Deadline 3rd August 1pm

Presentation max 15mins (including SWOT)

Things to do:

 Microsoft & Google over the period of 2 years (2019 & 2018) (do this first)
 Refer to page 3 for more info
 We need collate results found and judge it base on its liquidity solvency (ignore this first)
 Get a performance indicator (industry specific) (ignore this first)
 Recommendation based on financial information (ignore this first)
Set 1 Set 2
Current ratio (num) Days’ sales uncollected (days)
Acid test ratio/quick ratio (num) Days’ sales inventory(days)
Accounts receivable turnover (num) Total Asset Turnover (num)
Inventory turnover (num) Debt to equity ratio (in %)

Set 3 Set 4
Times Interest earned (num) Return on total assets (%)
Profit margin ratio(%) Return on common stockholders’ equity (%)
Gross margin ratio (%) Price – earnings ratio (no. of times)

Set 5
Dividend yield (find %)
Net asset per share ($)
justify why this company is a competitor – brief
intro and summary of competitor (scale of
business, product/services, similarity and
differences)

What we need to do:

1) Factors affecting the company’s bottom line (profitability) & sustainability* (can it hold for
the longer term)?
2) Performance indicators that are industry specific eg. Aviation (load factor), Hospitality
(Occupancy rate) etc
3) Analysis of the 6 ratios by comparing over last 2 full financial years
4) Choose a competitor in the same industry or sector and justify why this company is a
competitor – by listing the similarities and differences. Compare current year’s Gearing ratio,
Price Earnings ratio and Net Asset per share against that competitor.
5) Your recommendation on the future of the selected company is based on the financial
information presented.

Presentation (things to cover):

1. Content coverage
 Performance of company over time 2. Group Presentation
 Financial ratios analysis  Organization of presentation
 Cover additional appropriate  Quality of language used
ratios not covered in  Quality of PowerPoint slides
syllabus  Level of enthusiasm &
 Format & Language creativity
  Recommendation & Conclusion

Google and Microsoft similarities

Today, there are several points where Microsoft and Google cross paths. The two have taken each
other on in their native product categories and expanded into new markets as well.

Microsoft launched Bing VS Google launch Google's search

Microsoft's Office software suite VS Google Docs
Both Google and Microsoft have mobile operating system platforms
both Google and Microsoft offer Web-based e-mail platforms
Microsoft office 365 vs google suite web-based office applications
Liquidity and efficiency

Current ratio (num) = current asset/current liabilities (short term debt paying ability)

Acid test ratio/quick ratio (num)= (cash + short term investment + current receivables) / current
liabilities
(immediate short-term debt paying ability)

Accounts receivable turnover (num)= Net Sales/ Average accounts receivable net (efficiency of
collection)

Inventory turnover (num)= COGS / Average Inventory (Efficiency of Inventory management)

Days’ sales uncollected (days)= (Accounts receivable net / Net Sales) * 365 (liquidity of receivables)

Days’ sales inventory(days) = (Ending inventory / COGS) * 365 (Liquidity of inventory)

Total Asset Turnover (num)= Net Sales / Average total asset (efficiency of assets in producing sales)

Solvency

Debt to equity ratio (in %) = Total liabilities/total equity *100(debt versus equity financing)

Times Interest earned (num) = Income b4 interest expenses and income taxes / interest expenses
(ability of company operation to provide protection to long term creditors)

Profitability

Profit margin ratio(%) = (net income/net sales) *100 (net income in each sales dollar)

Gross margin ratio (%) = {(Net sales – COGS) / Net sales} *100 (gross margin in each sales dollar)

Return on total assets (%) = Net income / Average total assets (overall profitability of assets, shows
how effectively a company uses its assets to generate earnings.)

Return on common stockholders’ equity (%) = {(net income – preferred dividends) / average
common stockholders’ equity}*100 (profitability of owner investment)

Market Prospects

Price – earnings ratio (no. of times) = Market price per share/earning per share (market value
relative to earnings

Dividend yield (find %) = annual cash dividends per share *100 / market price per share (cash return
per common share)

Net asset per share ($) = Net Asset / Total number of shares