Microsoft Company is the second among the two companies in terms of dollar sales efficiency, an attribute which can be traced to its noted efficiency in the field as among the multinational world companies. Thus, Microsoft company is utilizing the experience in the field to ensure that a reasonable profit and return is reaped from any dollar spent in any of its operations as well as the overhead costs.

Asset turnover Microsoft Apple Google

The asset turnover of Microsoft company is 1.5422. Those of the competing firms Apple and Google are 1.452 and 1.532. it can be observed that in so far as the company tries to make the optimal return out of its assets, it is also necessary for its consistent growth (Palepu & Healy, 2013). There is the need for the companies to utilize their assets to recover the costs spent on them on regular basis, as also observed in the recommendable asset turnover ratio of both the competing firms, which serve to justify their positions as being among the leading companies in the technological world together with Microsoft Company.

Asset turnover Microsoft Apple Google

There are some of the analyses which are the sources of concern. They are under the profitability ratios, and one of them is the asset turnover ratio. It can be observed that in as far as the assets are being utilized in the generation of the net returns to the organization, the ratio is questionable since it is hardly for it to put the mammoth company, Microsoft company in the greater position of top companies worldwide as is the case. There could have been some inaccuracy it the data. Such a data inaccuracy can be attributed to the likelihood of some unprofessional alteration of data for some benefits to the concerned stakeholders. Also, there is the analysis on the gross profit margin, which has been established at 0.18867. The ratio is meagre. It cannot be the gross profit margin of a top-ranking profitable company, which is Microsoft Company in this case. There could have been some levels of inaccuracy in the data. Finally, there was the analysis of operating margin of 0.6765. The ratio is too high, which can be a sign of some manipulated data. It serves to indicate that the company is making some outrageous profitability in the process. However, there can be no sufficient information in the footnotes of the financial statements or even the MD&A that can serve to address the above concerns. It is primarily because of the fact that nearly all the financial information for the company might not be utterly relied upon as they could have been subject to some sort of manipulations by the top-level management (Williams & Dobelman, 2017).