Using the Balance Sheet to Determine Asset Composition Recent Balance Sheets for Microsoft Corporation are presented below.
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Microsoft Corporation |
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30 Jun |
2001 |
2002 |
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Assets |
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Current assets: |
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Cash and equivalents |
$3,922 |
$3,016 |
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Short term investments |
27,678 |
35,636 |
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Total cash and short term investments |
31,600 |
38,652 |
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Accounts receivable, net |
3,671 |
5,129 |
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Inventories |
83 |
673 |
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Deferred income taxes |
1,522 |
2,112 |
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Other |
2,334 |
2,010 |
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Total current assets |
39,210 |
48,576 |
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Property and equipment, net |
2,309 |
2,268 |
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Equity and other investments |
14,361 |
14,191 |
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Goodwill |
1,511 |
1,426 |
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Intangible assets, net |
401 |
243 |
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Other long term assets |
1,038 |
942 |
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Total assets |
$58,830 |
$67,646 |
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30 Jun |
2001 |
2002 |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
$1,188 |
$1,208 |
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Accrued compensation |
742 |
1,145 |
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Income taxes |
1,468 |
2,022 |
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Short term unearned revenue |
4,395 |
5,920 |
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Other |
1,461 |
2,449 |
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Total current liabilities |
9,254 |
12,744 |
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Long term unearned revenue |
1,219 |
1,823 |
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Deferred income taxes |
409 |
398 |
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Other long term liabilities |
659 |
501 |
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Commitments and contingencies |
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Stockholders’ equity: |
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Common stock and paid in capital shares authorized 12,000; shares issued and outstanding 5,383 and 5,359 |
28,390 |
31,647 |
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Retained earnings, including accumulated other |
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comprehensive income of $587 and $583 |
18,899 |
20,533 |
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Total stockholders” equity |
47,289 |
52,180 |
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Total liabilities and stockholders” equity |
$58,830 |
$67,646 |
Required
A. Microsoft reports property and equipment, net on the balance sheet. Calculate property and equipment as a percentage of total assets for 2001 and 2002.
B. Microsoft reports cash and short term investments as a current asset. Calculate cash and short term investments as a percentage of total assets.
C. Comment on your analysis from Requirements A and B.
D. Calculate the working capital ratio for 2001 and 2002. Discuss your results.