Disclosure Analysis

Disclosure Analysis

Microsoft Corporation is a publicly on the NASDQ, the company’s primary focus of business is on the development, manufacturing, licensing and distribution of software products and operating systems. Microsoft has been earning revenue since 1975 and has since become the world’s leader in software and operating systems. Microsoft’s balance sheet shows the cash of the business which includes cash and equivalents, short-term investments, accounts receivables, inventory, deferred income tax, and other. According to the notes that Microsoft provides with their financial statements cash and equivalents are not readily outlined in the company’s notes and do not include short-term investments since they have chosen to list short-term investments separately from the company’s cash and equivalents. The company’s cash and equivalents can include but are not limited to bank accounts, corporate notes and bonds, common stock, mortgaged backed securities, mutual funds, commercial paper, certificates of deposit, foreign bonds, and U.S. Government Agency securities. Since Microsoft has chosen to invest in different types of investments allows the company to remain strong even through market up and downs and continue to give Microsoft a return on investments (Microsoft, 2008)

Microsoft’s inventory is stated either lower than market value or at market value and is computed by using the average cost method. Costs that are included are materials, labor, and manufacturing overhead that can be related to the purchase or production of inventories. Microsoft regularly reviews their inventory to aid in future purchase commitments with their suppliers, inventory is reduced accordingly to a new cost basis. Inventory is classified as raw materials, work in progress, and finished goods. This will allow Microsoft to better monitor how much of a specific