From the course: Financial Accounting Part 2

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Real-world: Apple vs. Google vs. Microsoft

Real-world: Apple vs. Google vs. Microsoft

From the course: Financial Accounting Part 2

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Real-world: Apple vs. Google vs. Microsoft

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- Okay, let's use our newfound skills when it comes to the DuPont framework and ratio analysis to see what we can learn about three companies with which we are all familiar, Microsoft, Google, and Apple. Now, here's what I want you to do first. Which of these three companies do you think had the highest current ratio last year? Think about that for a minute. And here is the insight. Anyone can guess, but given the data you know how to compute the answer. No guessing is involved. And the answer, Google by a long shot. As you can see here, Google reported a current ratio, that's current assets divided by current liabilities, of 5.1 compared to 2.48 for Microsoft and 1.28 for Apple. Now, the next question would be to drill down and find out why their current ratio is so high. We would do that by analyzing the individual current asset and current liability accounts. So which of these three companies do you think had the…

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