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Apple and Microsoft: Financial performance comparison

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Review financial statements for two years for Apple and Microsoft. Make a comparison of the following items and note trends.
- Revenues
- Cost of good sold
- Accounts receivable
- Accounts payable
- Inventory

Discuss and interpret the changes over the two-year period. Which company is the best performer and why? How is this information useful to you from a managerial perspective? Explain your reasoning and support your conclusions with the numbers you have pulled out for the comparison above. Don't forget to comment on the interaction of the balance sheet and income statement.

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Solution Preview

All the following financial data were sourced from Apple, Inc.'s and Microsoft Corporation's 2013 Form 10-K filings with the Securities and Exchange Commission.

Apple, Inc.: http://www.sec.gov/Archives/edgar/data/320193/000119312513416534/d590790d10k.htm
Microsoft Corporaton: http://www.sec.gov/Archives/edgar/data/789019/000119312513310206/d527745d10k.htm

The attached Excel file shows the page number where the particular financial figure was taken from in the Form 10-K.

Based on the limited horizontal analysis above - changes of the five identified accounts from 2012 to 2013, we can conclude the following:
1. Apple's revenues increased at a higher percentage and in absolute dollar amount than Microsoft.
2. Apple's cost of sales increased at a higher rate than the increase in its revenues, and the cost of sales increased by a dollar amount that is higher than the increase in sales which can result to a lower net ...

Solution Summary

This solution discusses Apple and Microsoft's performance in 2012 and 2013.