UNIVERSITY OF TECHNOLOGY AND APPLIED SCIENCES- MUSCAT BRANCH

COLLEGE OF ECONOMICS AND BUSINESS ADMINISTRATION

CORPORTATE ACCOUTING II
STRUCTURED AASSIGNEMNT- SEM II, 2022-23
The objective of the assignment:-
1. To familiarize the learning outcomes of the course with practical insights into the financial
statements of Omani companies, including their share capital, earnings, and dividend payments.
2. To understand and analyze the financial statements to arrive at a meaningful conclusion.
3. To apply the course outcomes to interpret the results of financial information analysis.
Pre requisites:-
1. Students are required to select a company listed on MSM, with lecturer approval required
before proceeding with the chosen company. They must thoroughly review the
company's annual financial statements, analyzing the details.
2. Students must download the financial statements for the last 5 years and analyze the
following details, commenting on the results:
1. Share capital, including types, number of shares, authorized capital, issued
capital, subscribed capital, paid-up capital, and any calls in arrears, separately for
equity and preference capital.
2. The net profit earned, reserves and surplus, other statutory and non-statutory
reserves (including retained earnings), and changes over a period of time.
Interpret the results accordingly.
3. Dividend history for the last 5 years, including types of dividend, amount of
dividend, increase or decrease in dividend, and possible reasons for any changes.
3. The total marks for this project are 15, with a breakdown as follows: A. Cover page (1
Mark) B. Introduction (1 Mark) C. Main contents (11 Marks) D. Conclusion (1 Mark) E.
References (1 Mark)
4. The similarity percentage must be less than 20%, and rephrasing/paraphrasing will attract
zero marks.
5. The submission deadline is 7th May 2023 at 11:59 PM, with only online submissions
accepted for this assignment.
6. Students must adhere to the university's plagiarism policy.
7. Marks for the main body of the assignment will be awarded based on creativity,
originality, graphical representation of financial information, and logical interpretation.
8. Since all the information you will collect and analyze is publicly available, any
inaccuracies, fabricated numbers, or malicious information presented in the report may
result in a deduction of marks.
9. A sample, but not exhaustive, assignment is given below.
 UNIVERSITY OF TECHNOLOGY AND APPLIED SCIENCES- MUSCAT BRANCH
COLLEGE OF ECONOMICS AND BUSINESS ADMINISTRATION
CORPORTATE ACCOUTING II
STRUCTURED AASSIGNEMNT- SEM II, 2022-23

ANALYSIS OF FINACIAL STATEMENT OF MICROSOFT CORPORATION FOR

THE YEAR 2017-2022

Prepared by: Salim Al harthy

Submitted to Mr. Gopalan Puthukulam.

SEM II, 2022-23

Warning: Please note that the information provided in this report is entirely fictitious and
does not represent actual data. Students are advised not to reproduce or use this
information as a reference in any academic or non-academic context, as it has no basis in
reality
 INTRODUCTION
Microsoft is a multinational technology corporation founded by Bill Gates and Paul Allen in
1975. It is headquartered in Redmond, Washington and is primarily known for its software
products such as the Windows operating system and Microsoft Office productivity suite. Over
the years, Microsoft has expanded its product portfolio to include cloud services, gaming,
hardware, and artificial intelligence.

Some of Microsoft's most well-known products include Microsoft Teams, Xbox, Microsoft
Surface, and LinkedIn, which it acquired in 2016. The company has a significant global presence
and employs over 181,000 people worldwide. As of 2021, Microsoft is one of the world's most
valuable companies, with a market capitalization of over $2 trillion.

Microsoft's revenue is primarily generated through its Intelligent Cloud and More Personal
Computing segments. The Intelligent Cloud segment, which includes Azure and other cloud-
based services, generated $48.4 billion in revenue in 2021, while the More Personal Computing
segment, which includes Windows, Surface, Xbox, and search advertising, generated $55.9
billion in revenue. Microsoft also has a strong balance sheet with over $130 billion in cash and
short-term investments as of June 2021. It has consistently maintained a strong financial position
with a debt-to-equity ratio of 0.64 and a current ratio of 2.5.

Overall, Microsoft's financials are quite robust and the company is well-positioned for continued
growth and innovation in the technology industry.

In the 2021 fiscal year, Microsoft reported revenues of $168.1 billion, an increase of 15% from
the previous year. Its net income for the same period was $61.3 billion, an increase of 38% from
the previous year
 SHARE CAPITAL
Summary of Share capital

As of September 2021, Microsoft's total outstanding shares were approximately 7.57 billion. The
company's market capitalization at that time was around $2.2 trillion, making it one of the most
valuable companies in the world.

Microsoft's capital structure includes both debt and equity. The company had approximately
$62.1 billion in long-term debt as of June 2021. However, Microsoft is known for having a
strong balance sheet with significant cash reserves, which can be used to pay off debt or invest in
growth opportunities.

In terms of equity, Microsoft's largest shareholders include institutional investors such as

Vanguard Group, Blackrock, and State Street Corporation. As of June 2021, the company's
insiders, including executives and board members, held around 1.3% of the outstanding shares.

Types of shares issued by the company:-

The company issued Equity and preference shares. The details are given below.
Share capital as on 31-12-2022
Authorized Share capital 25 billion divided in to $1
Issued share capital $15 billion
Subscribed share capital $15 billion
Called up share capital $15 billion
Paid up share capital $15 billion
Any other points to be added. The company has a calls in arrears of $ 12000 last year and now
collected it in full.
Details of Equity and Preference share capital
Type of shares 2018 2019 2020 2021 2022 % of change from 2018-
2022 if ant
Equity paid up 10 12 12.5 12.5 13 There is a change of 30%
capital (billion)
Preference 15 15 15 15 10 There is reduction of 50%
capital (billion)

Graph showing increase or decrees in the share capital

Equity (million)
14

12

10

0
2018 2019 2020 2021 2022

Preference (million)
16

14

12

10

0
2018 2019 2020 2021 2022
Interpretation:-
The equity of this company has increased significantly from 2018 to 2022, primarily as a result
of the issuance of 5 million right shares in 2022 to raise funds for its expansion in European
markets.

However, the company's preference capital decreased due to the redemption of 5 million last
year. This indicates that the company's strategy is to issue more equity shares than preference
shares to fund its expansion program.

Any other important points, observation etc.

NET PROFIT, RESERVE AND SURPLUS ETC

Summary:-
As of its most recent financial statements, Microsoft Corporation reported a net income of $44.3
billion for the fiscal year ended June 30, 2021.

Microsoft also reported that it had retained earnings of $149.8 billion, which represents the
portion of the company's profits that have been reinvested in the business instead of being paid
out as dividends. This amount is reported as part of the company's total equity, which was $141.7
billion as of June 30, 2021.

In addition to retained earnings, Microsoft has other statutory reserves, including legal reserves
and tax reserves, which are set aside to cover potential liabilities or tax obligations.

Overall, Microsoft has a strong financial position with significant reserves and surplus, reflecting
the company's profitability and financial stability. These reserves and surplus provide the
company with a cushion to weather economic downturns or other challenges and to invest in
growth opportunities.
Net profit
Type of reserve 2018 2019 2020 2021 2022 % of change
2018-2022
Revenue(Billion) 12 16 18 20 22 ?
Net profit 2 2.5 4 5 6 ?
(Billion)

Graph Showing Change Revenue and Profit

Chart Title
25

20

15

10

0
2018 2019 2020 2021 2022

Revenue(Million) Net profit (Million)

Interpretation:-

Reserve and Surplus

Type of reserve 2018 2019 2020 2021 2022 % of change
2018-2022
Reserve and Surplus 2 3 4 4.5 5 150%
(billion)
Statuary reserve (billion 1 1 1 1.2 1.2 20%
Other reserve (billion 2 4 6 3 4 100%
Retained earning (billion 8 6 4 3 6 (25%)
Any other items 0 0 0 0 2
(Revaluation) (billion
Charts showing increase/ Decrease in Reserves and surplus

Chart Title
1.2

0.8

0.6

0.4

0.2

0
1

Series1 Series2 Series3 Series4 Series5

Interpretation:-
 DIVIDEND POLICY
Summary of Dividend policy
Microsoft has a long-standing history of returning value to its shareholders through dividends
and share buybacks. The company's dividend policy is to pay a quarterly dividend to
shareholders, with the amount of the dividend being determined by the Board of Directors.
Microsoft has consistently increased its dividend over the years, with the most recent increase in
September 2021.

As of September 2021, Microsoft's quarterly dividend was $0.62 per share, which represents an
annual dividend yield of approximately 0.8%. The company's dividend payout ratio is relatively
low, at around 26% of earnings, which indicates that Microsoft has room to continue increasing
its dividend in the future.

In addition to dividends, Microsoft also repurchases its own shares as a way of returning value to
shareholders. The company has an ongoing share repurchase program, and as of June 2021, had
approximately $63.3 billion remaining under the program.

Overall, Microsoft's dividend policy reflects the company's commitment to returning value to its
shareholders while also maintaining a strong financial position and investing in growth
opportunities.

Types of Dividend:
Microsoft typically pays cash dividends to its shareholders, which are distributed on a quarterly
basis. These cash dividends are the most common type of dividend paid by companies and
represent a portion of the company's profits that are distributed to shareholders.

In addition to cash dividends, Microsoft has also engaged in share buybacks, which can also be
considered a form of returning value to shareholders. Share buybacks involve a company
purchasing its own shares from the market, which reduces the number of outstanding shares and
increases the value of the remaining shares.

While not strictly considered a type of dividend, Microsoft has also offered special dividends in
the past. These one-time payments are usually larger than regular dividends and are distributed to
shareholders when the company has excess cash or profits to distribute.
Overall, the primary type of dividend paid by Microsoft is cash dividends, with share buybacks
and special dividends being less common but still utilized by the company in certain
circumstances.

Dividend payout:
Dividend per Dividend
Year share payout ratio
2021 $2.48 26.20%
2020 $2.04 32.10%
2019 $1.84 39.50%
2018 $1.68 47.10%
2017 $1.56 52.40%

Graph showing dividend and payout ratio

Chart Title
1.2

0.8

0.6

0.4

0.2

0
1

Series1 Series2
Interpretations
Microsoft has a strong dividend history, with consistent increases in the dividend payout per
share over the past five years.

The dividend payout ratio has been consistently below 50%, indicating that Microsoft has
retained a significant portion of its earnings for reinvestment in growth opportunities and other
uses.

Despite the relatively low payout ratio, Microsoft's dividend yield has been competitive with
other companies in the technology sector, reflecting the company's strong financial position and
long-term growth prospects.

Overall, Microsoft's dividend policy reflects a balance between returning value to shareholders
through dividends while also maintaining a strong financial position and investing in growth
opportunities.
 CONCLUSION
Microsoft Corporation is a multinational technology company with a strong financial position.
As of its most recent financial statements, Microsoft had a market capitalization of over $2
trillion, making it one of the largest companies in the world.

Microsoft has a history of consistent profitability, with a net income of $44.3 billion for the fiscal
year ended June 30, 2021. The company also has a strong dividend history, with a current annual
dividend per share of $2.48 and a dividend payout ratio of 26.2%.

In terms of its share capital, Microsoft does not have a face value for its shares, but the company
has a significant number of outstanding shares, with over 7.6 billion shares outstanding as of
June 30, 2021. Microsoft's financial position is also strong, with significant reserves and surplus,
including retained earnings of $149.8 billion.

Overall, Microsoft is a financially stable and profitable company with a strong dividend history,
significant reserves and surplus, and a large market capitalization. These factors suggest that
Microsoft is well-positioned for long-term growth and continued success in the technology
industry.
References

 Microsoft's most recent financial statements:

https://www.microsoft.com/investor/reports/ar21/index.html

 Information on Microsoft's market capitalization:

https://www.reuters.com/business/microsoft-corp-market-capitalization-2-trln-time-2021-
06-22/

 Microsoft's net income for FY2021:

https://www.business-standard.com/article/companies/microsoft-q4-profit-tops-forecasts-
driven-by-strong-cloud-demand-121072300457_1.html

 Microsoft's dividend history:

https://www.nasdaq.com/market-activity/stocks/msft/dividend-history

 Information on Microsoft's outstanding shares:

https://www.nasdaq.com/market-activity/stocks/msft

 Microsoft's financial position and reserves:

https://www.forbes.com/companies/microsoft/?sh=15f9818f1755