CP 7: Capital Structure & Derivation of RAOCC. A. Balance Sheet (last 5 years) 1. Capital Expenditures a) Purposes and growth of CAPEX. b) CAPEX ROIIC. c) ROIC versus RAOCC 2. Liquidity Analysis. a)...

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Answer To: CP 7: Capital Structure & Derivation of RAOCC. A. Balance Sheet (last 5 years) 1. Capital...

Preeta answered on Dec 12 2021
154 Votes
The following analysis has been shown with respect to Microsoft after analyzing the past five-year annual reports of the company.
CP 7: Capital Structure & Derivation of RAOCC.
A. B
alance Sheet (last 5 years)
1. Capital Expenditures
a) Purposes and growth of CAPEX.
There has been overall growth in the capital expenditure and the main reason for that is assets acquired under capital lease. The following table shows the capital expenditure of the company:
(Source: https://www.microsoft.com/en-us/Investor/earnings/trended/capital-expenditure.aspx)
b) CAPEX ROIIC.
The ROIIC of Microsoft has been presented in the following table:
    
    2020
    2019
    2018
    2017
    2016
    ROIC
    25.83%
    25.53%
    11.70%
    20.78%
    21.84%
c) ROIC versus RAOCC
The ROIIC of Microsoft has been presented in the following table:
    
    2020
    2019
    2018
    2017
    2016
    RAOCC
    48.91%
    42.06%
    21.26%
    35.75%
    53.10%
On comparison, RAOCC of the company is higher than ROIC.
2. Liquidity Analysis.
a) Current Ratio.
The following table represents the current ratios of the company:
    
    2020
    2019
    2018
    2017
    2016
    Current ratio
    2.52
    2.53
    2.90
    2.92
    2.35
b) Quick Ratio.
The following table represents the quick ratios of the company:
    
    2020
    2019
    2018
    2017
    2016
    Quick ratio
    2.49
    2.50
    2.86
    2.88
    2.31
3. Capital Structure Analysis
a) Total $ Debt Book Value.
The following table represents the total debt value of the company:
    
    2020
    2019
    2018
    2017
    2016
    Total debt value
    3,749.00
    5,516.00
    3,998.00
    10,121.00
    12,904.00
b) Debt/Total Capital.
The following table represents the debt/total capital of the company:
    
    2020
    2019
    2018
    2017
    2016
    Debt/Total Capital
    6.35
    7.8%
    10.5%
    13.97%
    15.24%
c) Debt/Equity.
The following table represents the debt/equity of...
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