Question

What is the asset utilization for 2017 and 2018?

1 Annual Financials for Microsoft Corp. 2 Fiscal year is July-June. All values USD millions. Income Statement 2017 Sales Revenue 96.02 6 Cost of Goods Sold (COGS) incl. D&A 34.62 7 COGS excluding D&A 26.77 8 Depreciation & Amortization Expense 7.86 Depreciation 6.1 10 Amortization of Intangibles 1.76 Gross Income 61.4 2018 110.18 38.97 29.02 9.95 7.7 2.25 71.21 Fiscal year is October September. All values USD millions. Balance Sheet Assets Fiscal year is July-June. All values USD millions. 2017 2018 Cash & Short Term Investments 132.98B 133.77B Cash Only 7.66B 11.95B Short-Term Investments 125.32B 121.82B 11 Total Accounts Receivable Accounts Receivables, Net Accounts Receivables, Gross Bad Debt Doubtful Accounts Other Receivables 22.43B 22.43B 22.78B (345M) 26.48B 26.48B 26.86B (377M) 2017 32.62 13.04 19.58 2018 36.33 14.73 21.61 14 SG&A Expense 15 Research & Development 16 Other SG&A 17 Other Operating Expense 18 Unusual Expense 19 EBIT after Unusual Expense 20 Non Operating Income/Expense 21 Non-Operating Interest Income Equity in Affiliates (Pretax) 2.18B 1.24B 145M 797M 2.66B 1.95B 54M 655M 871M 234M (871M) 34.64B 2.83B 2.35B 1.39B 2.21B Inventories Finished Goods Work in Progress Raw Materials Progress Payments & Other Other Current Assets Miscellaneous Current Assets Total Current Assets 5.13 5.1B 162.7B 6.75B 6.75B 169.66B 24 Interest Expense 25 Gross Interest Expense 26 Interest Capitalized 2.22B 2.3B 81M 2.73B 2.79B 59M Net Property, Plant & Equipment Property, Plant & Equipment - Gross 30.29B 54.47B 36.15B 65.37B

Answer 1

1. Liquidity= current asset- current liability

Liquidity ratios are as follow:

	2017(in $ B)	2018(in $ B)
current asset	162.70	169.66
current liability	55.75	58.49
liquidity=	=162.70-55.75 = 106.95	= 169.66-58.49 = 111.17
current ratio=current asset/current liability	= 162.70/55.75= 2.92	=169.66/58.49=   2.90
stock	2.18	2.66
Quick ratio= (current asset-stock )/current liability	=162.70-2.18/55.75      = 2.88	=169.66-2.66/58.49 =2.86

2. Profit ratio:

Profitability:	Formula	2017	2018
EBIT margin	EBIT/sales
	Sales	=96.02	=110.18
	EBIT=	=61.4-32.62-0.871= 27.91	34.64
EBIT margin		=27.91/96.02= 0.2907 or 29.07%	=34.62/110.18= 0.3146 or 31.46%
Net profit margin	Net profit / sales	=25.49/96.02= 0.2655 or 26.55%	=16.57/110.18=0.1504or 15.04%

3. Asset management/utilization ratio:

Inventory Turnover ratio	Cost of Goods sold /Average Inventory	=34.62/2.18 = 15.88	=38.97/2.66= 14.65
Assume Average inventory = inventory at the end of the period
Days Inventory Holding	Avg inventory/ Cost of good sold *365	=1/15.88 *365= 22.98 or 23 days	= 1/14.65 *365= 24.9 or 25 days
Total Asset Turnover	Sales/ total asset	=96.02/250.31 = 0.38	=110.18/258.35 = 0.43
Receivable turnover	Sales/ receivables	=96.02/22.43 = 4.28	=110.18/26.48 = 4.16