Running head: SUN MICROSYSTEMS, INC.
Sun Microsystems, Inc.: Shareholder Report
MBA/503 Introduction to Finance and Accounting
University of Phoenix
Sun Microsystems, Inc.
Changes in the economy and the computer industry have presented many challenges in the past four years. Sun Microsystems continued to see growth during this challenging time. The computer industry saw a great deal of change between 1998 and 2001. The world has seen the emergence of China as a major computer manufacturer and companies like IBM and Hewlett Packard have introduced innovative items. This has translated into increased markets for Sun Microsystems and increased demands for new and innovative computer parts. The increased demand has increased market competition. Sun Microsystems has met the new challenges and continues to experience growth and increase in revenue. The financial statement analysis presented below will assist in understanding the company’s efforts and successes in meeting industry demands.
Two approaches are generally used in analyzing the financial statement. The first, ratio analysis, “provides a meaningful comparison of a company to its industry” (Block and Hirt, 2005, p. 1). The second, trend analysis, “shows company performance over time” (Block and Hirt, 2005, p. 1). This report will provide insight to both analyses.
Financial tools are usually ratios that compare how a company performs against industry average or how it compares against itself over certain periods. The following is an evaluation of the financial tools discussed in the analysis of Sun Microsystems. Two categories of analysis are used, analyzing profitability and overall value.
Profitability analysis helps explain how the company uses resources. To analyze profitability, profit margin, return on assets and return on equity ratios will be examined and discussed. The profit margin is a rate of return on the sales dollar. A higher ratio means...