Company Analysis from an Employee Perspective Essay

Company Analysis from an Employee Perspective - Essay Example In June 2012, the company release Microsoft Surface, its first Microsoft hardware based computer. To compete with Gmail, Microsoft release Outlook.com, a webmail service in July 2013. It also acquired Yammer in the same year, a social network website and Windows 8 Phone. Anticipating demand, Microsoft also increased the number of its outlets in 2012. The concern has high current ratio. This means that the company is not utilising its cash reserves efficiently and not leveraging on short term debt. Microsoft is holding an enormous cash balance that is an asset not producing anything. This lowers the overall return on the assets and thereby increases the cost of capital. Microsoft has been consistently working on high cash and this indicates a lazy behaviour of the company. Ideal current ratio is 2:1 Current Ration for the year 2012 was at 2.60. We observe that not much of a change has happened over the past year. The firm has had high cash reserves in the past year as well to the tune of 51% of the total assets. Maintaining high cash persistently reflect poor strategic planning and management (Business Ferret, 2011). Return on Assets helps to determine the percentage of profits a company is making to finance all of its assets. This ratio also judges the efficiency of management to utilise company’s assets to generate enough profits. This kind of judgement on management strength is of keen interest to possible employees. The company has been consistently showing strong and healthy return on assets. However, ROA for 2013 shows a rise from 14.77 to 15.31%. For software companies, high ROA is a good indication because these companies do not need much of cash for their assets. However, for Microsoft, high denominator is due to high amount of cash holdings. This is not a very good sign. ROA, when adjusted with cash, stands at 33.4%. Such high cash contributes towards