Microsoft and Oracle's Balance Sheets
d (Million dollars) | Microsoft2012 | Oracle 2012 | Microsoft2011 | Oracle 2011 | Current Assets | 85,084 | 74,918 | 40,023 | 39,174 | Current Liabilities | 32,688 | 28,774 | 15,388 | 14,192 | Net working capital | 52,396 | 46,144 | 24,635 | 24,982 | Current Ratio | 260.29% | 260.37% | 260.09% | 276.03% | Cash | 6,938 | 9,610 | 14,955 | 16,163 | Short-term securities | 56,102 | 43,162 | 15,721 | 12,685 | Account receivable | 15,780 | 14,987 | 6,377 | 6,628 | Quick Ratio | 241.13% | 235.49% | 240.79% | 249.97% | Total Liabilities | 54,908 | 51,621 | 34,240 | 33,290 | Total stockholder’s equity | 66,363 | 57,083 | 43,688 | 39,776 | D/E Ratio | 82.74% | 90.43% | 78.37% | 83.69% |
After comparing these two corporations’ balance sheets, I found some information that may be valuable to make a lending decision. And I, as a credit analyst, have decided to recommend Oracle Inc. for this $400 million line of credit.
First, we need the purchases be repaid within 30 days, which means that the companies’ short-term solvency should be evaluated first. We usually prefer more current assets than current liabilities to ensure that companies have sufficient liquidity to pay their short-term debts. Here we can see that the Current Ratios and Quick Ratios of these two companies are exactly similar, these two companies are both in healthy financial conditions. Though the Microsoft has more Net working capitals than Oracle, both of the two companies can pay back a $400 million debt in 30 days.
On the other hand, with the data from their balance sheets, we can also get the debt-to-equity ratio of these two companies: Oracle Inc. 78.37% and Microsoft 82.74%. The ratios indicate that the Microsoft Corporation financed more with debts than the Oracle Inc., and the investment to Microsoft may be riskier than that to Oracle. In conclusion, the Oracle Inc. should be the best choice to get the
After comparing these two corporations’ balance sheets, I found some information that may be valuable to make a lending decision. And I, as a credit analyst, have decided to recommend Oracle Inc. for this $400 million line of credit.
First, we need the purchases be repaid within 30 days, which means that the companies’ short-term solvency should be evaluated first. We usually prefer more current assets than current liabilities to ensure that companies have sufficient liquidity to pay their short-term debts. Here we can see that the Current Ratios and Quick Ratios of these two companies are exactly similar, these two companies are both in healthy financial conditions. Though the Microsoft has more Net working capitals than Oracle, both of the two companies can pay back a $400 million debt in 30 days.
On the other hand, with the data from their balance sheets, we can also get the debt-to-equity ratio of these two companies: Oracle Inc. 78.37% and Microsoft 82.74%. The ratios indicate that the Microsoft Corporation financed more with debts than the Oracle Inc., and the investment to Microsoft may be riskier than that to Oracle. In conclusion, the Oracle Inc. should be the best choice to get the