Financial Accounting 504 23-Jun-13 Professor Chung Oracle v Microsoft Final Course Project

As noted in Wikipedia Oracle is headquartered in Redwood, California. It was founded in 1977 and is the world's third largest soft wear developer in sales. According to Yahoo Finance Oracle is a multi-faceted operation. Oracle provides a vast amount of services for the internet and computer. It provides cloud applications, IT consulting services, licenses middleware software which includes database and database management. It has 115,000 full time employees and is run by co-founder, CEO Larry Ellison who has been the only CEO of the company since it's inception. Also noted in Wikipedia he is the top paid CEO in the world. In 2013 Oracle …show more content…

Some areas the two companies are relatively close in liquidity performance as depicted in the current ratio. In other areas Oracle proves to have much better performance than Microsoft as depicted in the inventory and days in inventory ratios however and current ratio. Oracle also has a faster collection period than Microsoft as reflected in the average collection period ratio. I would declare Oracle as having a better liquidity standing than Microsoft.

Solvency: Microsoft is superior to Oracle in this ratio category. Although Microsoft has a little more risk than Oracle in the debt to current assest ratio which means that if necessary Oracle has a better opportunity to convert assets in to cash with a 45.3% while Microsoft is at 47.5% however; this is the only ratio that Oracle is more favorable than Microsoft. With Microsoft's free cash flow of $19,459 billion versus Oracle's $9,703, Microsoft is least likely to have the need to liquidate their assets. Free cash flow ratio gives insight to a company's acquisition power, ability to eliminate or minimize debt and allows for a higher dividend payout. Microsoft has a better current cash debt to current liability ratio as well. For evey $1 in liability Microsoft as .98 cash from operating activities