July 27, 2017
Financial statements give people a better understanding of how profitable or
nonprofitable an organization can be. There are individuals who do not understand this process
and can often wonder what organizations they should invest their money into. Microsoft is the
organization selected for this assignment.
“Microsoft is a technology company that supports the invention of, manufactures and
licenses goods and services related to computing” (Bellis, 2017, para, 1). The organization
Microsoft was founded through the relationship of Paul Allen and Bill Gates. The company
venture first opened in Japan in 1977. In 1981, Bill and Paul decided to move the organization to
Washington State, and the firm became known as Microsoft Inc. Over the next 30 years, the
company formed solid products and services by releasing different operating and gaming
systems, and the formulation of their first excursion into the hardware market by designing the
Microsoft Surface product line. Microsoft mission statement is “Our mission is to empower
every person and every organization on the planet to achieve more” (Microsoft, 2017).
Microsoft current net income for the fiscal year 2017 is $21.2 million. When comparing
the current the fiscal year to the fiscal year 2016, net income has increased by $4.40 million. To
obtain a company net income, you take to total revenue and deduct the total number of expenses
to get the net income for the year. There are several reasons the increasing or decreasing in net
income is pertinent to investors. The first reason would be if the company is profitable and net
income continues to increase; investors will spend more money in the company. For example,
the net income will give a prediction on what the future of the organization will be in a few
years. If investors believe the company of the organization is profitable, the investors will buy
and sell stock at a higher price based on that prediction from the net income (Kimmel,
Weygandt, & Kieso, 2016). Creditors use the information in a similar way.
Shareholder’s Equity is computed by adding the common stock and retained earnings.
The stockholder’s equity for Microsoft in the fiscal year 2017 is rounded to about $72.4 million.
There are several reasons why labor unions will be interested in the financial statements for the
organization. The main reason is that labor unio...
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