Xacc/280 Week 3 Individual Assignment

Words: 1010
Pages: 5

I chose three tech companies for my financial analysis; Amazon ”AMZN”, Apple ”AAPL”, and Microsoft Corporation “MSFT”. Company data are derived from the 2016 fiscal year. I utilize services from all three companies on a daily basis. I own many Apple products, my favorite being my iPhone. On my iPhone I have access to Amazon and Microsoft apps. As an Amazon Prime subscriber, I enjoy the fast shipping and wide variety of products offered by Amazon. Microsoft office allows me to create presentations with Powerpoint, write academic papers (like this one) with Word, and organize data using Access or Excel. In order to analyze the financial health of the three companies, i’m using the debt ratio, asset turnover ratio, price/earnings ratio, current ratio, and gross profit percentage.

Vertical analysis keeps companies on track through benchmarking. Benchmarking can be used to compare companies in an industry or against a single competitor. Since my vertical analysis is based on the income statement, I’m using net sales/total revenue as my base. Looking at Microsoft’s general and administrative expenses for 2015 and 2016, I see they remain pretty constant, 13.95% in 2016 and 13.96% in 2015. As a matter of fact, general and administrative expenses for all companies are either the same or within a few percentage
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According to Investopedia.com, “higher ratios imply that the company is generating more revenue per dollar of assets”. A high asset turnover ratio is desirable; however, they vary by industry. Ratios less than 1 are typical in telecommunications industries due to their large bases, yielding a lower ratio. This theory is evident in my calculations; Microsoft Corporation has the lowest asset turnover ratio at 0.30. This may be a result of a large base or inefficiency. Apple follows at 0.70, and Amazon is