# Acct 504 Course Project Essay

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Use this Excel spreadsheet to compute ratios; show your computations for all ratios on this tab and also include your commentary. The financial statements used to calculate these ratios are available in Appendix A and Appendix B of your textbook. Interpretation and Comparison between the two companies' ratios (Reading the Appendix of Chapter 13 will help you prepare the commentary) At a glance, it appears as thought Microsoft is the stronger of the two when looking at this comparison, since it's Earnings per Share is higher. However, the number of shares outstanding is not the same between the two companies, so this comparison doesn't show an accurate portrayal. Both companies have fairly strong Current Ratios, which is a strong indicator of a company's financial Oracle Microsoft Earnings per share As given in the income statement \$1.69 \$2.73 Current ratio Current assets Current liabilities \$39,174,000 = \$14,192,000 2.76 \$74,918,000 \$28,774,000 = 2.60 Gross Profit Ratio Gross profit Net Sales \$27,224,000 = \$35,622,000 76.42% \$54,366,000 \$69,943,000 = 77.73% Microsoft's gross profit ratio is slightly higher than Oracle's by 1.31% . The higher the gross profit Profit margin ratio Net Income Net Sales \$8,547,000 = \$35,622,000 23.99% \$23,150,000 \$69,943,000 = 33.10% Profit margin shows how much of each dollar earned by the company will translate into a profit. Typically, a higher inventoy turnover is desireable since it indicates how many times inventory is replaced. By looking at the numbers provided, Days in inventory is a measure of how long inventory sits around until they are sold. A lower score is better here, as inventory sitting around longer requires overhead charges for storage, Receivable turnover measures the quickness of a company's debt collection. The higher the