The average collection period measures the number of days it takes for Google Inc. to collect its receivables from customers. Over the years, this number has decreased from 63 days to 58 days and finally 52 days in 2012, 2013, and 2014 respectively. The days payable outstanding measures how long it takes Google Inc. to pay its suppliers. It is a good sign when this number keeps decreasing. In 2012 and 2013 it was the same, that is, 16 days, but it dropped to 9 days in 2014.
As the liquidity ratios of Microsoft Corp. showed, it is easy to convert debts, and receivables into cash. First of all, current ratio helps to analyze the short-term flexibility of economic environment of its company. According to liquidity ratios of Microsoft Corp., current ratio was calculated at 2.6, 2.7, and 2.5 from 2012 to 2014. Moreover, cash flow liquidity ratio showed that it gradually decreased as time went. The reason was that cash and equivalents were hugely decreased. In addition, average collection period ratio showed that Microsoft Corp. had enough abilities to pay their suppliers. Lastly, as days payable outstanding ratios were increased from 2012 to 2014, daily operating cycle of Microsoft Corp. was well organized.
The ratio for Apple Inc. shows that the company 's ability to pay off its short-term debt obligations. As stated in Investopedia, " 'Generally, the ...
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...long-term debt to total capitalization showed remarkably increased in 2014. The reason was that they invested money on developing their Surface (Microsoft). Debt to equity ratios for Microsoft Corp. proportionated its equity and debt to use the merger with Nokia (Microsoft). Therefore, it was a decrease between 2013 and 2012. However, because of merger, it was an increase between 2014 and 2013. Times interest earned ratio for Microsoft Corp. showed that it covered interest expense from operating activities 38 times in 2014. It indicated that there was a huge decrease between 2013 and 2012.
The percentage of debt ratio for Apple Inc. has increased from 0.32 in 2012 to 0.51 by 2014. This shows that Apple rely on owner equity and debt to help finance company operations. The debt equity, calculated through ratio, increased dramatically from 0.48 in 2012 to 1.07 by 2014.
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