Essay About Microsoft Comments And Formula Calculation Oracle Calculation

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Ratios for 2007
formula
calculation
Oracle
calculation
Microsoft
Comments
1. Earnings per Share
Net income/Shares outstanding
4274/5170
$0.83
$1.44
The earnings per share of Microsoft is higher than oracle due to better net income
2. Current Ratio
Current assets less current liabilities
12883/9387
40168/23754
times
Microsoft has more current assets than Oracle to pay its current debts.
3. Gross Profit Rate
Gross profit/Sales
1-(3349/17996)
81.39%
1-(10693/51122)
79.08%
The gross profit margin of oracle is slightly higher than Microsoft.
4. Profit Margin Ratio
Net income/Sales
4276/17996
23.76%
14065/51122
27.51%
The net profit margin of Microsoft is higher than oracle, it may be due to better control over operating expenses.
5. Inventory Turnover Ratio
Cost of goods sold/Average inventory
10693/1302.5
times
The inventory turnover of Microsoft is around times in a year
6. Days in Inventory
365/inventory turnover
365/E7
Microsoft sells its inventory in 44 days.
7. Receivables Turnover Ratio
Sales/Account receivable
17996/3548
51122/10327
times
No big difference in account receivable of two companies
8. Average Collection Period
365/account receivable turnover
365/C9
365/E9
73.73
Both companies are recovering its account receivable almost in same time.
9. Asset Turnover Ratio
Sales/Averages total assets
17996/34572
51122/63171
times
The ratio shows better and effective utilization of Microsoft of its assets as compared to Oracle.
10. Return on Assets Ratio
Net income/Average total assets
4276/31800.5
13.45%
14065/63171
22.26%
The better utilization of assets resulted in better return for Microsoft as compared to Oracle.
11. Debt to Total Assets Ratio
Total liabilities/total assets
17653/34572
51.06%
32074/63171
50.77%
Debt financing for total assets is almost same for both companies.
12. Times Interest Earned Ratio
EBIT/Interest expense
5974/343
17.42
times
Oracle has good amount of operating income to support its interest expense.
3. Payout ratio
Dividend /Net income
3837/14065
27.28%
No dividend has been paid by Oracle.
14. Return on Common Equity
Net income/Average stockholders equity
4276/15965.5
26.78%
14065/35600.5
39.51%
ROE of Microsoft is far better than Oracle.
15. Free Cash Flow
Operating cash flow-capital expenditure-debt payment
5520-319-2418
$2,783
17796-2264
$15,532
Microsoft has hefty amount of free cash flow as compared to Oracle.
16. Current Cash Debt Coverage
Operating cash flow-dividend/average current liabilities
5520/8158.5
67.66%
(17796-3837)/23098
60.43%
Oracle has more cash available to meet its current liabilities as compared to Microsoft
17. Cash