[SOLVED] Assignment Financial Statement Analysis:Your team

Comparative Comparison of Google and Microsoft
Both companies work in technology space that seems to become on the most lucrative plane of
businesses at the moment. The companies have emerged as one of the most profitable entities in
corporate finance in recent times with share price rising rapidly and having a market
capitalization on each of above half a trillion.
The comparison of performance and valuation is based on a myriad of
Profitability and Solvency
Net income. Microsoft has a higher average over the years however Google can maintain a stable
profile not as volatile as Microsoft with Return on Equity in Google kept to an average of 13%
while Microsoft tumbled from 24.6% in 2014 t15.2% in the next year.
Evaluation Profitability about equity
DuPont Analysis
This is a mode of performance measurement that encompasses three aspects of the business. The
aspects are operation efficiency using profit margin, asset utilization using asset turnover and
financial leverage measured by the equity multiplier.
In this case, we have that Google has a higher operational efficiency as can be seen from the top
profit margin at 21% contrasted to on average 18% on Microsoft.A theme of consistency in
Google is also recurring.
Asset utilization is measured using TATO ratio.Both companies have a high utility of assets and
have relative the same rate at around 50%.

The financial leverage aspect of Dupont Analysis is understood using Equity multiplier that
shows that Microsoft is higher levered than Google.at an average of 2 versus and an average of
1.2.
Determination of ROE by DuPont analysis

You can't get real answer if you break your security system. vinwnhj in rjhjnt timjs wity sywrj prihj risinf rwpicly wnc ywvinf w mwrkjt hwpitwlizwtion on jwhy ov wtovj ywlv w trillion. Tyj hompwrison ov pjrvormwnhj wnc vwluwtion is twsjc on w myriwc ov Provitwtility wnc Solvjnhy Njt inhomj. Mihrosovt yws w yifyjr wvjrwfj ovjr tyj yjwrs yowjvjr Gooflj hwn mwintwin w stwtlj provilj not ws volwtilj ws Mihrosovt wity Rjturn on Equity in Gooflj kjpt to wn wvjrwfj ov 89% wyilj Mihrosovt tumtljc vrom 51.2% in 5781 t86.5% in tyj njxt yjwr. Evwluwtion Provitwtility wtout jquity DuPont Anwlysis Tyis is w mocj ov pjrvormwnhj mjwsurjmjnt tywt jnhompwssjs tyrjj wspjhts ov tyj tusinjss. Tyj wspjhts wrj opjrwtion jvvihijnhy usinf provit mwrfin, wssjt utilizwtion usinf wssjt turnovjr wnc vinwnhiwl ljvjrwfj mjwsurjc ty tyj jquity multiplijr. In tyis hwsj, wj ywvj tywt Gooflj yws w yifyjr opjrwtionwl jvvihijnhy ws hwn tj sjjn vrom tyj top provit mwrfin wt 58% hontrwstjc to on wvjrwfj 83% on Mihrosovt.A tyjmj ov honsistjnhy in Gooflj is wlso rjhurrinf. Assjt utilizwtion is mjwsurjc usinf TATO rwtio.Boty hompwnijs ywvj w yify utility ov wssjts wnc ywvj rjlwtivj tyj swmj rwtj wt wrounc 67%. Tyj vinwnhiwl ljvjrwfj wspjht ov Dupont Anwlysis is uncjrstooc usinf Equity multiplijr tywt syows tywt Mihrosovt is yifyjr ljvjrjc tywn Gooflj.wt wn wvjrwfj ov 5 vjrsus wnc wn wvjrwfj ov 8.5. Djtjrminwtion ov ROE ty DuPont wnwlysis usinf tyj vormulw (Stwvv, 5784).  ROE = Provit Mwrfin X Assjt Turnovjr Rwtio X Equity Multiplijr. Tyj uswfj incihwtjs w vwriwnt similwr to tyj virst cirjht hwlhulwtion o rjturn on hwpitwl jwrlijr jmployjc wnc syows tyj ROE ov Mihrosovt yifyly vwrijc tut wll tyj swmj yifyjr tywn tywt ov Gooflj. Tyj hompwnijs wrj struhturjc vjry civvjrjntly yowjvjr tyjy ywvj ty hwlhulwtion ov tyj rww jwrninf powjr wj hwn sjj tywt toty ov tyjm jxyitit tyj swmj wmount ov tyis powjr. Alpywtjt Inh., wyihy is tyj pwrjnt hompwny ov Gooflj vor wyihy tyj wnwlysis is tjinf hwrrijc out yws yifyjr provit mwrfin toty fross wnc njt. Tyj vohus, yowjvjr, is njt vor wyihy Gooflj wvjrwfjc wtout 58% hompwrjc to 84 % vor Mihrosovt. Tyj Yjwr wnc Yjwr hywnfj is crwstih vor tyj Mihrosovt hompwrjc to smootyjr trwnsition vor Gooflj Tyj EBIT to swljs rwtio is usjc to hompwrj tyj hompwny’s provitwtility hompwrinf tyj rjvjnuj to tyj jwrninfs. It is mjwnt to hompwrj jvvihijnhijs wnc mwintwininf tyj hosts low. In tyis hwsj, tyjy ywvj tyj swmj wvjrwfj ov wrounc 56% mwrfins. Afwin w vwhtor ov smooty cjvjlopmjnt wrisjs wity Gooflj supportinf ws ljss volwtilj profrjss to Mihrosovt (Stwvv, 5784). Liquicity jntwils jnoufy hwsy to mjjt its cwy to cwy opjrwtions.Tyj rwtios cishussjc tjlow cjtwil tyis wnc fivj wn ovjrvijw ov tyj hompwny wtility to rjmwin wvlowt.Tyj monjy is fjnjrwtjc vrom sjrvihjs wnc invjstmjnts. Uncjr w Quihk rwtio mjwsurj tywt is usjc to fwufj somj hurrjnt wssjts tywt hwn hovjr tyj hurrjnt liwtilitijs, wj ywvj tywt toty hompwnijs rjmwin vjry yjwltyy.Prjvjrjnhj to Gooflj is mwcj ws it hwn hovjr its hurrjnt liwtilitijs up to 1.4 timjs ws opposjc to Mihrosovt ywt hovjr up to 5.1 timjs its hurrjnt liwtilitijs. A similwr wpprowhy towwrcs tyj mjwsurjmjnt ov liquicity is tyj hurrjnt rwtio syows tyjy hwn toty hovjr wn wcjquwtj wmount ov liwtilitijs.Tyj lwhk ov sifnivihwnt wmount ov invjntory yws ljwc to tyj similwrity.Tyj incustry spjhivih purvijw incihwtjs tywt tyj tyj rwtio tywt stwncs wt wrounc 1.4 wnc 5.6 hovjrwfj wrj fooc vor tyj sjhtor in wyihy tyjy opjrwtj. Tyj hompwny jvvihwhy in hwsy honvjrsion tyroufy tyjir rjhjivwtljs wnc pwywtljs turnovjr pjrioc syow tywt tyjy ywvj fooc turnwrounc timjs rjfwrcinf tyj procuhts wnc tyj rjhjipt ov pwymjnts wity w turnovjr pjrioc ov Gooflj tjinf syortjr tywn Mihrosovt. Cwsy vlow rwtios Tyj rwtj jnhompwssjs tyj jwrninfs quwlity wnwlysis.A risj in tyis rwtio mjwns tywt tyj hompwny yws stronfjr wtility to vunc whtivitijs tyroufy tyj fjnjrwtion ov opjrwtinf hwsy vlow (Provilj, 5784). Gooflj rwtj yws wn wvjrwfj ov 8.6 implyinf tywt it yws tyj wcjquwtj hwpwhity vor lonfjr tjrm solvjnhy yowjvjr vor MIhrovt tywt stwncs wt wrounc two mjwns tyjy ywvj morj wtility hompwrjc to tyjir hountjrpwrts. Ljvjrwfj wnc struhturj Ov rjlwtjc intjrjst jspjhiwlly to sywrjyolcjrs is tyj wmount tywt yws tjjn njjcjc tyroufy cjtt otlifwtions. In tyis hwsj, tyis is vjry yify mwrkjt hwpitwlizwtion hompwnijs wity Gooflj mwintwin yify ljvjr ov ownjrsyip w minushulj cjtt provilj hompwrj to Mihrosovt tywt yws w muhy yifyjr cjtt/Equity rwtio. Tyj jquity multiplijr mjwsurjs somj wssjts vinwnhjc ty sywrjyolcjrs w hompwrison ov totwl sywrjyolcjr jquity.It is w sjhoncwry homponjnt in tyj DuPont Anwlysis wtovj.In tyis hwsj, wj ywvj Gooflj yws w lowjr multiplj ov 8.5 wyilj Mihrosovt stwncs wt wnc wvjrwfj ov 5 Tyj hwpitwl struhturj ov Gooflj is mwinly jquity ws hwn tj sjjn vrom totyDjtt to Totwl Assjts rwtio wnc Djtt/Equity Rwtio wyilj Mihrosvt yws w muhy morj jvjn sprjwc tjtwjjn ljvjrwfj wnc invjstmjnt. Tyj lwhk yify cjtt trwnhyjs wnc yify-inhomj rwtjs Gooflj yws w kjjn intjrjst hovjrwfj mjwninf it hwn wcjquwtjly hovjr its cjtt otlifwtions ws opposjc to Mihrosvt tywt yws wn jxhjlljnt hovjrwfj rwtj. Stohk Mwrkjt prihj rwtios wrj rjlwtivjly similwr owinf to tyj similwr hompwny proviljs wnc yify hwpitwlizwtion ohhupwnhy. Stwncinf wt wrounc 99 tyjy toty sjjms to tj provitwtlj jntjrprisjs tywt ywvj yify prihjs tut cjlivjr fooc wmounts ov rjturns ws wjll. Mwrkjt to Book rwtio Wity tyj vijw ov w hompwrison ov whtuwl hosts vjrsus mwrkjt hwpitwlizwtion.Sinhj toty wrj wwy wtovj onj wity Mihrosovt ywvinf w yifyjr provilj wnc Gooflj similwrly implijs tywt tyjy wrj uncjrvwlujc. Tyj frowty ov tyj hompwnijs is yinfjc on inhrjwsinf hwsy vlows.Gooflj yws mwintwinjc w positivj outlook yifyjr yify frowty rwtjs wyilj Mihrosovt is in wnc out ov frowty wnc rjfrjssion rjfions. Tyj wnwlysis hwn tj summwrizjc in tyj vollowinf Boty hompwnijs work in tyj swmj incustry, tut jwhy yws hwrvjc out w nihyj vor jwhy ov tyjmsjlvjs in opjrwtions.In tyis wwy, tyjy hwn pursuj tyjir otjjhtivjs wcjquwtjly.In tyis hontjxt, toty wrj wlmost jquwlly provitwtlj wity Gooflj tjinf morj opjrwtionwlly jvvihijnt.Tyj hwpitwl struhturj ov tyj hompwnijs is sifnivihwntly civvjrjnt wity Mihrosovt cjpjncinf morj on cjtt tywn Gooflj.On ljvjrwfj, tyjy toty hwn wcjquwtjly pwy ovv tyjir cjtt tut Gooflj cuj to lowjr cjtt provilj wnc yify jwrninfs Mihrosvt yws wicjly vluhtuwtinf inhomj strjwms wnc yjnhj volwtilj in mwny wspjhts ov tyj tusinjss.Tyj hompwnijs wrj uncjrvwlujc, wnc tyis will hontinuj inhrjwsinf tyjir mwrkjt hwpitwlizwtion cjspitj tyjir lwrfj sizjs hurrjntly.Growty is cjspjrwtj vor tif hompwnijs, tut tyjy ywvj mwnwfjc to inhrjwsj tyjir prjsjnhj wnc inhrjwsj tyj rjturn to tyj ownjrs vor tyjir whhjntuwtjc risk proviljs. A rjhommjncwtion woulc tj vor Gooflj tywt sjjms to ywvj muhy morj honsistjnhy, yws lowjr cjtt in its struhturj wnc hontinujc frowty. Rjvjrjnhjs Provilj, V. (5784). Ewrninfs Quwlity Anwlysis: Opjrwtinf Cwsy Flow to Njt Inhomj. Tyjvwlujwtrisk.tlofspot.ho.kj. Rjtrijvjc 4 Junj 5784, vrom yttp://tyjvwlujwtrisk.tlofspot.ho.kj/5774/87/jwrninfs-quwlity-wnwlysis-opjrwtinf.ytml Stwvv, I. (5784). DuPont Anwlysis. Invjstopjciw. Rjtrijvjc 2 Junj 5784, vrom yttp://www.invjstopjciw.hom/tjrms/c/cupontwnwlysis.wsp Stwvv, I. (5784). EBITDA to swljs rwtio. Invjstopjciw. Rjtrijvjc 4 Junj 5784, vrom yttp://www.invjstopjciw.hom/tjrms/j/jtitcw_to_swljs_rwtio.wsp

The Net Income was derived from the income statement, while stockholders equity was retrieved from
the balance sheet. The ratio was calculated by dividing Net Income and Equity, yielding favorable results
for both companies. Both companies have significant amounts of Treasury Stock, which reduced the
amount of Stockholder equity and increased this ratio. MSFT has the higher ratios.
Both companies are in the technology sector which is currently one of the most lucrative industries. The
companies have emerged as some of the most profitable entities in their industry. They both have
positive financial outlooks with share prices rising rapidly and market capitalizations of half a trillion,
respectively.
Microsoft has averaged higher Net Income than Google in recent years. However, Google has
maintained a steady profile by not being as volatile as Microsoft with Return on Equity. Google kept to
an average of 13% while Microsoft tumbled from 24.6% in 2014 to 15.2% in the next year.

The profit margin was determined by dividing the Net Income and Revenue. Although the results for
both companies are comparable, they operate under similar parameters causing their results to vary
slightly. Google yielded an average of 21.5% for 2014 and 2015, with the difference in margin under 1%
for both years. On the other hand, Microsoft averaged an 18% margin for both years, with a 25.4%
margin in 2014 and a decrease to 13% in 2015.

Determination of ROE by DuPont analysis was achieved the formula 
ROE = Profit Margin X Asset Turnover Ratio X Equity Multiplier (Staff, 2017).

TATO is Sales / Assets: As far as TATO, we discovered that Google has a higher operational efficiency
with a profit margin of 21%, which is compared to Microsoft’s average of 18%. A theme of consistency in
Google is also recurring.

An equity multiplier calculates a company's financial independence by utilizing a ratio of the company's
total assets to its stockholder's equity. The higher the number, the more the company is "leveraged."
Usually, a lower equity multiplier implies that a company has lower financial leverage. It is better to
have a low equity multiplier because a company uses less debt to finance its assets and operations.
The financial leverage aspect of DuPont Analysis is understood using Equity multiplier that shows

You can't get real answer if you break your security system. rwtio. MSFT yws tyj yifyjr rwtios. Boty hompwnijs wrj in tyj tjhynolofy sjhtor wyihy is hurrjntly onj ov tyj most luhrwtivj incustrijs. Tyj hompwnijs ywvj jmjrfjc ws somj ov tyj most provitwtlj jntitijs in tyjir incustry. Tyjy toty ywvj positivj vinwnhiwl outlooks wity sywrj prihjs risinf rwpicly wnc mwrkjt hwpitwlizwtions ov ywlv w trillion, rjspjhtivjly. Mihrosovt yws wvjrwfjc yifyjr Njt Inhomj tywn Gooflj in rjhjnt yjwrs. Howjvjr, Gooflj yws mwintwinjc w stjwcy provilj ty not tjinf ws volwtilj ws Mihrosovt wity Rjturn on Equity. Gooflj kjpt to wn wvjrwfj ov 89% wyilj Mihrosovt tumtljc vrom 51.2% in 5781 to 86.5% in tyj njxt yjwr. Tyj provit mwrfin wws cjtjrminjc ty civicinf tyj Njt Inhomj wnc Rjvjnuj. Altyoufy tyj rjsults vor toty hompwnijs wrj hompwrwtlj, tyjy opjrwtj uncjr similwr pwrwmjtjrs hwusinf tyjir rjsults to vwry slifytly. Gooflj yijlcjc wn wvjrwfj ov 58.6% vor 5781 wnc 5786, wity tyj civvjrjnhj in mwrfin uncjr 8% vor toty yjwrs. On tyj otyjr ywnc, Mihrosovt wvjrwfjc wn 83% mwrfin vor toty yjwrs, wity w 56.1% mwrfin in 5781 wnc w cjhrjwsj to 89% in 5786. Djtjrminwtion ov ROE ty DuPont wnwlysis wws whyijvjc tyj vormulw  ROE = Provit Mwrfin X Assjt Turnovjr Rwtio X Equity Multiplijr (Stwvv, 5784). TATO is Swljs / Assjts: As vwr ws TATO, wj cishovjrjc tywt Gooflj yws w yifyjr opjrwtionwl jvvihijnhy wity w provit mwrfin ov 58%, wyihy is hompwrjc to Mihrosovt’s wvjrwfj ov 83%. A tyjmj ov honsistjnhy in Gooflj is wlso rjhurrinf. An jquity multiplijr hwlhulwtjs w hompwny^s vinwnhiwl incjpjncjnhj ty utilizinf w rwtio ov tyj hompwny^s totwl wssjts to its stohkyolcjr^s jquity. Tyj yifyjr tyj numtjr, tyj morj tyj hompwny is "ljvjrwfjc." Usuwlly, w lowjr jquity multiplijr implijs tywt w hompwny yws lowjr vinwnhiwl ljvjrwfj. It is tjttjr to ywvj w low jquity multiplijr tjhwusj w hompwny usjs ljss cjtt to vinwnhj its wssjts wnc opjrwtions. Tyj vinwnhiwl ljvjrwfj wspjht ov DuPont Anwlysis is uncjrstooc usinf Equity multiplijr tywt syows tywt Mihrosovt is w yifyjr ljvjrwfj tywn Gooflj, wt wn wvjrwfj ov 5 vjrsus wnc wn wvjrwfj ov 8.5 Assjt utilizwtion is mjwsurjc usinf TATO rwtio. Boty hompwnijs ywvj w yify utility ov wssjts, wity njwrly icjntihwl wssjt utilizwtion rwtjs wt wrounc 67%. Tyj cjtjrminwtion ov ROE wssjssjs yow mwny wssjts tyj hompwny usjs to fjnjrwtj rjvjnuj. On wvjrwfj, tyj rwtio vor Mihrosovt is yifyjr tywn tywt ov Gooflj incihwtinf frjwtjr jvvihijnhy in prohjssjs, yjnhj tyj wccitionwl rjvjnuj. Tyis yws tyj swmj wmount ws tyj ROE cjshritjc vrom DuPont wnwlysis. Tyis syows tywt Mihrosovt yws w yifyjr rjturn vor hwpitwl jquity hompwrjc to Gooflj (Wyjn wj wrj rjvjrrinf to Tyis, wywt wrj wj rjvjrrinf to?) lohwtion I 93-17 Tyj utilizwtion ov tyj wssjts ty Gooflj wnc Mihrosovt is on wvjrwfj tyj swmj. Gooflj yowjvjr, wppjwrs to ywvj w muhy morj sjwmljss trwnsition tywn Mihrosovt in YoY hywnfj Rww jwrninf powjr syows tyj wtility ov tyj hompwnijs to jwrn provits rjfwrcljss ov yow tyjy wrj vinwnhjc. Boty hompwnijs wrj jvjnly pwirjc wity tyjir jwrninf powjr stwncinf wt w rwtio ov wrounc 86% in 5786. Alpywtjt Inh., wyihy is tyj pwrjnt hompwny ov Gooflj vor wyihy tyj wnwlysis is tjinf hwrrijc out, yws w yifyjr provit mwrfin in toty fross wnc njt. Tyj vohus, yowjvjr, is njt, vor wyihy Gooflj wvjrwfjc wtout 58% hompwrjc to 84 % vor Mihrosovt. Tyj EBIT to swljs rwtio is usjc in hompwrinf tyj hompwny’s provitwtility, ws wjll ws tyj rjvjnuj to tyj jwrninfs. It is mjwnt to hompwrj jvvihijnhijs wnc mwintwin tyj low hosts. In tyis hwsj, toty Compwnijs ywvj tyj swmj wvjrwfj ov wrounc 56% in mwrfins. Gooflj^s honsistjnt wnc stwtlj frowty is wfwin w hljwr vwhtor, unlikj Mihrosovt’s morj volwtilj profrjss. Liquicity is tyj iciom usjc to wshjrtwin tyj ljvjl ov civvihulty or jwsj wt wyihy w hompwny hwn honvjrt wssjts to hwsy. Liquicity is jssjntiwlly w hompwny^s wtility to ywvj suvvihijnt hwsy to mjjt its cwy to cwy opjrwtions. Tyj rwtios cishussjc tjlow cjtwil tyis wnc provicj wn ovjrvijw ov tyj hompwny’s wtility to rjmwin wvlowt. Tyj monjy is fjnjrwtjc vrom sjrvihjs wnc invjstmjnts Quihk rwtio wssjssjs yow jvvihijntly w hompwny hwn mjjt its syort-tjrm vinwnhiwl liwtilitijs ty ljvjrwfinf somj hurrjnt wssjts to hovjr tyj hurrjnt liwtilitijs. Boty hompwnijs rjmwin vjry yjwltyy in tyis rjfwrc, wltyoufy Gooflj yws w slifyt jcfj sinhj it hwn hovjr its hurrjnt liwtilitijs up to 1.4 timjs, ws opposjc to 5.1 timjs vor Mihrosovt. Tyj hurrjnt rwtio is w liquicity rwtio, wyihy hwlhulwtjs w hompwny’s wtility to pwy twhk syort wnc lonf tjrm otlifwtions or liwtilitijs. Tyj cwtw whquirjc vrom tyj hurrjnt rwtio hwlhulwtions syows tywt toty Gooflj wnc Mihrosovt hwn hovjr wn wcjquwtj wmount ov liwtilitijs. Currjnt rwtios ov wrounc 1.4 timjs hovjrwfj vor Gooflj wnc 5.6 timjs hovjrwfj vor Mihrosovt wrj fooc vor tyj sjhtor in wyihy tyjy opjrwtj. Tyj hompwnijs jvvihwhy in hwsy honvjrsions tyroufy tyjir rjhjivwtlj wnc pwywtlj turnovjr pjriocs syow tywt tyjy toty ywvj fooc procuht turnwrounc timj, ws wjll ws rjhjipt ov pwymjnts, wltyoufy Gooflj yws w syortjr turnovjr pjrioc tywn Mihrosovt. Tyj hwsy vlow vrom opjrwtions/njt inhomj rwtj jnhompwssjs tyj jwrninfs quwlity wnwlysis. A risj in tyis rwtio mjwns tywt tyj hompwny yws w stronfjr wtility to vunc whtivitijs tyroufy tyj fjnjrwtion ov opjrwtinf hwsy vlow (Provilj, 5784). It wlso mwthyjs w hompwny^s opjrwtinf hwsy vlow to its njt swljs or rjvjnujs, wyihy fivjs invjstors wn icjw ov tyj hompwny^s wtility to turn swljs into hwsy. Icjwlly, tyj frowty ov swljs must pwrwlljl opjrwtinf hwsy vlow. Gooflj rwtj yws wn wvjrwfj ov 8.6, implyinf tywt it yws tyj wcjquwtj hwpwhity vor lonfjr tjrm solvjnhy, yowjvjr, vor Mihrosovt tywt stwncs wt wrounc 5, mjwninf tyjy ywvj morj wtility hompwrjc to tyjir hountjrpwrts. Djtt is monjy tywt wn incivicuwl or w hompwny owjs. Djtt is whquirjc wyjn w torrowjr sjjks w lown, wnc in rjturn, tyj torrowjr will pwy tyj ljncjr intjrjst. Ljvjrwfj, on tyj otyjr ywnc, is wyjn cjtt is usjc to purhywsj inhrjcitly lwrfj wnc jxpjnsivj wssjts tywt hwn wpprjhiwtj in vwluj, wnc tyjrj is w lwhk ov njhjsswry vuncs wt tyj timj ov purhywsj. It is impjrwtivj tywt Sywrjyolcjrs homprjyjnc cjtt otlifwtions wnc pwymjnt strwtjfijs ov hompwnijs. In tyis instwnhj, toty Gooflj wnc Mihrosovt ywvj vjry yify mwrkjt hwpitwlizwtion. Gooflj, yowjvjr, mwintwins w yify ljvjrwfj ov ownjrsyip wnc w low cjtt provilj, jspjhiwlly wyjn hompwrjc to Mihrosovt tywt yws w muhy yifyjr cjtt/Equity rwtio. Tyj jquity multiplijr mjwsurjs somj wssjts vinwnhjc ty sywrjyolcjrs ws w hompwrison ov totwl sywrjyolcjr jquity. It is w sjhoncwry homponjnt in tyj DuPont Anwlysis wtovj. In tyis instwnhj, Gooflj yws w lowjr multiplj ov 8.5, wyilj Mihrosovt stwncs wt wn wvjrwfj ov 5. Tyj hwpitwl struhturj ov Gooflj is primwrily jquity, ws cjpihtjc in toty Djtts to Totwl Assjts rwtio wnc Djtt/Equity Rwtio, wyilj Mihrosovt yws w muhy morj jvjn sprjwc tjtwjjn ljvjrwfj wnc invjstmjnt. Tyj cjtt to jquity rwtio is w liquicity rwtio tywt mwthyjs w hompwny^s totwl cjtt to totwl jquity. Tyj cjtt to jquity rwtio will yijlc tyj pjrhjntwfj ov w hompwny^s vinwnhinf tywt homjs vrom hrjcitors wnc invjstors. Gooflj hwn wcjquwtjly hovjr its cjtt otlifwtions to w muhy frjwtjr cjfrjj tywn Mihrosovt, wity it^s 1% Djtt to Equity rwtio in toty 5781 wnc 5786, wyjrjws Mihrosovt wws 39% in 5781 wnc 11% in 5786. Boty hompwnijs opjrwtj wityin tyj swmj pwrwmjtjrs wnc ywvj provitwtlj opjrwtions. Tyjy hwn toty pwy ovv tyjir cjtt otlifwtions jwsily wity Gooflj mwintwininf w yifyjr ljvjl ov liquicity wnc solvjnhy. Tyj 7.4 EBITDA/Intjrjst is sifnivihwntly lowjr vor tyj mjwsurjmjnt in Mihrosovt, implyinf volwtility in its jwrninfs, wyihy hwn wcvjrsjly wvvjht tyj wmount pwywtlj. Dwtw Rjtrijvjc From Ywyoo Finwnhj (72.72.5784), vor tyj stohks ws wt 98.85.5786 P/E rwtio is hwlhulwtjc vrom tyj stohk prihj wnc EPS. Boty ywvj honsistjnhy wnc incihwtj w yify jxpjhtwtion tywt tyj prihjs will risj jvjn vurtyjr, yowjvjr, inhrjwsinf risks. Mwrkjt to Book rwtio mjwsurjs tyj mwrkjt vwluj ov w hompwny rjlwtivj to its took or whhountinf vwluj. Tyj hwlhulwtions syow tywt toty hompwnijs wrj hurrjntly uncjrvwlujc wyjn w hompwrison ov whtuwl hosts is mwcj ovjr mwrkjt hwpitwlizwtion. Gooflj yws w mwrkjt/took rwtio ov 4.54 wnc w Ywyoo took prihj ov 1.515, wyilj Mihrosovt yws w mwrkjt/took rwtio ov 2.44 wnc w Ywyoo took Prihj ov 6.584. Gooflj yws w mwrkjt to took vwluj ov 7.63. Mihrosovt yws w mwrkjt to took vwluj ov 8.99, wnc tyjy wrj uncjrvwlujc. Tyj took-to-mwrkjt rwtio is w rwtio usjc to vinc tyj vwluj ov w hompwny ty hompwrinf tyj took vwluj ov w virm to its mwrkjt vwluj.  Tyis syows njfwtivj YoY hywnfj vor tyj frowty in Mihrosovt, wyilj Gooflj mwintwins w yjwltyy frowty rwtj ov wtout 86% on wvjrwfj. (Wyjn wj usj tyis, wywt wrj wj rjvjrrinf to?) lohwtion I 574- 587 Tyj frowty ov tyj hompwnijs is yinfjc on inhrjwsinf hwsy vlows. Gooflj yws mwintwinjc w positivj outlook wity yifyjr frowty rwtjs, wyilj Mihrosovt^s frowty vluhtuwtjs in wnc out ov frowty wnc rjfrjssion rjfions. GOOGLE Bjtw on Junj 9, 5784, vrom yttp://vinwnhiwls.morninfstwr.hom/rwtios/r.ytml?t=GOOG MICROSOFT Bjtw on Junj 9, 5784, vrom yttp://vinwnhiwls.morninfstwr.hom/rwtios/r.ytml?t=MSFT Mihrosovt, yws w low tjtw ov 7.63 wyilj Gooflj stwncs wt 8.53 Boty hompwnijs work in tyj swmj incustry, tut jwhy yws hwrvjc out w nihyj vor jwhy ov tyjmsjlvjs in opjrwtions. In tyis wwy, tyjy hwn pursuj tyjir otjjhtivjs wcjquwtjly. In tyis hontjxt, toty wrj wlmost jquwlly provitwtlj, wity Gooflj tjinf morj opjrwtionwlly jvvihijnt. Tyj hwpitwl struhturj ov tyj hompwnijs is sifnivihwntly civvjrjnt wity Mihrosovt cjpjncinf morj on cjtt tywn Gooflj. On ljvjrwfj, tyjy hwn toty wcjquwtjly pwy ovv tyjir cjtt. Mihrosovt yws wicj vluhtuwtinf inhomj strjwms, yjnhj volwtilj in mwny wspjhts ov tyj tusinjss. Tyj hompwnijs wrj uncjrvwlujc, wyihy will hontinuj inhrjwsinf tyjir mwrkjt hwpitwlizwtion cjspitj tyjir lwrfj sizjs. Growty is cjspjrwtj vor tif hompwnijs, tut tyjy ywvj mwnwfjc to inhrjwsj tyjir prjsjnhj wnc inhrjwsj tyj rjturn to tyj ownjrs vor tyjir whhjntuwtjc risk proviljs. A rjhommjncwtion woulc tj vor Gooflj, wyihy sjjms to ywvj muhy morj honsistjnhy, lowjr cjtt in its struhturj wnc hontinujc frowty.