Hewlett-Packard Company and Microsoft Corporation Financial Analysis 2012
Hewlett-Packard Company and Microsoft Corporation Financial Analysis According to company financials for the 2012 fiscal year, HP current ratio is at 1.09 while Microsoft Corp. ratio is at 2.6 which make HP a lesser candidate to obtain a short-term credit. They would not have enough to pay its current liabilities. Also HP recorded inventories of $6.32B compared to Microsoft $1.14B. If sales for PC’s, tablets, phones and other products dropped, HP would have a difficult time selling its inventory and running the risk of not being able to pay its current liabilities. Microsoft Corp. has a higher inventory turnover rate and a higher cost of goods sold and HP has a lower number of days’ sales in inventory. This means that they take less time than Microsoft Corp. to purchase, sell and replace inventory. Even though HP would have a hard time selling inventory in a crisis, they have managed to have a higher Accounts Receivable Turnover at 5.18, 0.4 more than Microsoft Corp. HP may have a better way of granting and collecting from its creditor. Should you work for HP, well its accrued payroll increased from $4B to $4.06B in 2012, this signals that either HP increased the number of employees or they owe wages to employees for 2012. I would not advise anyone to pick up employment at Hewlett-Packard Company currently because they have been having internal issues. This company has changed 2 CEOs in 2 years, every time this happens its’ stock drops drastically. The new CEO Meg Whitman wrote, “Fiscal 2012 was the first year in a multi-year journey to turn HP around. We diagnosed the problems facing the company, laid the foundation to fix them, and put in place a plan to restore HP to growth. We know where we need to go, and we are starting to make progress” (Whitman). Whitman built the EBay empire and now she’s at HP turning it around but stockholders are still feeling rocky about their investments. Employees are aware that when HP makes sudden changes in the