Please view the 2020 income statements and balance sheets for Microsoft. 1. What does margin measure? Describe this in your own words. Writing a formula is not a sufficient answer.   2. What was Microsoft's 2020 margin?   3. What is one specific way that Microsoft could increase its margin? Please number your responses.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
Please view the 2020 income statements and balance sheets for Microsoft.
1. What does margin measure? Describe this in your own words. Writing a formula
is not a sufficient answer.
 
2. What was Microsoft's 2020 margin?
 
3. What is one specific way that Microsoft could increase its margin?
Please number your responses.
INCOME STATEMENTS
(In millions, except per share amounts)
Year Ended June 30,
2020
2019
2018
Revenue:
Product
Service and other
$ 68,041 $ 66,069 $ 64,497
59,774
74,974
45,863
Total revenue
143,015 125,843
110,360
Cost of revenue:
Product
Service and other
16,017
30,061
16,273
26,637
15,420
22,933
Total cost of revenue
46,078
42,910
38,353
Gross margin
Research and development
Sales and marketing
96,937
19,269
19,598
5,111
82,933
16,876
18,213
4,885
72,007
14,726
17,469
4,754
General and administrative
Operating income
Other income, net
52,959
42,959
729
35,058
1,416
77
Income before income taxes
53,036
8,755
43,688
4,448
36,474
19,903
Provision for income taxes
Net income
$ 44,281 $ 39,240 $ 16,571
Earnings per share:
Basic
5.82 $
5.76 $
5.11 $
5.06 $
2.15
2.13
Diluted
Weighted average shares outstanding:
Basic
7,610
7,683
7,673
7,753
7,700
7,794
Diluted
Refer to accompanying notes.
Transcribed Image Text:INCOME STATEMENTS (In millions, except per share amounts) Year Ended June 30, 2020 2019 2018 Revenue: Product Service and other $ 68,041 $ 66,069 $ 64,497 59,774 74,974 45,863 Total revenue 143,015 125,843 110,360 Cost of revenue: Product Service and other 16,017 30,061 16,273 26,637 15,420 22,933 Total cost of revenue 46,078 42,910 38,353 Gross margin Research and development Sales and marketing 96,937 19,269 19,598 5,111 82,933 16,876 18,213 4,885 72,007 14,726 17,469 4,754 General and administrative Operating income Other income, net 52,959 42,959 729 35,058 1,416 77 Income before income taxes 53,036 8,755 43,688 4,448 36,474 19,903 Provision for income taxes Net income $ 44,281 $ 39,240 $ 16,571 Earnings per share: Basic 5.82 $ 5.76 $ 5.11 $ 5.06 $ 2.15 2.13 Diluted Weighted average shares outstanding: Basic 7,610 7,683 7,673 7,753 7,700 7,794 Diluted Refer to accompanying notes.
PART II
Item 8
BALANCE SHEETS
(In millions)
June 30,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
13,576 $
122,951
11,356
122,463
Short-term investments
136,527
Total cash, cash equivalents, and short-term investments
Accounts receivable, net of allowance for doubtful accounts of $788 and
$411
Inventories
133,819
32,011
1,895
11,482
29,524
2,063
10,146
Other current assets
Total current assets
181,915
175,552
Property and equipment, net of accumulated depreciation of $43,197 and
$35,330
Operating lease right-of-use assets
Equity investments
Goodwill
44,151
8,753
2,965
43,351
7,038
13,138
36,477
7,379
2,649
42,026
7,750
14,723
Intangible assets, net
Other long-term assets
Total assets
$
301,311 $
286,556
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
Current portion of long-term debt
Accrued compensation
$
12,530 $
3,749
7,874
2,130
36,000
10,027
9,382
5,516
6,830
5,665
32,676
9,351
Short-term income taxes
Short-term unearned revenue
Other current liabilities
72,310
59,578
29,432
3,180
204
7,671
10,632
69,420
66,662
29,612
4,530
233
6,188
7,581
Total current liabilities
Long-term debt
Long-term income taxes
Long-term unearned revenue
Deferred income taxes
Operating lease liabilities
Other long-term liabilities
Total liabilities
183,007
184,226
Commitments and contingencies
Stockholders' equity:
Common stock and paid-in capital – shares authorized 24,000; outstanding
7,571 and 7,643
Retained earnings
Accumulated other comprehensive income (loss)
80,552
34,566
3,186
78,520
24,150
(340)
Total stockholders' equity
118,304
102,330
Total liabilities and stockholders' equity
$
301,311 $
286,556
Transcribed Image Text:PART II Item 8 BALANCE SHEETS (In millions) June 30, 2020 2019 Assets Current assets: Cash and cash equivalents $ 13,576 $ 122,951 11,356 122,463 Short-term investments 136,527 Total cash, cash equivalents, and short-term investments Accounts receivable, net of allowance for doubtful accounts of $788 and $411 Inventories 133,819 32,011 1,895 11,482 29,524 2,063 10,146 Other current assets Total current assets 181,915 175,552 Property and equipment, net of accumulated depreciation of $43,197 and $35,330 Operating lease right-of-use assets Equity investments Goodwill 44,151 8,753 2,965 43,351 7,038 13,138 36,477 7,379 2,649 42,026 7,750 14,723 Intangible assets, net Other long-term assets Total assets $ 301,311 $ 286,556 Liabilities and stockholders' equity Current liabilities: Accounts payable Current portion of long-term debt Accrued compensation $ 12,530 $ 3,749 7,874 2,130 36,000 10,027 9,382 5,516 6,830 5,665 32,676 9,351 Short-term income taxes Short-term unearned revenue Other current liabilities 72,310 59,578 29,432 3,180 204 7,671 10,632 69,420 66,662 29,612 4,530 233 6,188 7,581 Total current liabilities Long-term debt Long-term income taxes Long-term unearned revenue Deferred income taxes Operating lease liabilities Other long-term liabilities Total liabilities 183,007 184,226 Commitments and contingencies Stockholders' equity: Common stock and paid-in capital – shares authorized 24,000; outstanding 7,571 and 7,643 Retained earnings Accumulated other comprehensive income (loss) 80,552 34,566 3,186 78,520 24,150 (340) Total stockholders' equity 118,304 102,330 Total liabilities and stockholders' equity $ 301,311 $ 286,556
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Trading
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education