Sun Microsystem Paper
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? 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? 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. The following is a comprehensive view of the finances of Sun Microsystems from 1998-2001. Sun Microsystems has experienced significant fluctuations in performance
1. Compute annual percent change in net income per common share diluted.
Formula: % change= P2-P1/P1
Year 2001-2000 2000-1999 1999-1998
Net income per common share-dilution 0.55-0.27=0.28 0.55-0.31=0.24 0.31-0.24=0.07
Annual % 0.28/0.27=103% 0.24/0.31=77% 0.07/0.24= 29%
2. Compute net income/net revenue.
Year 2001 2000 1999 1998
Net income 927 1,854 1,030 755
Net revenue 18,250 15,721 11,806 9862
Profit Margin 19.6% 11.7% 11.4% 7.6%
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3. What is the major reason for the change in the answer for question 2 between 2000 and 2001?
2001 2000
Cost of Sales 10,041 7,549
Research and Development 2,016 1,630
Selling, General, and Administrative Expenses 4,544 4,072
Provision for Income Taxes 603 917 Net Revenues 18,250 15,721 Ratio Cost of Sales to Net Revenue 55% 48%
Ratio Research and Development to Net Revenue 11% 10%
Ratio Selling, General & Administrative Expenses to Net Revenue 25% 26%
Ratio Provision for Income Taxes to Net Revenue
1. Compute annual percent change in net income per common share diluted.
Formula: % change= P2-P1/P1
Year 2001-2000 2000-1999 1999-1998
Net income per common share-dilution 0.55-0.27=0.28 0.55-0.31=0.24 0.31-0.24=0.07
Annual % 0.28/0.27=103% 0.24/0.31=77% 0.07/0.24= 29%
2. Compute net income/net revenue.
Year 2001 2000 1999 1998
Net income 927 1,854 1,030 755
Net revenue 18,250 15,721 11,806 9862
Profit Margin 19.6% 11.7% 11.4% 7.6%
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3. What is the major reason for the change in the answer for question 2 between 2000 and 2001?
2001 2000
Cost of Sales 10,041 7,549
Research and Development 2,016 1,630
Selling, General, and Administrative Expenses 4,544 4,072
Provision for Income Taxes 603 917 Net Revenues 18,250 15,721 Ratio Cost of Sales to Net Revenue 55% 48%
Ratio Research and Development to Net Revenue 11% 10%
Ratio Selling, General & Administrative Expenses to Net Revenue 25% 26%
Ratio Provision for Income Taxes to Net Revenue
References: Block, S. & Hirt, G. (2005). Foundations of financial management. New York, NY: McGraw Hill. Bplans.com. (2007). Executive summary. Retrieved April 27, 2008 from the World Wide Web: http://www.bplans.com