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    3370752

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    Hosea Moranga
    This analysis summarizes Microsoft Corporation's 2022 financial statements to examine earnings per share under different financing scenarios. The analysis found that Microsoft's earnings per share was highest when financed solely by equity and lowest when financed solely by debt. This is because equity financing increases the number of outstanding shares while debt financing reduces earnings available to shareholders through increased interest expenses. The analysis recommends Microsoft use a combination of equity and debt financing to achieve desirable earnings per share results.

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    3370752

    Uploaded by

    Hosea Moranga
    15 views3 pages
    This analysis summarizes Microsoft Corporation's 2022 financial statements to examine earnings per share under different financing scenarios. The analysis found that Microsoft's earnings per share was highest when financed solely by equity and lowest when financed solely by debt. This is because equity financing increases the number of outstanding shares while debt financing reduces earnings available to shareholders through increased interest expenses. The analysis recommends Microsoft use a combination of equity and debt financing to achieve desirable earnings per share results.

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    This analysis summarizes Microsoft Corporation's 2022 financial statements to examine earnings per share under different financing scenarios. The analysis found that Microsoft's earnings per share was highest when financed solely by equity and lowest when financed solely by debt. This is because equity financing increases the number of outstanding shares while debt financing reduces earnings available to shareholders through increased interest expenses. The analysis recommends Microsoft use a combination of equity and debt financing to achieve desirable earnings per share results.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    15 views3 pages

    3370752

    Uploaded by

    Hosea Moranga
    This analysis summarizes Microsoft Corporation's 2022 financial statements to examine earnings per share under different financing scenarios. The analysis found that Microsoft's earnings per share was highest when financed solely by equity and lowest when financed solely by debt. This is because equity financing increases the number of outstanding shares while debt financing reduces earnings available to shareholders through increased interest expenses. The analysis recommends Microsoft use a combination of equity and debt financing to achieve desirable earnings per share results.

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    1

    EPS/EBIT Analysis

    Student’s Name

    Institutional Affiliation

    Professor’s Name

    Course

    Date
    2

    EPS/EBIT Analysis

    This analysis is based on Microsoft Corporation’s 2022financial statements. From the

    financial statements, the company reported earnings before interest and taxes were $83,383, and

    its earnings per share were $1.03 (Microsoft Corporation, 2022). This information formed the

    basis of the analysis after determining the company's earnings before interest and taxes in a

    pessimistic, realistic, and optimistic scenario. The analysis shows that the company's earnings

    per share are the highest when it is financed by equity only and the lowest when it is financed by

    debt only. This is so because financing from equity increases the number of shares outstanding,

    whereas financing by debt capital decreases the company's earnings attributable to the equity

    stockholders due to increased interest (CFI, 2022). As such, it is recommended that the company

    combine equity financing and debt financing to obtain desirable results on its earnings per share.
    3

    References

    CFI (2022). Debt vs. Equity Financing. Corporate Finance Institute.

    https://corporatefinanceinstitute.com/resources/commercial-lending/debt-vs-equity/.

    Microsoft Corporation (2022). Annual Report 2022.

    https://www.microsoft.com/investor/reports/ar22/index.html

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