Microsoft Corporation (MSFT) is one of the world's largest technology companies, renowned for its software products and services. Founded by Bill Gates and Paul Allen in 1975, Microsoft has since become a global leader in technology, offering a wide range of products and services across various sectors. Microsoft's primary segments include:

Productivity and Business Processes: This segment includes Office Commercial, Office Consumer, LinkedIn, and Dynamics business solutions.

Intelligent Cloud: This segment comprises server products and cloud services, including Azure, SQL Server, Windows Server, Visual Studio, System Center, and GitHub.

More Personal Computing: This segment encompasses Windows, Devices, Gaming (Xbox hardware and services), Search (Bing), and Surface.

Microsoft is traded on the Nasdaq Stock Market under the ticker symbol MSFT. As of the past few years, Microsoft has been focusing heavily on cloud computing and artificial intelligence, leveraging its vast resources and expertise to innovate in these areas.

Explanation:

Year 1 (2022): Current Assets: $150 billion Current Liabilities: $80 billion Inventory: $20 billion Total Debt: $50 billion Shareholders' Equity: $200 billion EBIT (Earnings Before Interest and Taxes): $60 billion Interest Expense: $5 billion Sales: $300 billion Year 2 (2023): Current Assets: $170 billion Current Liabilities: $90 billion Inventory: $25 billion Total Debt: $60 billion Shareholders' Equity: $220 billion EBIT (Earnings Before Interest and Taxes): $70 billion Interest Expense: $6 billion Sales: $320 billion Liquidity Analysis: 1. Current Ratio: Current Ratio=150 billion/80 billion=1.875 (Year 1) Current Ratio=170 billion20 billion/90 billion=1.778 (Year 2) 2. Quick Ratio: Quick Ratio=150 billion20 billion/80 billion=1.625 (Year 1) Quick Ratio=170 billion25 billion/90 billion=1. Debt/Leverage Analysis: 1. Debt to Total Assets Ratio: Debt to Total Assets Ratio=50 billion/150 billion=0.333 (Year 1) Debt to Total Assets Ratio=60 billion/170 billion=0. 2. Debt to Equity Ratio: Debt to Equity Ratio=50 billion/200 billion=0.25 (Year 1) Debt to Equity Ratio=60 billion/220 billion=0.273 (Year 2) 3. Interest Coverage Ratio (TIE): TIE Ratio=60 billion5 billion=12 (Year 1)TIE Ratio=5 billion60 billion=12 (Year 1) TIE Ratio=70 billion6 billion=11.667 (Year 2)TIE Ratio=6 billion70 billion=11.667 (Year 2) 4. Degree of Operating Leverage: DOL=%60 billion/%300 billion=(70 billion60 billion)/60 billion / (320 billion300 billion)/300 DOL0.1667/0.06672.5 (Year 2) Interpretation: Liquidity Analysis: Microsoft's current and quick ratios indicate that the company has sufficient short-term assets to cover its short-term liabilities in both years, suggesting good liquidity. Debt/Leverage Analysis: The debt ratios show that Microsoft has moderate debt levels compared to its assets and equity, which is generally favorable. The interest coverage ratio indicates that the company can comfortably cover its interest expenses with its earnings. The degree of operating leverage suggests that Microsoft's earnings are relatively sensitive to changes in sales volume

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Profitability Analysis - Calculate the following ratios:

• Return on Assets
• Return on Equity

Using these ratios, assess the effectiveness with which the corporation uses its assets. Compare these ratios with average numbers from the industry in which your corporation operates. Is this company more or less profitable than similar companies in the same industry/market?Why/why not?

Market Value Analysis - Calculate the value of the corporation based on the following:

• Market capitalization value
• Book Value
• DCF value using Net Annual Earnings for 25 years at 4% (average the past 2 or 3 years)
• Net Annual Earnings at 4% in perpetuity
• Required Rate of Return, using the CAPM method
• PE Ratio

Compare these values and assess the real value of the corporation, including reference to its level of risk. Do you recommend buying shares in the company at this point?Why/why not?