Introduction of Managerial Finance

    The aim of this paper is to demonstrate the financial performance of the Microsoft Corporation and how much dividend the corporation is providing on its stocks. Microsoft Corporation is chosen to because it is one of the largest organizations in the world and the corporation has paid the dividend in the past to its shareholders. Microsoft Corporation is a multi nation corporation that deals in technology. The headquarter of the corporation is located in the city of Redmond Washington. The products of the company include computer software, electronics, PC (Personal Computers), Web browsers, game consoles and operating systems. The Windows operating system is the most renowned operating system in the world and used by many people. The corporation was established in the year 1975. According to the 2016 statistics the company has employed 124000 employees. The services which are given by the company include Windows Store, Windows Update Office 365 and many other services. Over the past many years, the corporation has achieved success and company has experienced growth however the recent changes such as the change in tax code will affect the Microsoft Corporation. Due to the changes in tax laws, the company financials will disturb (BARAM, 2017).

Financial Analysis Managerial Finance

The above financial analysis indicates a good financial performance however when the financial performance is compared with its competitors it can be seen that the competitors have performed well in various aspects. The ROA of the Google Corporation is higher in 2016 than the Microsoft (Brigham & Houston, 2015). Apple corporations ROA is also better than the Microsoft in both 2016 and 2017. The operating cash flow which shows the actual cash generated by the corporations is also not impressive when compared to its competitors. Apple corporations operating cash flow is almost double than Microsoft (Horne & John M. Wachowicz, 2000).

Dividend Policy Managerial Finance

The tech companies need to improve the dividend policy so that they can attract investors. The companies do pay dividend however they have to think about regular payments so that the share prices can increase with the passage of time. The dividend policy of the Microsoft and other Tech companies like Apple is not much different. The companies have to pay the dividend to increase the shareholder's wealth and to attract investment. The main aim of the investors is to increase their wealth or to receive a significant amount of dividend. When the investors are not going to receive dividend than it will become difficult for the corporations to attract investors in the future. This means that a better dividend policy is needed in Microsoft Corporation (Waters, 2010).

Capital Structure Managerial Finance

            The capital structure means how the corporations have financed their operations. If the capital structure of Microsoft Corporation is analyzed than it can be seen that the company is financed through debt and equity. The capital structure of the corporation must be optimum so that the cost of capital can be lowered and company can manage it's financial efficiently. If the capital structure of the company is not optimum than the company can face serious consequences such as failure in payment of debt. The capital structure of Microsoft is analyzed than it can be seen that its amount of debt is higher than its competitors. The company in future have to take care of its debt amount so that it can repay it effectively. Too much debt is not good for any corporation (Pinder-Ayres, 2016).

Source: https://image.slidesharecdn.com/capitalstructure-140613012526-phpapp01/95/capital-structure-1-638.jpg?cb=1402623120

Conclusion on Managerial Finance

If all the above discussion is summarized than it is evident that the above financial analysis indicates a good financial performance however when the financial performance is compared with its competitors it can be seen that the competitors have performed well in various aspects. The ROA of the Google Corporation is higher in 2016 than the Microsoft. Apple corporations ROA is also better than the Microsoft in both 2016 and 2017. The dividend policy of the Microsoft and other Tech companies like Apple is not much different. The companies have to pay the dividend to increase the shareholder's wealth and to attract investment. The main aim of the investors is to increase their wealth or to receive a significant amount of dividend.

If the capital structure of the company is not optimum than the company can face serious consequences such as failure in payment of debt. The capital structure of Microsoft is analyzed than it can be seen that its amount of debt is higher than its competitors. The company in future have to take care of its debt amount so that it can repay it effectively. Too much debt is not good for any corporation.

 References of managerial finance

BARAM, M. (2017). How The Tax Bill Will Impact Silicon Valley: Great For Big Tech, Good For Startups. Retrieved from https://www.fastcompany.com/40510564/how-the-tax-bill-will-impact-silicon-valley-great-for-big-tech-good-for-startups

Brigham, E. F., & Houston, J. F. (2015). Financial Management. Cengage Learning.

Horne, J. C., & John M. Wachowicz, J. (2000). Fundamentals of Financial Management and PH Finance Center CD (11 ed.). Prentice Hall.

Pinder-Ayres, B. (2016). Financial Management Creative Business Essential. RIBA Publishing.

Waters, R. (2010). Why tech companies need the discipline of a dividend. Retrieved from https://www.ft.com/content/ae39fe74-e772-11df-b5b4-00144feab49a

 Appendix