Comprehensive 3-2 Chapter 3 Assignment

Running Header: Comprehensive Problem 3-2

Comprehensive 3-2 Chapter 3 Assignment

Comprehensive Problem 3-2 Chapter 3

A complete analysis was conducted on the financial statements and status of Sun Microsystems. After examining the research findings and analysis it is fair to say that evidence determines that Sun Microsystems finances has not been on a steady incline. In fact, it had definitely experienced some highs and lows in its return on investment and stockholders’ equity over a four- year evaluation from the duration of 1998 through 2001.

In order to get a concise understanding of where problems are within the company’s operations the following factors were considered and examined; the annual percentage change in net income per common share diluted, net income/net revenues, the major income statement accounts to net revenues, return on stockholders’ equity, the price/earnings (P/E) ratio, and the book values per share for each year.

In order for Sun Microsystems to see a greater return in its bottom line assets it must consider an alternative approach of operating its organization. Sun Microsystems needs to implement a new plan quickly to save its company from going under as its stockholders’ equity continues to decrease. Sun Microsoft has experienced a decline in its net income between 2000 and 2001. The P/E in 2001 determined that the return on stockholders’ investment was rather small when compared to the amount of revenue it generated.

Stock prices also declined and not all changes were specific to Sun Microsystems. Some of these changes were industry wide. If Sun Microsystems was to outsource some of its employees it can save money appealing to its stockholders. As a result, outsourcing will allow far more emphasis and focus on