Ratio Analysis for Microsoft Corp
Microsoft Trend and Comparative Financial Analysis
Microsoft’s liquidity ratios depict that the company’s performance is aligned to meet its current obligations. The company has a Current Ratio of 2.50 which is on par with the industry average. This measure signifies that the company is operating at the same level as its competitors at maintaining short-term solvency. With regards to its Quick Ratio, Microsoft is currently showing a lower ratio than the industry average of 3.35. This lower ratio (2.45) is due to the …show more content…
The Price per Earnings ratio show how much investors are willing to pay for the firm’s stock. Based on a Price per Earnings ratio of 0.21, Microsoft is performing below the industry average rate of 0.34. However, when looking at previous quarters, the company depicts better signs of a Price per Earnings ratios. Increasing the company’s market price per share by 41% as it had in Q2, Microsoft’s P/E ratio would be more attractive at approximately 0.30. This same implication can be said about the company’s current Price per Cashflow ratio. Nonetheless, the current standing of the company continues to draw in investors although it can do a better job of attracting investors away from its competitors.
Based on Microsoft’s financial standing, the company is generally performing at the industry level which is depicted by the close proximity of the ratios (as represented by the bars) in the chart above.
Business Ethics and Corporate Governance
Microsoft enforces their Standards of Business Conduct to ensure the company embodies the highest ethical and legal behavior. All employees, directors, and executive officers must understand and comply with the Microsoft Standards. In ambiguous circumstances, they must request guidance to resolve the business practice or compliance concern. They are expected to be truthful and cooperate