Financial Outcomes - Essay Example

Introduction Microsoft financially performs well in comparison with its previous year’s financial performance. Microsoft records revenue of $62.5 billion, comparatively increasing 7 percent more than the revenue of 2009; operating income increases by 18 percent to $24.1billion, diluted earnings per share grows by 30 percent to $2.10; simultaneously, the company has, through buybacks and dividends, given back almost &16 billion to shareholders in the year 2010 (Annual report, 2010). Optimistic potential outcomes Various optimistic potential outcomes can be expected from the financial performance of Microsoft.

First, the company would remain financially stable and vibrant. As the financial history bears witness to the fact that the stable financial entities experiences more short and long term financial growth and increase in comparison with other companies who are less financially stable. This financial stability can be proven by the fact that in the same year of 2010, Microsoft becomes in a position to return almost $16 billion to its shareholders by buybacks and dividends. Additionally, the company enjoys a sufficient amount of funds.

Microsoft is a technology-intensive company, which constantly needs a sufficient amount of funds to carry out its different business needs such as research and development and so on. In this regard, the stronger financial indicators clearly highlight the presence of funds utilizable to cater the business needs. Additionally, the positive and stronger financial performance brings positive credit ratings from the credit rating agencies such as Moody’s, and Fitch. These companies compile different financial measures to determine the credit rating of a company.

As Microsoft has shown stronger performance in these years, its credit rating has considerably remained stable and positive. Thereby, on the basis of such financial results, Microsoft has become in a position to avail external short or long term credit not only from its current shareholders but also from the financial institutions as well. In fact, most of the financial institutions are considerably critical while screening applications for credit, or loans; and in order to approve them, they first ensure that whether the applicant company is financially stable.

Without any doubt, the positive implications of stronger financial performance by Microsoft do not only benefit to the company, but also to the management and shareholders as well; as they would enjoy the same sort of growth that is availed by Microsoft in the coming days. References Annual Report of Microsoft, (2010), Shareholder letter. Retrieved from http://www.microsoft.com/investor/reports/ar10/10k_sl_eng.html