Using the 2015 Microsoft 10-k from answer the following questions - Using the co

Question

Using the 2015 Microsoft 10-k from answer the following questions

- Using the consolidated statement of operations, analyze the profitability of Microsoft by preparing a common-size income statement from the past three year. In addition, calculate sales growth and operating expense growth for each two year period presented, as well as effective tax rates for all three years.

- Using the consolidated statements of stockholders equity for Microsoft, explain the key reasons form the changes in the common stock, accumulated other comprehensive income, and retained earnings accounts. Evaluate these changes.

The 2015 10-k report can be found at:

http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=10834537

Highlight the link above, copy and paste it in the browser Google chrome or firefox. If that does not work for some reason, go to this Microsoft site:

http://www.microsoft.com/en-us/Investor/sec-filings.aspx?year=2015

From there find the 10-k report under Filing, next to Date filed. The date should be 7/31/2015.

These will need to be copied and pasted in the browser, the hyperlink does not work just by clicking it.

Explanation / Answer

key reasons form the changes in the common stock, accumulated other comprehensive income, and retained earnings accounts

There has been increase in the value of the common stock due to the newly issued shares in form of common stock and in form of compensation to the employees(including tax effects) which are greater than the stock repurchased.

There has been increase in the retained earnings in 2014 due to the higher Net income as compared to the cash paid for the dividends and stocks repurchased while there has been decrease in the retained earnings in 2015 due to the lower Net income as compared to the cash paid for the dividends and stocks repurchased.

There has been increase in the other comprehensive income in 2014 due to the increase in the unrealized gains on investments while  a decrease in the other comprehensive income in 2013 due to the decrease in the unrealized gains on investments.

(In millions, except per share amounts) - Common Size Common Size Common Size Year Ended June 30, 2015 % Revenue 2014 % Revenue 2013 % Revenue Revenue $           93,580 100.00% $             86,833 100.00% $           77,849 100.00% Cost of revenue 33,038 35.30% 27,078 31.18% 20,385 26.19% - - - Gross margin 60,542 64.70% 59,755 68.82% 57,464 73.81% Research and development 12,046 12.87% 11,381 13.11% 10,411 13.37% Sales and marketing 15,713 16.79% 15,811 18.21% 15,276 19.62% General and administrative 4,611 4.93% 4,677 5.39% 5,013 6.44% Impairment, integration, and restructuring 10,011 10.70% 127 0.15% 0 0.00% Operating expense 42,381 45.3% 31,996 36.8% 30,700 39.4% - - - Operating income 18,161 19.41% 27,759 31.97% 26,764 34.38% Other income, net 346 0.37% 61 0.07% 288 0.37% - - - Income before income taxes(EBT) 18,507 19.78% 27,820 32.04% 27,052 34.75% Provision for income taxes(Tax) 6,314 6.75% 5,746 6.62% 5,189 6.67% effective tax rate(Tax/EBT) 34.12% 20.65% 19.18% Net income $           12,193 13.03% $             22,074 25.42% $           21,863 28.08% - - - Revenue growth rate 7.77% 11.54% (=93580/86833)-1 (=(86833/77849)-1 Operating expense growth rate 32.46% 4.22% (=42381/31966)-1 (=31966/30700)-1

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.