# Ratios- Oracle And Mivrosoft 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. Oracle Microsoft Interpretation and Comparison between the two companies' ratios (Reading the Appendix of Chapter 13 will help you) Earnings per share As given in the income statement \$1.69 Basic Common \$2.73 "Comparing these numbers is not meaningful since the number of shares outstanding differs. " Working capital Current assets minus current liabilities \$24,982 \$24,982 \$46,144 \$46,144 Microsoft has a little more than \$20 mil. advantage over Oracle in working capital Current ratio Current assets \$39,174 = 2.76 \$74,918 = 2.60 Oracle has \$2.76 in current assets for every \$1 dollar in current liabilities while Microsoft only has \$2.60 in current assets per \$1 in current liabilities. Oracle does not have too much more liquidity based on this ratio. Current liabilities \$14,192 \$28,774 Gross Profit Ratio Gross profit \$27,224 = 76.4% \$54,366 = 77.7% Only product sales was used for the gross profit rate calculation. This ratio indicates that Microsoft has a 1.3% advantage in gross profit margin. Net Sales \$35,622 \$69,943 Profit margin ratio Net Income \$8,547 = 24.0% \$23,150 = 33.1% Total revenue was used for the base's of Oracle's and Microsoft's profit margin calculation .Microsoft earns almost 33 cents for every \$1 dollar in sales whereas Oracle earns over 24cents so the advantage goes to Microsoft for this profitabiility ratio. Net Sales \$35,622 \$69,943 Inventory Turnover Cost of Goods Sold \$8,398 29.9 \$15,577 14.8 Oracle doubles in liquidity