Management strategies
Part I
For both MSFT and Google Inc. (GOOG), compute:
MSFT (As of Jun 30, 2013)
1.Current Ratio
101,466,000 / 37,417,000 =2.71 to 1
2.Acid Test Ratio
3,804,000 + 73,218,000 + 19,118,000 / 37,417,000 = 2.6 to 1
3.Debt Ratio
63,487,000 / 142,431,000 = 45%
GOOG (As of Dec 21, 2012)
1.Current Ratio
60,454,000 / 14,337,000 = 4.22 to 1
2.Acid Test Ratio
14,778,000 + 33,310,000 + 9,729,000 / 14,337,000 = 4.03 to 1
3.Debt Ratio
22,083,000 / 93,798,000 = 24%
Part II
Answer the following questions:
1.How do the two companies' ratios compare? Why are they significant?
2.Which company do you think is stronger and why?
3.Suggest some real management stratgiesyour company might use to maintain or improve the ratio of: Short-term debt vs. long-term debt
Part III
"Creditors don't like to lend long-term money for short-term needs."
1.What do you think this means and how do lenders apply this general rule?
2.What sort of liabilities are short-term (current), and what assets do they correspond with?
3.What sort of liabilities are long-term (non-current), and what assets do they correspond with?
4.How do the two companies compare on short-term debt and assets vs. long-term debt and assets?