Get the latest report from Microsoft Corporation and analyze it for its investment potential - Research Paper Example

Since then the company has been excelling in every department and has made itself as an exemplary icon for other companies to follow. Before investing in a particular company, it is prudent that the company’s performance should be properly analyzed. A company’s performance can be analyzed by referring to its financial statements, in other words, a potential investor should dig deep into the financial statements of an organization. Financial statements provide a clear picture of the company’s performance over the year.

For and investor, there are many different techniques used to analyze the financial statements but the common approach used to analyze the financial performance is the use of ratio analysis. “Ratio analysis is a tool used by individuals to conduct a quantitative analysis of information in a companys financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company” (Investopedia).

Ratios are further divided into different categories, with each ratio analyzing a different perspective. To analyze the financial performance according to the investor perspective, Investor/shareholder ratios are used. Earnings per share are the portion that an organization allocates to its outstanding share of common stock. EPS is a measure of a company’s profitability. Microsoft’s EPS for the year 2009 was $1.63/share as compared to its EPS of $1.9/share in 2008. This shows that the company was unable to have the same profitability as in 2008.

The EPS figure seems discouraging for investors to invest in the company. Dividend per Share shows the company’s ability to give out dividends to its individual shareholders. Microsoft’s dividend per share had increased by $0.08/share. Microsoft’s cash dividend per share in 2009 was $0.52 as compared to $0.44 in 2008. Although the company’s net income