Financial Reporting Project Apple vs Microsoft

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Financial Reporting Project Part III Apple Inc. and Microsoft Corp. are two very interesting companies to compare when taking into account all the publicity they receive and the public perception of the two. A very shocking find was the large difference in acid-test ratios. The current assets to current liabilities ratio for Microsoft was more than double that of Apple. This gives the users of the financial statements a good bit of extra security when looking at the ability of the company to pay their short term debt. In a time when Apple is pounding the market with time tested software and product name, Microsoft, a company that is looking to find a new niche in a world of rapidly increasing technology, is looking to assure investors that while times are a bit uncertain for them in terms of product, managers have a firm grasp on fiscal responsibility and will never throw caution to the wind. That being said, the times interest earned ratio tells a story of its own. If I am looking for a company that can, with complete certainty, handle the expense of incurring debt, I should look no further than apple. Apple earns its interest expense at almost three times the rate of Microsoft. The acid-test ratio has Microsoft in a good spot, but when it comes to the generation of earnings to pay debt costs, Apple has them beat. In terms of revenue generation from fixed assets directly though, Microsoft does not seem to be doing too poorly considering the fixed asset turnover places them above Apple. This shows good management of property, plant, and equipment, and an ability to make sound investments, but direct sales are another issue. The profit margin, a measurement of a company’s profit in proportion to its sales, places the two companies in close to the same ballpark. Apple just barely outstrips Microsoft in this arena. This can be good in some ways, but in the case of

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