Oracle Ratios

Microsoft

Oracle

Interpretation and Comparison between the two companies' ratios (Reading the Appendix of Chapter 13 will help you prepare the commentary) According to this Oracle gives more per share to their stock holders then Microsoft does.

Earnings per share

As given in the income statement

$2.73

Basic Common

$1.69

Both companies have the ability to pay back their short term debts.

Current ratio

Current assets Current liabilities

$74,918 $28,774

=

2.60

$73,535 $14,192

=

5.18

When reading this we can tell that for every dollar spent, Microsoft has 78cents left over and Oracle has 76cents that can be used towards future investments.

Gross Profit Ratio

Gross profit Net Sales

$54,366 $69,943

=

77.7%

$27,224 $35,622

=

76.4%

Microsoft has a nice number of 33% of its sales that are contributed to their income while Oracle has only 24% to contribute.

Profit margin ratio

Net Income Net Sales

$23,150 $69,943

=

33.1%

$8,547 $35,622

=

24.0%

Microsoft has inventory that that can be pushed and sold out at almost 15 times per sale figure while Oracle has a higher number of almost 30 times push out for sales. Inventory Turnover Cost of Goods Sold Average Inventory $15,577 $1,056 14.8 times $8,398 $281 29.9 times

By looking at these figures we can see that Microsoft takes a little longer to push their inventory out by 25 days verses Oracles 12 days.

Days in Inventory

365 days Inventory turnover

365 14.8

=

25 days

365 29.9

=

12 days

Receivable Turnover Ratio

Net credit sales Average Net Receivables

$69,943 $14,001

=

5.0

$35,622 $6,107

=

5.8

It looks like Microsoft has a better Receivable turnover then oracle, but not by much.

Average Collection Period

365 Receivable Turnover Ratio

365 5.0

=

73.1 days

365 5.8

=

62.6

When looking at these numbers we can see that when Microsoft is doing their