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Simple Analysis and Parsimonious Forecasting: An Illustration of Microsoft

Simple Analysis and Parsimonious Forecasting: An Illustration of Microsoft. Di (Wendy) Wang. Return on Enterprise Operations. EPAT. EPAT. Sales. RNEA=. =. Avg (NEA). Sales. Avg (NEA). =. EPM*EATO. Disaggregating Return on Net Enterprise Assets. Three Steps.

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Simple Analysis and Parsimonious Forecasting: An Illustration of Microsoft

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  1. Simple Analysis and Parsimonious Forecasting: An Illustration of Microsoft Di (Wendy) Wang

  2. Return on Enterprise Operations EPAT EPAT Sales RNEA= = Avg(NEA) Sales Avg(NEA) = EPM*EATO Disaggregating Return on Net Enterprise Assets

  3. Three Steps

  4. Parsimonious-Revenues We assume that the expected sales growth rate should be an average of the last three years 7.65% reduced to 6.16% due to expected increasing competition.

  5. Parsimonious-EPM (from Sales) We assume that the expected EPM should be an average of the last two years 29.56% reduced to 27% due to expected increasing competition.

  6. Parsimonious-EATO We assume that the expected EATO should be an average of the last two years 8.66 reduced slightly to 8.56 due to expected increasing competition.

  7. Parsimonious Assumptions

  8. ParsimoniousAssumptions-Sales

  9. ParsimoniousAssumptions-EPM

  10. ParsimoniousAssumptions-EATO

  11. Parsimonious Assumptions

  12. Sources: • Microsoft Form10-K For the Fiscal Year Ended June 30, 2011 • http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=8062497 • Microsoft Form10-K For the Fiscal Year Ended June 30, 2012 • http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=8733512 • Microsoft Form10-K For the Fiscal Year Ended June 30, 2013 • http://apps.shareholder.com/sec/viewerContent.aspx?companyid=MSFT&docid=9422625

  13. THANK YOU!

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