4. Andrew Potter is comparing the cash- flow- generating ability of Microsoft with that of Apple Inc. Hecollects information from the companies' annual reports and prepares the following table.Cash Flow from Operating Activitiesas a Percentage of Total Net Revenue2017 (%)2016 (%)2015 (%)Microsoft43.939.131.7Apple Inc.27.730.534.8As a Percentage of Average Total Assets2016 (%)2017 (%)2015 (%)Microsoft18.218.117.1Apple Inc.18.221.531.1What is Potter likely to conclude about the relative cash- flow- generating ability of these two companies?

Cash flow statements are one of the component of financial statements which shows the cash inflows…

Answered: as a Percent: 2017 (%) Microsoft 43.9…

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Accounting

as a Percent: 2017 (%) Microsoft 43.9 Apple Inc. 27.7 As a Percent 2017 (%) Microsoft 18 2

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

4. Andrew Potter is comparing the cash- flow- generating ability of Microsoft with that of Apple Inc. He
collects information from the companies' annual reports and prepares the following table.
Cash Flow from Operating Activities
as a Percentage of Total Net Revenue
2017 (%)
2016 (%)
2015 (%)
Microsoft
43.9
39.1
31.7
Apple Inc.
27.7
30.5
34.8
As a Percentage of Average Total Assets
2016 (%)
2017 (%)
2015 (%)
Microsoft
18.2
18.1
17.1
Apple Inc.
18.2
21.5
31.1
What is Potter likely to conclude about the relative cash- flow- generating ability of these two companies?

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