msft 10yr osv stock valuation spreadsheet
DESCRIPTION
http://www.oldschoolvalue.comStock valuation of MSFT to find the intrinsic value. Free stock value spreadsheets available.TRANSCRIPT
Jae Jun
Old School Value | http://www.oldschoolvalue.com
Author
- Yellow highlighted fields are user input fields. Enter ticker in the Summary tab only.
- Use yellow fields to override the default values without messing up formulas and accidently saving incorrect values
- If a graph is squashed or looks out of place, zoom in and zoom out to refresh the view.
- Press F9 to start calculations. Automatic formula calculations have been turned off in the excel menu to improve start speed and convenience.
- Protected sheets do not have any passwords. Simply unprotect it.
- Summary page provides a quick overview of all valuation methods and important graphs and numbers. Easy to add more or less yourself.
- DCF Valuation is based on discounted cash flow. Important company fundamental metrics included.
- Useful for companies with either 5yr or 10yrs of operating history
- Use 5yr version if there has been a recent turnaround or a major event changing the fundamentals of the business
- Use 10yr version for stable, cash cows such as KO or JNJ. You can even use it for stable consistent small caps
- Adjust user growth, discount rate, FCF override, terminal rate (default 3%)
- Price vs Value tab displays only the DCF intrinsic value compared to the historical stock price. (Thinking of how to add Graham intrinsic value and
EPV to the graph)
- Graham Intrinsic Value is based on Ben Graham's formula defined in the Intelligent Investor
Intrisic Value = "normal" earnings x (8.5 + (2 x expected 5 yr growth)) x (4.4/20yr A corp bond)
- Use for companies where FCF is erratic such as cyclicals or short history companies.
- Remember that earnings are usually inflated.
Companies may overstate earnings by hiding some numbers in there but they will never understate earnings on purpose.
- Which means that the value you get with the Graham equation will be higher than normal.
- Use high margin of safety (MOS)
- Adjust user growth
- EPV is based on Bruce Greenwald's book.
http://www.oldschoolvalue.com/book-reviews/greenwald-earnings-power-value-investing-epv/
- Detailed instructions on how to use the spreadsheet with a rundown of Microsoft
http://www.oldschoolvalue.com/stock-analysis/earnings-power-value-epv-valuation-microsoft/
- To explain it here, I would have to write out the entire book again. Please read it yourself to fully understand it.
- "Adjust +/-" column is for adding or subtracting values from the stated numbers
- "Multiplier" is to select what % you want to consider it. e.g. intangibles usually = 0%
- Select the pinkish cell to select either data from MSN or ADVFN
- Cell P47, select either 3 or 4 years of R&D you want to include into the valuation
- EPV section row 66, include or exclude extraordinary items to EBIT
- Read the comments to see references and explanations from the book
- Competitors tab allows you to view 6 companies side by side
- Charts tab shows different performance graphs of the companies
- Assessment tab is a checklist that you should try to folllow before making investment decisions.
- You should at least be able to draw up the spider graph
Jae Jun | Old School ValueAll spreadsheet related questions and support is now handled only through the forum.
http://www.oldschoolvalue.com/forum/spreadsheet-installation/
Disclaimer
Nothing on Old School Value, related pages, emails, or other communications by the author, either written or oral, are intended to be a
recommendation to either buy, hold, or sell any specific security or group of securities. Likewise, nothing herein should be construed as an
endorsement of any financial adviser, investment manager, commercial information provider, transaction service, or brokerage firm.
The findings from this spreadsheet is merely a start to a means of further research and uncovering a great business and investment. Old
School Value holds no responsibility for any investment whatsoever.
Spreadsheet Installation Related - Refer to the manual and ask for help on the forums to reduce repetitive questions and answers.The manual contains every possible problem
related to the spreadsheet.
- When requesting help, please try to find out whether it is a spreadsheet issue or excel issue.
PDF: http://www.oldschoolvalue.com/intrinsic-value-spreadsheets/installation-troubleshooting-guide/
Forum: http://www.oldschoolvalue.com/forum/spreadsheet-installation/
How to Use
Company Name ticker
Microsoft Corp www.oldschoolvalue.com
10/1/2009 Figures in Millions except per share values
Current Price
Total Net Reprod. Cost 4.93$ EPV 24.36$ DCF Price 27.91$ Graham Price 29.89$ 24.95$
Reprod. Cost of Assets BV 7.69$ Normalized Income 19,259.53$ Growth Rate 9% Growth Rate 14%
Tangible BV 2.84$ Discount Rate 9% Discount Rate 9% Normalized EPS 1.01$
NNWC 0.56$ Margin of Safety 0% Margin of Safety 11% Margin of Safety 17%
Market Cap (millions) 222,760 Quick Ratio (MRQ) 1.8 Gross (TTM) 79.2 Operating (TTM) 33.56 Net Profit (TTM) 24.93
52-Week High 27.47 Current Ratio (MRQ) 1.82 Gross - 5 Yr. Avg. 81.06 Operating - 5 Yr. Avg. 36.03 Net Profit - 5 Yr. Avg. 28.01
52-Week Low 14.87 LT Debt to Equity (MRQ) 9.47 EBITD (TTM) 37.94 Pre-Tax (TTM) 33.92
% off 52-Week Low 67.8% Total Debt to Equity (MRQ) 14.53 EBITD - 5 Yr. Avg. 38.98 Pre-Tax - 5 Yr. Avg. 38.82
P/E Ratio (TTM) 15.88 Sales (MRQ) vs Qtr. 1 Yr. Ago -17.29 ROA (TTM) 19.34 Revenue/Employee (TTM) 628355
Price to Sales (TTM) 3.93 Sales (TTM) vs TTM 1 Yr. Ago 3.93 ROA - 5 Yr. Avg. 19.63 Net Income/Employee (TTM) 156656
Price to Book (MRQ) 5.79 Sales - 5 Yr. Growth Rate 9.67 ROI (TTM) 31.08 Receivable Turnover (TTM) 4.72
Price to Tangible Book (MRQ) 9.08 EPS (MRQ) vs Qtr. 1 Yr. Ago -25.55 ROI - 5 Yr Avg 28.63 Inventory Turnover (TTM) 14.28
Price to Cash Flow (TTM) 13.4 EPS (TTM) vs TTM 1 Yr. Ago -13.36 ROE (TTM) 38.42 Asset Turnover (TTM) 0.78
Price to Free Cash Flow (TTM) 20.06 EPS - 5 Yr. Growth Rate 16.65 ROE - 5 Yr. Avg. 33.44
Enterprise Value/Revenue (TTM) 3.51 Capital Spending - 5 Yr. Grwth 22.98
Enterprise Value/EBITDA (TTM) 8.812
Multi-Year Performance
2000-2007 2001-2008 2002-2009 2000-2005 2001-2006 2002-2007 2003-2008 2004-2009
Shareholder Equity -6.7% -10.2% -9.4% 1.4% -5.5% -12.8% -17.3% -18.7%
Free Cash Flow 5.2% 11.4% 8.1% 5.8% 8.9% 10.2% 9.4% 11.2%
CROIC 19.4% 20.8% 26.2% 16.6% 16.6% 20.8% 26.2% 33.1%
FCF/Sales 29.7% 28.1% 27.2% 30.8% 29.7% 27.8% 27.2% 26.4%
ROA 14.3% 14.3% 16.5% 13.4% 13.4% 14.3% 16.5% 18.6%
ROE 18.8% 18.8% 24.2% 17.1% 17.1% 18.8% 24.2% 33.5%
Revenue Growth 12.1% 13.2% 10.9% 11.6% 11.8% 12.5% 13.4% 9.7%
Gross Margin 82.5% 82.1% 81.7% 83.4% 82.5% 82.1% 82.1% 81.3%
Operating Margin 39.1% 37.2% 36.9% 41.5% 39.1% 36.9% 36.9% 36.4%
Net Margin 28.7% 28.7% 28.0% 29.9% 28.7% 28.0% 28.9% 28.0%
Earnings Growth 7.6% 16.0% 12.5% 5.7% 12.7% 14.9% 15.2% 16.7%
Cash from Ops Growth 3.5% 7.0% 4.0% 3.5% 1.4% 4.2% 6.5% 5.4%
13.8%
4.1%
14.3%
18.8%
12.0%
82.1%
37.1%
28.7%
Historical Stock Price Vs Intrinsic Value Per Share
Median
-9.8%
9.2%
20.8%
27.9%
Key Statistics Financial Strength Margins & Profitability
Valuation Ratios Growth Stats Management Effective Efficiency
MSFT
Microsoft Corporation is engaged in developing, manufacturing, licensing, and supporting a range of software products and services for different types of computing devices. The Company operates in five business
segments: Client, Server and Tools, Online Services Business, Microsoft Business Division, and Entertainment and Devices Division. The software products and services include operating systems for servers, personal
computers, and intelligent devices; server applications for distributed computing environments; information worker productivity applications; business solutions applications; computing applications; software
development tools, and video games. The Company provide consulting and product and solution support services, and trains and certifies computer system integrators and developers. It also designs and sells
hardware, including Xbox 360 video game console, the Zune digital music and entertainment device, and peripherals.
DCF ValuationAsset Valuation Graham ValuationEPV Valuation
0
10
20
30
40
50
60
10/12/1998 10/12/1999 10/12/2000 10/12/2001 10/12/2002 10/12/2003 10/12/2004 10/12/2005 10/12/2006 10/12/2007 10/12/2008
Historical Price
Intrinsic Value
Buy Price
Margin Percentages
Free Cash Flow vs Tangible Shareholder Equity Trend Efficiency & Profitability
Sales vs Accounts Receivables CAPEX vs PPE
86.9% 86.3%81.7% 82.3% 81.8%
84.4% 82.7%79.1% 80.8% 79.2%
47.6% 46.3%42.0% 41.1%
24.5%
36.6% 37.2% 36.2% 37.2% 34.8%
41.0%
29.0% 27.6%31.0%
22.2%
30.8% 28.5% 27.5% 29.3%24.9%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Gross Margin
Operating Margin
Net Margin
$-
$10,000.0
$20,000.0
$30,000.0
$40,000.0
$50,000.0
$60,000.0
$70,000.0
$80,000.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
FCF
Shareholder Equity
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
CROIC
FCF/Sales
ROA
ROE
$-
$10,000.0
$20,000.0
$30,000.0
$40,000.0
$50,000.0
$60,000.0
$70,000.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 TTM
Sales
Accts Receivable
Inventory
$-
$1,000.0
$2,000.0
$3,000.0
$4,000.0
$5,000.0
$6,000.0
$7,000.0
$8,000.0
$9,000.0
$10,000.0
2003 2004 2005 2006 2007 2008 2009 TTM
Last 6 yrs
Last 5 yrs
Last 4 yrs
Last 3 yrs
Last 2 yrs
Last 1 yr
PPE
10/1/2009 Figures in Millions except per share values
MSFT 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 TTM
Revenue 22,956.0$ 25,296.0$ 28,365.0$ 32,187.0$ 36,835.0$ 39,788.0$ 44,282.0$ 51,122.0$ 60,420.0$ 58,437.0$ 58,437.0$
% change from last year 9.3% 10.8% 11.9% 12.6% 7.4% 10.1% 13.4% 15.4% -3.4% 0.0%
COGS 3,002.0$ 3,455.0$ 5,191.0$ 5,686.0$ 6,716.0$ 6,200.0$ 7,650.0$ 10,693.0$ 11,598.0$ 12,155.0$ 12,155.0$
COGS (%) 13.1% 13.7% 18.3% 17.7% 18.2% 15.6% 17.3% 20.9% 19.2% 20.8% 20.8%
Gross Profit 19,954.0$ 21,841.0$ 23,174.0$ 26,501.0$ 30,119.0$ 33,588.0$ 36,632.0$ 40,429.0$ 48,822.0$ 46,282.0$ 46,282.0$
Gross Profit (%) 86.9% 86.3% 81.7% 82.3% 81.8% 84.4% 82.7% 79.1% 80.8% 79.2% 79.2%
SG&A 5,150.0$ 5,742.0$ 6,957.0$ 8,625.0$ 13,306.0$ 12,843.0$ 13,576.0$ 14,784.0$ 18,166.0$ 16,909.0$ 16,909.0$
SG&A (%) 22.4% 22.7% 24.5% 26.8% 36.1% 32.3% 30.7% 28.9% 30.1% 28.9% 28.9%
R&D 3,775.0$ 4,379.0$ 4,307.0$ 4,659.0$ 7,779.0$ 6,184.0$ 6,584.0$ 7,121.0$ 8,164.0$ 9,010.0$ 9,010.0$
R&D (%) 16.4% 17.3% 15.2% 14.5% 21.1% 15.5% 14.9% 13.9% 13.5% 15.4% 15.4%
Other 92.0$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Other (%) 0.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Operating Income 10,937.0$ 11,720.0$ 11,910.0$ 13,217.0$ 9,034.0$ 14,561.0$ 16,472.0$ 18,524.0$ 22,492.0$ 20,363.0$ 20,363.0$
Operating Income (%) 47.6% 46.3% 42.0% 41.1% 24.5% 36.6% 37.2% 36.2% 37.2% 34.8% 34.8%
Net Int Inc & Other 3,338.0$ (195.0)$ (397.0)$ 1,509.0$ 3,162.0$ 2,067.0$ 1,790.0$ 1,577.0$ 1,322.0$ (542.0)$ (542.0)$
Earnings Before Taxes 14,275.0$ 11,525.0$ 11,513.0$ 14,726.0$ 12,196.0$ 16,628.0$ 18,262.0$ 20,101.0$ 23,814.0$ 19,821.0$ 19,821.0$
Income Taxes 4,854.0$ 3,804.0$ 3,684.0$ 4,733.0$ 4,028.0$ 4,374.0$ 5,663.0$ 6,036.0$ 6,133.0$ 5,252.0$ 5,252.0$
Tax Rate % 34.0% 33.0% 32.0% 32.1% 33.0% 26.3% 31.0% 30.0% 25.8% 26.5% 26.5%
Earnings After Taxes 9,421.0$ 7,721.0$ 7,829.0$ 9,993.0$ 8,168.0$ 12,254.0$ 12,599.0$ 14,065.0$ 17,681.0$ 14,569.0$ 14,569.0$
Acctg Changes -$ (375.0)$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Disc Operations -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Ext Items -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Net Income 9,421.0$ 7,346.0$ 7,829.0$ 9,993.0$ 8,168.0$ 12,254.0$ 12,599.0$ 14,065.0$ 17,681.0$ 14,569.0$ 14,569.0$
Net Income (%) 41.0% 29.0% 27.6% 31.0% 22.2% 30.8% 28.5% 27.5% 29.3% 24.9% 24.9%
Diluted EPS, Cont Ops$ 0.9$ 0.7$ 0.7$ 0.9$ 0.8$ 1.1$ 1.2$ 1.4$ 1.9$ 1.6$ 1.6$
Diluted EPS$ 0.9$ 0.7$ 0.7$ 0.9$ 0.8$ 1.1$ 1.2$ 1.4$ 1.9$ 1.6$ 1.6$
Shares 11072 11148 11106 10882 10894 10906 10531 9886 9470 8996 8910
Cash and Equiv 4,846.0$ 3,922.0$ 3,016.0$ 6,438.0$ 15,982.0$ 4,851.0$ 6,714.0$ 6,111.0$ 10,339.0$ 6,076.0$ 6,076.0$
Short-Term Investments 18,952.0$ 27,678.0$ 35,636.0$ 42,610.0$ 44,610.0$ 32,900.0$ 27,447.0$ 17,300.0$ 13,323.0$ 25,371.0$ 25,371.0$
Accts Rec 3,250.0$ 3,671.0$ 5,129.0$ 5,196.0$ 5,890.0$ 7,180.0$ 9,316.0$ 11,338.0$ 13,589.0$ 11,192.0$ 11,192.0$
% change from last year 11.5% 28.4% 1.3% 11.8% 18.0% 22.9% 17.8% 16.6% -21.4% 0.0%
Inventory -$ -$ 673.0$ 640.0$ 421.0$ 491.0$ 1,478.0$ 1,127.0$ 985.0$ 717.0$ 717.0$
% change from last year 100.0% -5.2% -52.0% 14.3% 66.8% -31.1% -14.4% -37.4% 0.0%
Other Current Assets 3,260.0$ 4,366.0$ 4,122.0$ 4,089.0$ 3,663.0$ 3,315.0$ 4,055.0$ 4,292.0$ 5,006.0$ 5,924.0$ 5,924.0$
Total Current Assets 30,308.0$ 39,637.0$ 48,576.0$ 58,973.0$ 70,566.0$ 48,737.0$ 49,010.0$ 40,168.0$ 43,242.0$ 49,280.0$ 49,280.0$
Net PP&E 1,903.0$ 2,309.0$ 2,268.0$ 2,223.0$ 2,326.0$ 2,346.0$ 3,044.0$ 4,350.0$ 6,242.0$ 7,535.0$ 7,535.0$
Intangibles -$ -$ 1,669.0$ 3,512.0$ 3,684.0$ 3,808.0$ 4,405.0$ 5,638.0$ 14,081.0$ 14,262.0$ 14,262.0$
Other Long-Term Assets 19,939.0$ 17,311.0$ 15,133.0$ 14,863.0$ 15,813.0$ 15,924.0$ 13,138.0$ 13,015.0$ 9,228.0$ 6,811.0$ 6,811.0$
Total Assets 52,150.0$ 59,257.0$ 67,646.0$ 79,571.0$ 92,389.0$ 70,815.0$ 69,597.0$ 63,171.0$ 72,793.0$ 77,888.0$ 77,888.0$
Accts Payable 1,083.0$ 1,188.0$ 1,208.0$ 1,573.0$ 1,717.0$ 2,086.0$ 2,909.0$ 3,247.0$ 4,034.0$ 3,324.0$ 3,324.0$
Short-Term Debt -$ -$ -$ -$ -$ -$ -$ -$ -$ 2,000.0$ 2,000.0$
Taxes Payable 585.0$ 1,468.0$ 2,022.0$ 2,044.0$ 3,478.0$ 2,020.0$ 1,557.0$ 1,040.0$ 3,248.0$ 725.0$ 725.0$
Accrued Liabilities 557.0$ 742.0$ 7,065.0$ 8,641.0$ 7,853.0$ 9,164.0$ 11,076.0$ 2,325.0$ 2,934.0$ 3,156.0$ 3,156.0$
Other Short-Term
Liabilities 7,530.0$ 7,734.0$ 2,449.0$ 1,716.0$ 1,921.0$ 3,607.0$ 6,900.0$ 17,142.0$ 19,670.0$ 17,829.0$ 17,829.0$
Total Current Liabilities 9,755.0$ 11,132.0$ 12,744.0$ 13,974.0$ 14,969.0$ 16,877.0$ 22,442.0$ 23,754.0$ 29,886.0$ 27,034.0$ 27,034.0$
Long-Term Debt -$ -$ -$ -$ -$ -$ -$ -$ -$ 3,746.0$ 3,746.0$
Other Long-Term
Liabilities 1,027.0$ 836.0$ 2,722.0$ 4,577.0$ 2,595.0$ 5,823.0$ 7,051.0$ 8,320.0$ 6,621.0$ 7,550.0$ 7,550.0$
Total Liabilities 10,782.0$ 11,968.0$ 15,466.0$ 18,551.0$ 17,564.0$ 22,700.0$ 29,493.0$ 32,074.0$ 36,507.0$ 38,330.0$ 38,330.0$
Total Equity 41,368.0$ 47,289.0$ 52,180.0$ 61,020.0$ 74,825.0$ 48,115.0$ 40,104.0$ 31,097.0$ 36,286.0$ 39,558.0$ 39,558.0$
Total Liabilities & Equity 52,150.0$ 59,257.0$ 67,646.0$ 79,571.0$ 92,389.0$ 70,815.0$ 69,597.0$ 63,171.0$ 72,793.0$ 77,888.0$ 77,888.0$
Assets
Balance Sheet
Financial Data
Microsoft Corp
Company Name
Income Statement
Operating Expenses
Other Income and Expense
ticker
MSFT
Liabilities & Stockholders' Equity
Net Income 9,421.0$ 7,346.0$ 7,829.0$ 9,993.0$ 8,168.0$ 12,254.0$ 12,599.0$ 14,065.0$ 17,681.0$ 14,569.0$ 14,569.0$
Depr & Amort 748.0$ 1,536.0$ 1,084.0$ 1,439.0$ 1,186.0$ 855.0$ 903.0$ 1,440.0$ 2,056.0$ 2,562.0$ 2,562.0$
Deferred Taxes -$ (420.0)$ (416.0)$ 336.0$ (1,479.0)$ (179.0)$ 219.0$ 421.0$ 935.0$ 762.0$ 762.0$
Other 3,792.0$ 4,960.0$ 6,012.0$ 4,029.0$ 6,751.0$ 3,675.0$ 683.0$ 1,870.0$ 940.0$ 1,144.0$ 1,144.0$
Cash from Operations 13,961.0$ 13,422.0$ 14,509.0$ 15,797.0$ 14,626.0$ 16,605.0$ 14,404.0$ 17,796.0$ 21,612.0$ 19,037.0$ 19,037.0$
Cap Ex (879.0)$ (1,103.0)$ (770.0)$ (891.0)$ (1,109.0)$ (812.0)$ (1,578.0)$ (2,264.0)$ (3,182.0)$ (3,119.0)$ (3,119.0)$
Purchase of Business -$ -$ -$ (1,063.0)$ (4.0)$ (207.0)$ (649.0)$ (1,150.0)$ (8,053.0)$ (868.0)$ (868.0)$
Other (11,048.0)$ (7,631.0)$ (10,075.0)$ (5,259.0)$ (1,632.0)$ 16,046.0$ 10,230.0$ 9,503.0$ 6,648.0$ (11,783.0)$ (11,783.0)$
Cash from Investing (11,927.0)$ (8,734.0)$ (10,845.0)$ (7,213.0)$ (2,745.0)$ 15,027.0$ 8,003.0$ 6,089.0$ (4,587.0)$ (15,770.0)$ (15,770.0)$
Net Issuance of Stock (2,651.0)$ (4,454.0)$ (4,572.0)$ (4,366.0)$ (635.0)$ (4,948.0)$ (17,106.0)$ (20,793.0)$ (9,039.0)$ (8,722.0)$ (8,722.0)$
Net Issuance of Debt -$ -$ -$ -$ -$ -$ -$ -$ -$ 5,974.0$ 5,974.0$
Dividends (13.0)$ -$ -$ (857.0)$ (1,729.0)$ (36,112.0)$ (3,545.0)$ (3,805.0)$ (4,015.0)$ (4,468.0)$ (4,468.0)$
Other 472.0$ (1,132.0)$ -$ -$ -$ (18.0)$ 89.0$ 54.0$ 120.0$ (247.0)$ (247.0)$
Cash from Financing (2,192.0)$ (5,586.0)$ (4,572.0)$ (5,223.0)$ (2,364.0)$ (41,078.0)$ (20,562.0)$ (24,544.0)$ (12,934.0)$ (7,463.0)$ (7,463.0)$
Currency Adj 29.0$ (26.0)$ 2.0$ 61.0$ 27.0$ (7.0)$ 18.0$ 56.0$ 137.0$ (67.0)$ (67.0)$
Change in Cash (158.0)$ (898.0)$ (908.0)$ 3,361.0$ 9,517.0$ (9,446.0)$ 1,845.0$ (659.0)$ 4,228.0$ (4,263.0)$ (4,263.0)$
Cash from Operations 13,961.0$ 13,422.0$ 14,509.0$ 15,797.0$ 14,626.0$ 16,605.0$ 14,404.0$ 17,796.0$ 21,612.0$ 19,037.0$ 19,037.0$
Cap Ex (879.0)$ (1,103.0)$ (770.0)$ (891.0)$ (1,109.0)$ (812.0)$ (1,578.0)$ (2,264.0)$ (3,182.0)$ (3,119.0)$ (3,119.0)$
Free Cash Flow 9,290.0$ 7,779.0$ 8,143.0$ 10,541.0$ 8,245.0$ 12,297.0$ 11,924.0$ 13,241.0$ 16,555.0$ 14,012.0$ 14,012.0$
Book Value Per Share 3.74$ 4.24$ 4.70$ 5.61$ 6.87$ 4.41$ 3.81$ 3.15$ 3.83$ 4.40$ 4.44$
Cash Flows From Financing Activities
Free Cash Flow
Cash Flows Statement
Cash Flows From Operating Activities
Cash Flows From Investing Activities
www.oldschoolvalue.com
10/1/2009 User Growth Figures in Millions except per share values
Desired MOS Growth Discount % Price Share Value Buy under Actual D/C % 52Wk High 52Wk Low
50% 9.2% 9.0% 24.95$ 27.91$ 13.95$ 11% $27.47 $14.87
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Revenue 22,956.0$ 25,296.0$ 28,365.0$ 32,187.0$ 36,835.0$ 39,788.0$ 44,282.0$ 51,122.0$ 60,420.0$ 58,437.0$
Gross Profit 19,954.0$ 21,841.0$ 23,174.0$ 26,501.0$ 30,119.0$ 33,588.0$ 36,632.0$ 40,429.0$ 48,822.0$ 46,282.0$
Operating Income 10,937.0$ 11,720.0$ 11,910.0$ 13,217.0$ 9,034.0$ 14,561.0$ 16,472.0$ 18,524.0$ 22,492.0$ 20,363.0$
Net Income 9,421.0$ 7,346.0$ 7,829.0$ 9,993.0$ 8,168.0$ 12,254.0$ 12,599.0$ 14,065.0$ 17,681.0$ 14,569.0$
Diluted EPS 0.9$ 0.7$ 0.7$ 0.9$ 0.8$ 1.1$ 1.2$ 1.4$ 1.9$ 1.6$
Cash from Operations 13,961.0$ 13,422.0$ 14,509.0$ 15,797.0$ 14,626.0$ 16,605.0$ 14,404.0$ 17,796.0$ 21,612.0$ 19,037.0$
Free Cash Flow 9,290.0$ 7,779.0$ 8,143.0$ 10,541.0$ 8,245.0$ 12,297.0$ 11,924.0$ 13,241.0$ 16,555.0$ 14,012.0$
Capex 879.0$ 1,103.0$ 770.0$ 891.0$ 1,109.0$ 812.0$ 1,578.0$ 2,264.0$ 3,182.0$ 3,119.0$
Current Assets 30,308.0$ 39,637.0$ 48,576.0$ 58,973.0$ 70,566.0$ 48,737.0$ 49,010.0$ 40,168.0$ 43,242.0$ 49,280.0$
Current Liabilities 9,755.0$ 11,132.0$ 12,744.0$ 13,974.0$ 14,969.0$ 16,877.0$ 22,442.0$ 23,754.0$ 29,886.0$ 27,034.0$
Total Liabilities 10,782.0$ 11,968.0$ 15,466.0$ 18,551.0$ 17,564.0$ 22,700.0$ 29,493.0$ 32,074.0$ 36,507.0$ 38,330.0$
Tangible Shareholder Equity 41,368.0$ 47,289.0$ 50,511.0$ 57,508.0$ 71,141.0$ 44,307.0$ 35,699.0$ 25,459.0$ 22,205.0$ 25,296.0$
Gross Margin 86.9% 86.3% 81.7% 82.3% 81.8% 84.4% 82.7% 79.1% 80.8% 79.2%
Operating Margin 47.6% 46.3% 42.0% 41.1% 24.5% 36.6% 37.2% 36.2% 37.2% 34.8%
Net Margin 41.0% 29.0% 27.6% 31.0% 22.2% 30.8% 28.5% 27.5% 29.3% 24.9%
Current Assets>1.5 times 310.7% 356.1% 381.2% 422.0% 471.4% 288.8% 218.4% 169.1% 144.7% 182.3%
CROIC 21.9% 16.2% 15.3% 17.0% 11.2% 24.5% 27.9% 39.2% 57.4% 38.3%
FCF/Sales 40.5% 30.8% 28.7% 32.7% 22.4% 30.9% 26.9% 25.9% 27.4% 24.0%
Inventory Turnover 7.7 8.9 16.0 12.6 5.2 9.5 11.8 17.0
Return On Assets (ROA) 21.1% 13.2% 12.3% 13.6% 9.5% 15.0% 18.0% 21.2% 26.0% 19.3%
Retun On Equity (ROE) 27.4% 16.6% 15.7% 17.7% 12.0% 19.9% 28.6% 39.5% 52.5% 38.4%
Debt to Equity 26.1% 25.3% 29.6% 30.4% 23.5% 47.2% 73.5% 103.1% 100.6% 96.9%
Capitalization Ratio 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 8.7%
FCF to Debt 86.2% 65.0% 52.7% 56.8% 46.9% 54.2% 40.4% 41.3% 45.3% 36.6%
2000-2007 2001-2008 2002-2009 2000-2005 2001-2006 2002-2007 2003-2008 2004-2009
Shareholder Equity -6.7% -10.2% -9.4% 1.4% -5.5% -12.8% -17.3% -18.7%
Free Cash Flow 5.2% 11.4% 8.1% 5.8% 8.9% 10.2% 9.4% 11.2%
CROIC 19.4% 20.8% 26.2% 16.6% 16.6% 20.8% 26.2% 33.1%
FCF/Sales 29.7% 28.1% 27.2% 30.8% 29.7% 27.8% 27.2% 26.4%
ROA 14.3% 14.3% 16.5% 13.4% 13.4% 14.3% 16.5% 18.6%
ROE 18.8% 18.8% 24.2% 17.1% 17.1% 18.8% 24.2% 33.5%
Revenue Growth 12.1% 13.2% 10.9% 11.6% 11.8% 12.5% 13.4% 9.7%
Gross Margin 82.5% 82.1% 81.7% 83.4% 82.5% 82.1% 82.1% 81.3%
Operating Margin 39.1% 37.2% 36.9% 41.5% 39.1% 36.9% 36.9% 36.4%
Net Margin 28.7% 28.7% 28.0% 29.9% 28.7% 28.0% 28.9% 28.0%
Earnings Growth 7.6% 16.0% 12.5% 5.7% 12.7% 14.9% 15.2% 16.7%
Cash from Ops Growth 3.5% 7.0% 4.0% 3.5% 1.4% 4.2% 6.5% 5.4%
Growing at 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
9% 15,299$ 16,704$ 18,238$ $19,250.88 $20,841.94 $22,564.51 $24,429.44 $24,875.75 $26,726.11 $28,714.11
Terminal Value 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
3% 29,576$ 30,463$ 31,377$ 32,318$ 33,288$ 34,286$ 35,315$ 36,374$ 37,465$ 38,589$
Total Value
Shares Outstanding 8901
Per Share Value
Margin of Safety
Purchase Price
Current Price
Actual Discount
Enterprise Value
Enterprise Value/EBITDA
24.95$
11%
205,030.00$
8.812
18.8%
Projection of future Free Cash Flow
14.3%
13.8%
82.1%
Microsoft Corp
37.1%
9.2%
Debt Related
27.9%
Efficiency & Profitability
User Input Params
Financial Data
Margins
Cash Flow Data
Balance Sheet Data
Income Sheet Data
20.8%
Company Name ticker
Median
27.91$
-9.8%
MSFT
Multi-Year Performance
4.1%
12.0%
50%
13.95$
28.7%
Company Valuation
248,410$
8901
Free Cash Flow and Tangible Shareholder Equity Trend
$9,290.0 $7,779.0 $8,143.0 $10,541.0 $8,245.0 $12,297.0 $11,924.0 $13,241.0
$16,555.0 $14,012.0
$41,368.0 $47,289.0
$50,511.0 $57,508.0
$71,141.0
$44,307.0
$35,699.0
$25,459.0 $22,205.0
$25,296.0
$-
$10,000.0
$20,000.0
$30,000.0
$40,000.0
$50,000.0
$60,000.0
$70,000.0
$80,000.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
FCF Shareholder Equity
Margin Percentages
Multi-Year Performance Graph
Sales, Receivables, Inventory
Efficiency & Profitability Debt
86.9% 86.3%81.7% 82.3% 81.8% 84.4% 82.7%
79.1% 80.8% 79.2%
47.6% 46.3%42.0% 41.1%
24.5%
36.6% 37.2% 36.2% 37.2% 34.8%41.0%
29.0% 27.6%31.0%
22.2%
30.8% 28.5% 27.5% 29.3%24.9%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Gross Margin
Operating Margin
Net Margin
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
CROIC FCF/Sales ROA ROE
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Debt to Equity Capitalization Ratio FCF to Debt
82.5% 82.1% 81.7% 83.4% 82.5% 82.1% 82.1% 81.3%
39.1% 37.2% 36.9% 41.5% 39.1% 36.9% 36.9% 36.4%
28.7% 28.7% 28.0%29.9% 28.7% 28.0% 28.9% 28.0%
7.6% 16.0% 12.5%5.7% 12.7% 14.9% 15.2% 16.7%
14.3%14.3% 16.5% 13.4% 13.4% 14.3% 16.5% 18.6%
18.8%18.8% 24.2%
17.1% 17.1% 18.8%24.2%
33.5%
0.0%
50.0%
100.0%
150.0%
200.0%
250.0%
2000-2007 2001-2008 2002-2009 2000-2005 2001-2006 2002-2007 2003-2008 2004-2009
Gross Margin Operating Margin Net Margin Earnings Growth ROA ROE
$-
$10,000.0
$20,000.0
$30,000.0
$40,000.0
$50,000.0
$60,000.0
$70,000.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 TTM
Sales Accts Receivable Inventory
Company Name
Microsoft Corpwww.oldschoolvalue.com Figures in Millions except per share values
Desired MOS Growth Discount % Price Share Value Buy under Actual D/C % 52Wk High 52Wk Low
50% 9.2% 9% 24.95$ 27.91$ 13.95$ 11% 27.47$ 14.87$
Historical Stock Price Vs Intrinsic Value Per Share
ticker
MSFT10/1/2009
0
10
20
30
40
50
60
10/12/1998 10/12/1999 10/12/2000 10/12/2001 10/12/2002 10/12/2003 10/12/2004 10/12/2005 10/12/2006 10/12/2007 10/12/2008
Historical Price Intrinsic Value Buy Price Linear (Historical Price)
10/1/2009 User Growth Figures in Millions except per share values
www.oldschoolvalue.com
Desired MOS Growth Price Actual DC% Share Value Buy under P/B Ratio
66% 13.8% 24.95$ 17% 29.89$ 10.16$ 5.67
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
0.85$ 0.66$ 0.71$ 0.92$ 0.75$ 1.12$ 1.20$ 1.42$ 1.87$ 1.62$
2010 2011 2012 2013
1.62$ 1.85$ 1.86$ 2.15$
2000-2005 2001-2006 2002-2007 2003-2008 2004-2009 2000-2003 2001-2004 2002-2005
Earnings Growth 5.7% 12.7% 14.9% 15.2% 16.7% 2.7% 4.4% 16.4%
EPS Weighted Average 0.84$ 0.89$ 1.02$ 1.21$ 1.33$ 0.79$ 0.76$ 0.88$
2003-2006 2004-2007 2005-2008 2006-2009
Earnings Growth 9.26% 23.71% 18.63% 10.52%
EPS Weighted Average 1.00$ 1.12$ 1.40$ 1.53$
1.01$
13.79%
5.74
4.40
5.67
23.03
29.89$
66.00%
10.16$
24.95$
17%
Diluted EPS
Purchase Price
Current Price
Company Valuation
Per Share Value
Desired MOS
Book Value Per Share
Price to Book Ratio
Actual Discount
Company Name ticker
Microsoft Corp MSFT
Earnings
Multi-Year Performance
User Input ParamsNet Net Working Capital
0.21$
$1.01
13.8%
Enterprise Value Per Share
Company Stats
Normal Earnings
Expected 5 Year Growth
20 yr A Corp Bond Rate
Median (1998-2007)
$0.85
$0.66 $0.71
$0.92
$0.75
$1.12 $1.20
$1.42
$1.87
$1.62 $1.62
$1.85
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
EPS Linear (EPS)
Old School Value | http://www.oldschoolvalue.com
Company NameCompany Name ticker
Microsoft Corp MSFTFigures in Millions except per share values
EPV Current Price MOS % Tangible BV NNWC
24.36$ 24.95$ 0% 2.84$ 0.56$
Quarterly numbers based on: 2009 Q4 Data Source
Statement Source Date: 30-Jul-09 MSN
Assets Book Value
Adjust
+/- Multiplier
Reproduction
Asset Value 2003 2004 2005 2006 2007 2008 2009 TTM
Cash & Equivalents 31,447.0$ 31,447.0$
CAPEX
(statements) 891.0$ 1,109.0$ 812.0$ 1,578.0$ 2,264.0$ 3,182.0$ 3,119.0$ 3,119.0$
Marketable Securities 25,371.0$ 25,371.0$ Last 6 yrs
Accounts Receivable - Gross 11,192.0$ 11,192.0$ Last 5 yrs
Other Receivable -$ -$ Last 4 yrs
Receivables 11,192.0$ 11,192.0$ Last 3 yrs 2,764.0$ 2,770.0$ 2,812.0$ 3,499.0$ 4,654.0$ 7,024.0$ 8,565.0$ 9,420.0$
Inventories: Raw Materials Error Last 2 yrs 1,661.0$ 2,000.0$ 1,921.0$ 2,390.0$ 3,842.0$ 5,446.0$ 6,301.0$ 6,238.0$
Inventories: Work in Progress Error Last 1 yr 891.0$ 1,109.0$ 812.0$ 1,578.0$ 2,264.0$ 3,182.0$ 3,119.0$ 3,119.0$
Inventories: Purchased
Components Error PPE 2,223.0$ 2,326.0$ 2,346.0$ 3,044.0$ 4,350.0$ 6,242.0$ 7,535.0$ 7,535.0$
Inventories: Finished Goods Error Sales 32,187.0$ 36,835.0$ 39,788.0$ 44,282.0$ 51,122.0$ 60,420.0$ 58,437.0$ 58,437.0$
Inventories: Other Error R&D 4,659.0$ 7,779.0$ 6,184.0$ 6,584.0$ 7,121.0$ 8,164.0$ 9,010.0$ 9,010.0$
Inventories -- Total 717.0$ 717.0$
Prepaid Expenses -$ -$
Current Defered Income Taxes Error Error
Other Current Assets 5,924.0$ 5,924.0$
Total Current Assets 49,280.0$ 49,280.0$
Goodwill, Net 12,503.0$ 50% 6,251.5$
Intangibles, Net 1,759.0$ 1,759.0$
Intangibles 14,262.0$ 8,010.5$
Property/Plant/Equipment - Net 7,535.0$ 7,535.0$
Long Term Investments 4,933.0$ 4,933.0$
Note Receivable - Long Term -$ -$
Other Long Term Assets, Total 1,878.0$ 1,878.0$
Total Assets 77,888.0$ 71,636.5$
Liabilities & Equity Book Value Corrected BV Multiplier
Reproduction
Asset Value
Accounts Payable 3,324.0$ 3,324.0$
Accrued Expenses 3,156.0$ 3,156.0$
Accrued Liabilities -$ -$
Notes Payable/Short Term Debt 2,000.0$ 2,000.0$ Total Per Share Shares Outstanding 8901.0 8901
Current Port. of LT Debt/Capital
Leases -$ -$ Tangible BV 25,296$ 2.84$
Balance Sheet Assets 77,888.0$
Other Current Liabilities 18,554.0$ 18,554.0$ Adjusted BV 33,307$ 3.74$ Adjusted Assets 71,636.5$
Total Current Liabilities 27,034.0$ 27,034.0$ NNWC 5,026$ 0.56$ Total Liabilities 38,330.0$
Long-Term Debt 3,746.0$ 3,746.0$
Reprod. Cost of
Assets 106,763$ 11.99$ Total Equity 39,558.0$
Capital Lease Obligations Error Error
Reprod. Cost of
Assets BV 68,433$ 7.69$
Deferred Income Taxes -$ -$
Total Net
Reprod. Cost 43,901$ 4.93$ 17,631.3$
Minority Interest -$ -$ 17,495.2$
Total Other Liabilities 7,550.0$ 7,550.0$
Total Liabilities 38,330.0$ 38,330.0$ Cash Needed for Business 584.4$
Common Stock Equity Error Error Interest Bearing Debt 5,746.0$ Retained Earnings Error Error Non Interest Bearing Debt 32,584.0$
Total Capitalization Error Error Excess Cash 30,278.3$
Total Equity 39,558.0$ 39,558.0$
Total Liabilities & Stock Equity 77,888.0$ 77,888.0$
$4.93
Reproduction Asset Value
Asset Valuation Asset Valuation Data
Marketing/Brand Value
R&D Value
10/1/2009 User Discount %
9%
Discount Rate % Net Reprod. Cost
9%
$-
$1,000.0
$2,000.0
$3,000.0
$4,000.0
$5,000.0
$6,000.0
$7,000.0
$8,000.0
$9,000.0
$10,000.0
2003 2004 2005 2006 2007 2008 2009 TTM
Last 6 yrs
Last 5 yrs
Last 4 yrs
Last 3 yrs
Last 2 yrs
Last 1 yr
PPE
Old School Value | http://www.oldschoolvalue.com
Period End Date 30-Jun-05 30-Jun-06 30-Jun-07 30-Jun-08 30-Jun-09 30-Sep-08 31-Dec-08 31-Mar-09 30-Jun-09
Period Length 12 Months 12 Months 12 Months 12 Months 12 Months 3 Months 3 Months 3 Months 3 Months
Statement Source 10-K 10-K 10-K 10-K 10-K 10-Q 10-Q 10-Q 10-K
Income Statement 2005 2006 2007 2008 2009 2009 Q1 2009 Q2 2009 Q3 2009 Q4 TTM User Input
Sales 39,788$ 44,282$ 51,122$ 60,420$ 58,437$ $15,061.0 16,629.0$ 13,648.0$ 13,099.0$ 58,437.0$
EBIT 16,628.0$ 18,262.0$ 20,101.0$ 23,814.0$ 19,821.0$ $5,927.0 $5,690.0 $3,999.0 $3,937.0
Add back one time charges
EBIT Margin 41.8% 41.2% 39.3% 39.4% 33.9% 39.4% 34.2% 29.3% 30.1% 33.5%
EBIT at user defined % of sales -$
EBIT User Defined % Margin 41.8% 41.2% 39.3% 39.4% 33.9% 39.4% 34.2% 29.3% 30.1% 33.5%
Normalized EBITDA 17,755.0$ 18,782.0$ 19,874.0$ 24,143.0$ 22,984.0$ $6,584.0 6,571.0$ 5,392.0$ 4,708.0$ 23,255.0$
Normalized EBIT 16,871.0$ 17,792.0$ 18,438.0$ 22,271.0$ 20,693.0$ $5,999.0 5,939.0$ 4,728.0$ 4,027.0$ 20,693.0$
SG&A 2,697.3$ 3,064.0$ 3,717.5$ 4,596.8$ 4,144.8$ $982.8 982.8$ 1,123.3$ 973.5$ 4,062.3$
R&D 1,524.3$ 1,646.0$ 1,780.3$ 2,041.0$ 2,252.5$ $570.8 570.8$ 572.5$ 553.0$ 2,267.0$
Adjusted EBIT 20,849.5$ 22,972.0$ 25,598.8$ 30,451.8$ 26,218.3$ $7,480.5 7,243.5$ 5,694.8$ 5,463.5$ 25,882.3$
Adjusted EBIT % 52.4% 51.9% 50.1% 50.4% 44.9% 49.7% 43.6% 41.7% 41.7% 44.3%
Income Before Tax 16,628.0$ 18,262.0$ 20,101.0$ 23,814.0$ 19,821.0$ $5,927.0 5,690.0$ 3,999.0$ 3,937.0$ 19,553.0$
Income Tax - Total 4,374.0$ 5,663.0$ 6,036.0$ 6,133.0$ 5,252.0$ $1,618.0 1,464.0$ 1,073.0$ 1,097.0$ 5,252.0$
Tax Rate 26.3% 31.0% 30.0% 25.8% 26.5% 27.3% 25.7% 26.8% 27.9% 26.9%
Adjusted Earnings After tax 15,365.0$ 15,848.4$ 17,911.9$ 22,609.3$ 19,271.2$ $5,438.4 5,379.79$ 4,166.75$ 3,941.16$ 18,926.1$
Depreciation & Amortization 884.0$ 990.0$ 1,436.0$ 1,872.0$ 2,291.0$ $585.0 632.0$ 664.0$ 681.0$ 2,562.0$
Add user defined % of D&A 176.8$ 198.0$ 287.2$ 374.4$ 458.2$ $117.0 126.4$ 132.8$ 136.2$ 512.4$
Income as Adjusted 15,541.8$ 16,046.4$ 18,199.1$ 22,983.7$ 19,729.4$ $5,555.4 5,506.2$ 4,299.6$ 4,077.4$ 19,438.5$
Income as Adjusted % 39.1% 36.2% 35.6% 38.0% 33.8% 36.9% 33.1% 31.5% 31.1% 33.3%
Operating Income as Reported 14,561.0$ 16,472.0$ 18,524.0$ 22,492.0$ 20,363.0$ $5,927.0 5,677.0$ 4,018.0$ 3,987.0$ 19,609.0$
2005 2006 2007 2008 2009 TTM Average
PPE as a % of Sales 5.9% 6.9% 8.5% 10.3% 12.9% 12.9%
Sales Growth (decrease) to Prior
Year 2,953.0$ 4,494.0$ 6,840.0$ 9,298.0$ (1,983.0)$ -$
Capex 812.0$ 1,578.0$ 2,264.0$ 3,182.0$ 3,119.0$ 3,119.0$ 2,191.0$
Maintenance Capex 637.9$ 1,269.1$ 1,682.0$ 2,221.4$ 3,119.0$ 3,119.0$ 2,008.1$
Depr & Amort 855.0$ 903.0$ 1,440.0$ 2,056.0$ 2,562.0$ 2,562.0$ 1,729.7$
2005-2006 2006-2007 2007-2008 2008-2009 2009-TTM
3.2% 13.4% 26.3% -14.2% -1.5% 19,259.5$
15,794.1$ 17,122.8$ 20,591.4$ 21,356.5$ 19,583.9$ 18,500.1$
19,438.5$
2005-2007 2006-2008 2007-2009 2008-TTM
8.2% 19.7% 4.1% -8.0%
16,595.8$ 19,076.4$ 20,304.0$ 20,717.2$ 9%
19,259.5$
2005-2008 2006-2009 2007-TTM 2,008.1$
12.7% 2.7% -5.4% 5,746$
18,192.8$ 19,239.6$ 20,087.7$ 584.37$
31,447$
2005-2009 2006-TTM 25,116.63$
6.1% 4.9% 8901
18,500.1$ 19,279.4$
EPV Per Share
+Cash-Debt
Adjustment Per Share
345,029.3$ 38.76$ 370,145.9$ 41.58$
246,449.5$ 27.69$ 271,566.1$ 30.51$
191,682.9$ 21.53$ 216,799.6$ 24.36$ 156,831.5$ 17.62$ 181,948.1$ 20.44$
132,703.6$ 14.91$ 157,820.2$ 17.73$
Cost of Capital Rates
5%
7%
9%11%
13%
4.5% Interest Bearing Debt
1% of sales
Cash & Equiv
Cash - Debt
Shares
TTM Adjusted Income
EPV Data
Cost of Capital
Normalized Adjusted IncomeNormal. Adj. Income Growth Average Maintenance Capex
Earnings Power Value (EPV)
5 Year Annual Data Past 4 Quarterly Data
Multiyear Timeframe Adjusted
Income & Growth
Normalized Adjusted Income Possible Values for Override Box
$19,259.5
Normalized Income
Avg Adj. Income 5 yrs
19,553.0$
Company Name
Microsoft Corp MSFT10/1/2009
MSFT AAPL HPQ DELL Industry Ranking
Stock Price 24.95 183.62 46.33 15.25 NA NA
Market Cap (millions) 222,760 164,490 109,850 29,820 NA NA
52-Week High 27.47 188.90 48.00 17.26 NA NA
52-Week Low 14.87 78.20 25.39 7.84 NA NA
% off 52-Week Low 67.8% 134.8% 82.5% 94.5% NA NA
Valuation Ratios
P/E Ratio (TTM) 15.88 32.39 15.9 16.22 14.5 4
Price to Sales (TTM) 3.93 4.8 0.96 0.56 0.74 2
Price to Book (MRQ) 5.79 6.41 2.71 6.45 3.72 3
Price to Tangible Book (MRQ) 9.08 6.56 82.55 13.38 10.72 3
Price to Cash Flow (TTM) 13.4 28.55 9.36 11.81 4.61 2
Price to Free Cash Flow (TTM) 20.06 16.31 12.9 14.04 71.55 1
Enterprise Value/Revenue (TTM) 3.51 4.1 0.99 0.4 NA NA
Enterprise Value/EBITDA (TTM) 8.812 18.859 7.481 5.71 NA NA
Dividends
Dividend Yield 2.01 NA 0.68 NA 0.13 1
Dividend Yield - 5 Year Avg. 3.96 0 0.91 0 1.96 1
Dividend 5 Year Growth Rate 26.58 0 0 0 14.67 1
Payout Ratio (TTM) 31.71 0 10.46 0 31.02 1
Growth Rates
Sales (MRQ) vs Qtr. 1 Yr. Ago -17.29 11.7 -2.07 -22.33 -9.99 3
Sales (TTM) vs TTM 1 Yr. Ago 3.93 4.8 0.96 0.56 0.74 2
Sales - 5 Yr. Growth Rate 9.67 39.23 10.13 8.07 9.14 3
EPS (MRQ) vs Qtr. 1 Yr. Ago -25.55 13.89 -15.77 -21.85 0.11 4
EPS (TTM) vs TTM 1 Yr. Ago -13.36 11.88 -7.71 -29.72 0 3
EPS - 5 Yr. Growth Rate 16.65 124.7 31.39 4.32 3.4 3
Capital Spending - 5 Yr. Growth Rate 22.98 48.87 8.43 -14.54 30.23 2
Financial Strength
Quick Ratio (MRQ) 1.8 2.09 1.03 1.41 2.27 2
Current Ratio (MRQ) 1.82 2.11 1.17 1.46 2.44 2
LT Debt to Equity (MRQ) 9.47 0 33.45 73.38 12.11 3
Total Debt to Equity (MRQ) 14.53 0 41.36 74.44 18.21 3
Profitability
Gross Margin (TTM) 79.2 35.49 23.35 18.11 16.63 1
Gross Margin - 5 Yr. Avg. 81.06 31.83 24 17.94 54.11 1
EBITD Margin (TTM) 37.94 21.84 12.23 6.04 0 1
EBITD - 5 Yr. Avg. 38.98 16.82 9.65 7.33 25.11 1
Operating Margin (TTM) 33.56 19.98 8.27 4.76 4.42 1
Operating Margin - 5 Yr. Avg. 36.03 15.4 6.92 6.43 21 1
Pre-Tax Margin (TTM) 33.92 21.2 7.69 4.66 4.16 1
Pre-Tax Margin - 5 Yr. Avg. 38.82 17.24 7.19 6.86 22.22 1
Net Profit Margin (TTM) 24.93 14.97 6.25 3.43 2.78 1
Net Profit Margin - 5 Yr. Avg. 28.01 12.15 5.76 5.14 13.49 1
Management Effectiveness
Return On Assets (TTM) 19.34 12.96 7.08 6.29 2.14 1
Return On Assets - 5 Yr. Avg. 19.63 13.96 6.62 11.93 10.01 1
Return On Investment (TTM) 31.08 19.18 11.88 15.34 3.14 1
Return On Investment - 5 Yr Avg 28.63 21.57 11.36 33.97 14.65 2
Return On Equity (TTM) 38.42 22.74 18.3 48.86 3.81 2
Return On Equity - 5 Yr. Avg. 33.44 24 14.59 60.76 16.08 2
Efficiency
Revenue/Employee (TTM) 628355 1080063 365125 701908 11391701 NA
Net Income/Employee (TTM) 156656 161719 22816 24052 337100 NA
Receivable Turnover (TTM) 4.72 16.12 6.97 9.06 2.76 NA
Inventory Turnover (TTM) 14.28 48.21 12.82 45.26 3.21 NA
Asset Turnover (TTM) 0.78 0.87 1.13 1.84 0.29 4
ticker
all figures in $Mil Enter Competitor Tickers Into Boxes Below
Company Name
Microsoft Corp www.oldschoolvalue.com
Figures in Millions except per share values
TTM Error Error Error Error Error Error Error Error Error Error TTM Error Error Error Error Error Error Error Error Error Error
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Return on Assets (ROA) Return on Equity (ROE)
Current Ratio Quick Ratio
10/1/2009
ticker
MSFT
Net Profit Margin Cash Flow (Continuing Operations)
Magic Formula Investing -- Return on Capital Magic Formula Investing -- Earnings Yield
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0 0 0 0 0 0 0 0 0 0 0
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
10/1/2009 www.oldschoolvalue.com Figures in Millions except per share values
Criteria over 10yrs Value Points User Points
> 25% or 50% depending on
moat11% 0
> 66% 17% 0
Criteria over 10yrs Value Points User Points
10% 12.0% 1
30% 82.1% 2
15% 37.1% 2
10% 28.7% 2
10% 13.8% 1
Criteria over 10yrs Value Points User Points
15% 4.1% 0
13% 20.8% 2
10% 9.2% 0
7% 27.9% 2
Consistent over 10yrs N/A N/A
Consistent over 10yrs N/A N/A
Criteria for TTM Value Points User Points
> 1.5 x current liabilities 1.8 1
N/A 5.67 N/A N/A
< 100% 96.9% 1
> 10% 36.6% 2
< 30% 9% 2
< 15% of assets 18.3% 0
User Points Max Points
max 2
max 2
max 2
max 2
max 2
max 2
User Points Max Points
max 2
max 1
max 1
max 1
max 1
max 2
max 1
max 1
Comment
a) Yes
b) Yes
c) Yes
d) No
Compete on price? (1 for no, 0 for yes)
Barriers of entry to the business?
Diverse customers? (1 for diverse, 0 for concentrated)
Involved in competition? Monopoly, duopoly, crowded
Company has a recurring revenue stream?
Capital intensive company? (1 for no, 0 for yes)
Network effect? E.g. eBay
Business Model
Growth due to:
a) existing product / existing market (yes/no)
b) existing product / new market (yes/no)
c) new product / existing market (yes/no)
d) new product / new market (yes/no)
Able to increase prices and retain customers?
Competitive Advantage
Stable market share?
Dominant company in industry, segment?
Low barriers to entry and exit?
Experience goods (brand effect, trademarks)
High switching costs?
Current assets > 1.5 x current liabilities
Median FCF/Sales
Consistent ROE (manually check)
Consistent ROA (manually check)
Median Gross Margin
Median Operating Margin
Median Net Margin
Median EPS growth
Business and Management Performance
CROIC is postive and capable of paying off financing
Median FCF growth positive and consistent
Balance Sheet
Valuation
DCF Valuation Discount
Graham Intrinsic Value Discount
Margins, Profit and Growth
Company Name
Microsoft Corp
Company Assessment: Quantitative
MSFT
ticker
Intangibles % of assets
Company Assessment: Qualitative
Microsoft Corporation is engaged in developing, manufacturing, licensing, and supporting a range of software products and services for
different types of computing devices. The Company operates in five business segments: Client, Server and Tools, Online Services
Business, Microsoft Business Division, and Entertainment and Devices Division. The software products and services include operating
systems for servers, personal computers, and intelligent devices; server applications for distributed computing environments;
information worker productivity applications; business solutions applications; computing applications; software development tools, and
video games. The Company provide consulting and product and solution support services, and trains and certifies computer system
integrators and developers. It also designs and sells hardware, including Xbox 360 video game console, the Zune digital music and
entertainment device, and peripherals.
Median Revenue growth
Debt to Equity
FCF to Debt
Capitalization Ratio
Price to Book ratio < 2
Cash growth from Operations
Comment
User Points Max Points
max 1
max 1
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User Points Max Points
max 1
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max 1
Total Points out of 5
0.0
4.0
2.0
3.0
0.0
0.0
0.0
Low Risk High Growth Under Valued Well Managed Good Financial Health Strong Moat
3.7 2.0 2.5 3.5 3.5 4.0
3.7 2.0 2.5 3.5 3.5 4.0
no
no
no
Comment
Comment
Comment
no
no
no
no
no
no
no
no
DCF, graham, compare to peers
maybe
no
no
Compensation levels compared to sales?
Industry
Boring industry? (1 for slow, 0 for fast industry)
Can company adapt to changing industry environment?
Industry leader or lagger? (1 for leader, 0 for lagger)
Management
High insider ownership?
Candid management on positives and negatives?
Management performance at previous jobs?
Psychological Factors to Consider. Not Weighted.
Recency bias?
Hindsight bias?
Framing issues correctly and in different manners?
Is there a data framing bias?
Am I too overconfident on the situation?
Performed probability analysis for -ve factors?
Too much loss aversion?
Sunk cost mentality?
Slow in changing opinion?
Psychological denial ?
Bias from commitment and consistency tendency?
Pavlovian association?
Social proof bias?
Status quo bias?
False consensus bias?
Category
Valuation
Margins, Profit and Growth
Business and Management Performance
Balance Sheet
Do I have an exit plan?
Competitive Advantage
Business Model
Management
0.0
1.0
2.0
3.0
4.0
5.0Low Risk
High Growth
Under Valued
Well Managed
Good Financial Health
Strong Moat