Microsoft is the dominant software company in the world. Its Windows operating system runs most of the personal computers and workstations used in businesses and by consumers, and its productivity software (including word processing and spreadsheet applications) dominate the market, as well. The company has faced charges of anti-trust violations, but has worked out settlements with various government agencies, although these settlements have not yet been entirely concluded. This research examines the company's recent financial performance and considers the outlook for the company in the coming five years. Unless otherwise noted, all dollar figures are expressed in millions.
Using the company's 10-K SEC filing, it is possible to identify some basic trends associated with Microsoft's recent financial performance and strategy. The company's common size balance sheet (in which key items are shown as a percentage of total assets) is presented below (10-K Filing, 2001, p. 29):
The common size balance sheet identifies that the company does not separate its inventory from its other assets, and also that it has a significant amount of "other" assets. Closer examination of the balance sheet reveals that the company has a strong cash position, and also has a strong investment position in both short-term and long-term investment instruments. The company's key balance sheet items are shown below (10-K Filing, 2001, p. 29):
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