Based on the above data and common-size balance sheet in question 1, please prepare an analysis report covering the following aspects:

Question:

 

Jason is comparing two companies in the information technology industry, Apple and Microsoft, to evaluate their relative financial position as reflected on their balance sheets. The following data are based on the companies’ annual report in 2017.

 

Balance sheet extracts (in millions $)

  Apple Microsoft
Assets: 30 September 2017 30 June 2017
Current assets:    
Cash and cash equivalents 20,289 7,663
Short-term marketable securities 53,892 125,318
Accounts receivables 17,874 19,792
Inventories 4,855 2,181
Vendor non-trade receivables 17,799 0
Other current assets 13,936 4,897
Total current assets 128,645 159,851
Long-term marketable securities 194,714 6,023
Property, plant and equipment, net 33,783 23,734
Goodwill 5,717 35,122
Acquired intangible assets, net 2,298 10,106
Other non-current assets 10,162 6,250
Total assets 375,319 241,086
LIABILITIES AND SHAREHOLDER EQUITY    
Current liabilities:    
Accounts payable 49,049 7,390
Short-term debt 11,977 9,072
Current portion of long-term debt 6,496 1,049
Accrued expenses 25,744 6,634
Deferred revenue 7,548 34,102
Other current liabilities 0 6,280
Total current liabilities 100,814 64,527
Long-term debt 97,207 76,073
Deferred revenue non-current 2,836 10,377
Other non-current liabilities 40,415 17,715
Total liabilities 241,272 168,692
Total shareholders’ equity 134,047 72,394
Total liabilities and shareholders’ equity 375,319 241,086

Source: Based on data from companies’ annual report

 

Required:

  1. Please transfer the original balance sheet into a common-size balance sheet for both companies;

(25 marks)

  1. Based on the above data and common-size balance sheet in question 1, please prepare an analysis report covering the following aspects:
    1. Brief background of the two companies and IT industry;
    2. Liquidity analysis of the two companies;
    3. Solvency analysis of the two companies;
    4. Accounts receivable analysis: the industry average of accounts receivable is 11.8%, please explain possible reasons for the difference between the two companies and industry average, and provide useful recommendations on accounts receivables management.
    5. Company strategy analysis (e.g., inventories, goodwill, accounts payable and so on)

(75 marks)

 

 

Note:

In terms of the structure of the report, please present your arguments and reflections in a coherent, integrated form composed of full sentences and paragraphs and do NOT use point form. You may wish to choose some useful sub-headings where you can organize your thoughts on similar issues, and do not forget to include an introduction and concluding section.

 

Key/suggested references (the list is not exhaustive)

·      McLaney, E., & Atrill, P. (2020). Accounting and finance: an introduction

·      Elliot, B., and Elliot, J., (2015), Financial Accounting and Reporting, 7th edition, Pearson : London

Please all feel free to cite other references as needed.

 

Word limit:

Your report should be 1,200 words in length (+/- 10%), excluding reference and tables (common-size balance sheet is also excluded from word limit). The report should be written in Microsoft Word and be double-spaced with a font size 12.

 

Referencing style (e.g., Harvard):

Please pay attention to the structure of the essay. Your assignment should include a title page with your name, student number, module number, module title, the report itself, followed by a list of references, which includes the full reference for all articles, books and other sources you have cited in the body of the text.

 

 

 

Submission details:

Please submit via the online link on the module page and include the following information on the front page of your submission:

·      Student ID number

·      Programme of study (e.g., BA Economics)

·      Module (i.e., Introductory Economics)

·      Date

·      The title of your proposed research project

·      Word count

 

 

Marking scheme:

Marking will be in accordance with the general IMS undergraduate marking rubric:

1.     Answer. (Does the coursework address the question/issue or meet the assigned aims and keep on topic? Is there a comprehensive understanding of the topic?)

2.     Structure. (Is the structure clear and material presented in a well argued, coherent and synthesised manner?)

3.     Writing Style. (Is the writing fluent and of a good standard with few errors in spelling, punctuation or grammar?)

4.     Level of Reading. (Is the topic well researched and supported? Is there evidence of using a range of high quality sources?)

5.     Quality of Referencing. (Is the work appropriately sourced? Are the references well formatted and written up accurately and consistently?)

 

 

Any other information:

In submitting coursework online, it must be assumed that you have read and understood the University guidelines about plagiarism. All materials used to prepare this coursework need to be accordingly referenced.