Net Profit Margin

Net Profit Margin

35
30
25
20
15
10
5
0
2010.0

2011.0
Microsoft

2012.0
Apple

2013.0

2014.0

Industry

Net Profit margin, a profitability ratio, is

calculated by dividing net profit by sales
and then multiplied by 100.
Companies within the industry consistently
report low profit margins.
Microsoft should be contrasted against its
competitor for a more reliable benchmark.

Quick Ratio
Quick Ratio

Microsoft

Apple

Industry

The quick ratio is calculated by dividing

cash, marketable securities, and accounts
receivable by current liabilities.
Microsoft maintains well above a 1.0 quick
ratio.
Microsoft is more financially secure than the
industry and can cover short-term financial
obligations if needed.

Return on Equity
Return on Equity

Microsoft

Apple

Industry

Return on equity is a profitability ratio

calculated by dividing net income by
shareholders equity.
Microsoft displays a high return on equity
until the decline starting in 2011.
Microsoft needs to increase their ROE above
industry average to be more appealing to
investors.

Inventory Turnover
Inventory Turnover

Microsoft

Apple

Industry

Inventory turnover is an activity ratio and is

calculated by dividing sales by finished
goods inventory.
Microsoft has a low inventory turnover
relative to the industry.
Apples high inventory turnover inflates the
industry average causing Microsoft to fall
short of it.

Debt-to-Equity
Debt-to-Equity

Microsoft

Apple

Industry

The debt to equity ratio is a leverage ratio

that is derived by dividing total debt by
total stockholders equity.
Microsoft has a low debt to equity ratio
compared to the industry average, it is less
risky
Apple issued new bonds in 2013 and 2014,
of $17 billion and $12 billion, causing the
industry debt to equity to spike