FINANCIAL PERFORMANCE OF MICROSOFT Financial Performance of Microsoft Name of the University Authors Note

Running head: FINANCIAL PERFORMANCE OF MICROSOFT
Financial Performance of Microsoft
Name of the Student
Name of the University
Authors Note

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Executive summery
The study is based on the financial performance of a company which is one of tech giants
in the world. The aim of the study is to explain how Microsoft take decision based on different
parameters. The study, mainly explain about the different types of risk, financial statement,
different types of ownership, corporate governance, legal, regulatory bodies and the
characteristics of the above factors. The study, explain how the financial as well as the
management decision influences by the above factors. In the end of the study it concludes that
how Microsoft take all the decision by incorporating the above factors.

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Table of Contents
Introduction:....................................................................................................................................4
1. Role of financial information and analysis in business risk assessment and decision-making:. .4
1. 1 factors that guide and drive decision-making in business:...................................................5
1. 2 Significance of financial factors in business decision making.............................................5
1. 3...............................................................................................................................................6
The following are the important characteristics of business risk that impact on the business
decision-.......................................................................................................................................6
2. How financial statements and their structure aids in business decision making........................7
2. 1 Compare the accrual and cash flow approaches to accounting and financial reporting and
the implications of each for business decision making...............................................................8
2. 2 evaluate the structure and content of final accounts and their uses for business decision
making.......................................................................................................................................10
2. 3 Interpretation of financial information...............................................................................10
2. 4 Differentiate between financial decision relating to capital expenditure and revenue
expenditure................................................................................................................................11
3. Analyse the sources of finance and how businesses finance fixed assets and working capital
...................................................................................................................................................11
3.1 Evaluate the sources of long-term financing and working capital financing for businesses
...................................................................................................................................................12

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3.2 Examine critically the techniques needed to manage cash flow and the key business
decisions on which cash flow impacts.......................................................................................13
3.3 Evaluate methods for making capital expenditure or investment decisions and the criteria
that may be applied in the evaluation........................................................................................14
4. Evaluate how different ownership structures impact on financial performance.......................15
4.1 Critically analyse the corporate governance, legal and regulatory environments of different
business ownership structures....................................................................................................16
4.2 Compare and contrast stakeholder interests of owners and managers in decision making. 17
4.3 Evaluate the significance of ROCE, EPS and other overall performance measures for the
long-term sustainability of businesses.......................................................................................17
4.4 Differentiate between business ethics, governance and accounting ethics as controls on
business accountability..............................................................................................................18
5. Conclusion:................................................................................................................................18
6. References..................................................................................................................................19

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Introduction:
Financial decision is the critical part of a business organisation. The following study has
explained the importance of business decision in an organisation. The analysis has been
undertaken regarding the Microsoft company for study purpose. The study has explained about
the different risk and their characteristics and how its impact the business decision-making. It
discusses about the importance of financial statement and its impact on management. This
explain how the capital expenditure and revenue expenditure are two different aspects and the
source of finance. Inside the report different ownership structure and the how these influences
the financial position also given. It evaluates about corporate governance and how, it is different
from the legal and regulatory environment. During the study some important information has
used which is sourced from the financial year report of Microsoft.
1. Role of financial information and analysis in business risk assessment and decision-
making:
A business organisation is exposed to several business risks during the course of its
normal business operation and the decision relates to the company. The intension of the company
is to protect the business operation, shareholder fund, cash flow and liquidity position from the
unfavourable market fluctuation (Batkovskiy 2016). These aims of the company can be satisfied
through a good management decision. The management decision is more over base on the
financial information of the business.
In Microsoft the role of financial information is very important as it is relating to
decision-making process. Thus, the financial information Microsoft addresses about the
Company’s finance risks includes credit and debtors, liquidity, currency and interest, as well as

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capital management risk so it is enhancing the management to adopt an appropriate strategy
based on these information.
1. 1 factors that guide and drive decision-making in business:
There are number of factors, which influence and drive the decision-making in Microsoft.
The major factors include ROI, image and brand of Microsoft which enhance the sales of the
company, effective resource planning and opportunity cost are the factors guide the decision-
making process in Microsoft. Apart from this there some environmental factors, which drive the
decision-making in a business are competitors, advancement of technology, change in taste and
preferences, economic environment and many more (Gitman, Juchau, and Flanagan 2015).
1. 2 Significance of financial factors in business decision making
Financial factor is the scorecard of a business and has a major role in the business
decision making. The following are the significance of the financial factor
Profit and loss are the financial factor, which admits about the cash generating ability of a
company and this has no complexity in understanding. Profit and loss tells about expanses the
company have bearded from various financial models like revenue, expanses, cost of goods and
more (Furlanetto, Ravazzolo and Sarferaz 2017). This information helps Microsoft to take the
decision for reducing the expanses.
Cash is another critical financial information tools that have a significant role in business
decision making. This inform the company about how much cash will need to meet the financial
obligation of a company and when it is going to require and the source from where it will raise
(Otley and Emmanuel 2013).