Investment Advice for Microsoft - Research Proposal Example

Microsoft - major industry player - is headed by Mr. Steven A. Balmer, Microsoft’s 49-year old Chief Executive Officer (CEO).  The company’s co-founder, the illustrious Mr. Bill Gates, also sits in the Board of Directors and acts as its Chief Technological Architect.  As at end of the fiscal year 2005, Mr. Balmer along with the other directors of the company received an average annual salary of about $1.0 million each. As a global company, Microsoft operates in various countries across the world.

  The headquarter is located at One Microsoft Way in Redmond, Washington D.C.  Direct competitors of Microsoft include other formidable companies such as Google Inc., International Business Machines Corp. (IBM) and Oracle Corp.  In terms of sales, Microsoft came in second to IBM as at end-June 2005.  However, Microsoft has posted the highest net income as compared to other industry players. Based on the above financial highlights, it can be seen that sales of Microsoft are steadily accelerating as evidenced by the moderate sales growth in the last three years.

  In the same way, the income the company generated as at end-June 2005 has recovered from the decline in the previous year.  The sales and income posted by Microsoft are well above the industry average in 2005. Similarly, Microsoft has consistently proven its ability to convert sales into income in the past three years as seen in the company’s net profit margin.  Its 3-year average of 28% is higher than the industry average of only 23.5%. In terms of liquidity, Microsoft is highly liquid since it has more than sufficient current assets to cover its current liabilities.

  As such it has a high current ratio that sends a positive signal to investors.