MICROSOFT CORPORATION (MSFT)

MICROSOFTCORPORATION (MSFT)

September3, 2014.

MicrosoftCorporation (MSFT)Shareholders’equity in 2008

Thetotal stockholders’ equity at MicrosoftCorporation (MSFT)was $ 36, 286 million. Shareholders’ equity indicates the amount ofmoney left after paying all debtors and creditors. In this caselong-term assets and long-term debts are considered when calculatingthe shareholders equity (Ross,&nbspWestfield&ampJordan,2010). Shareholdersequity is also called the ownership equity and is spread among thecompany’s shareholders. The value of shareholders equity after agiven period of accounting is an essential assessment used byinvestors when assessing the viability of the firm for investment.Shareholders’ equity is liable to changes such as change in firms’assets (current or tangible) and the liabilities (current orlong-term liabilities)(Kieso, Weygandt &amp Warfield, 2007).In some cases, shareholders’ equity may change due to depreciation,share repurchases or when dividends are paid out (Ross,&nbspWestfield&ampJordan,2010). Inthe case of Microsoft, the stockholders’ equity indicates that, thefirm has good returns and, therefore, a good investment target.

MicrosoftCorporation (MSFT)networking capital in 2008

Networkingcapital = Current Assets-Current liabilities

Totalcurrent assets were=$43,242

TotalCurrent liabilities=$29,886

Networking capital=$43,242-$29,886

=$13,356 million

Networkingcapital gives a short-term financial status of a firm this means theability of a business to meet its current liabilities with currentassets. Networking capital gives more information about the businesscapacity to grow (Brealey,Myers&amp Marcus,2012). For instance, if a firm has more cash reserves, this indicatesthe capacity of the business to improve its account receivables.Microsoft had a networking capital of $13, 356 million in 2008 thisindicates that the firm had sufficient cash to meet the immediateneeds of all its current creditors and retaining in excess $13, 356million in its current asset reserves.

References

BrealeyR. A.,&nbsp MyersS. C. &amp MarcusA. J. (2012).Fundamentals of Corporate Finance.NewYork: McGraw-Hill/IrwinPublishers.

Kieso,D. E., Weygandt, J. J. &amp Warfield, T. D. (2007). IntermediateAccounting(12th Ed.). New York: John Wiley &amp Sons.

RossS.A.,&nbspWestfieldR.W.&ampJordanB.D. (2010). Essentials of Corporate Finance.NewYork: McGraw-Hill/IrwinPublishers.