Microsoft Corporation is a software company that operates in five segments including Windows, Server and Tools, Online Services, Microsoft Business, and Entertainment and Devices. It develops, licenses, and supports a range of software products and services and also designs and sells hardware. Some of its major products include Windows operating systems, server applications, productivity applications, and business solutions. In 2012, Microsoft acquired Yammer and PhoneFactor.

2. Exchange: NYSE
Stock: McDonald's
Corporation Industry- Restaurants
Employees: 4,40,000

3. • McDonald’s Corporation franchises and operates
McDonald’s restaurants in the global restaurant industry.
• These restaurants serve a menu at various price points
providing value in 119 countries globally.
• As of December 31, 2011, of the 33,510 restaurants in 119
countries 27,075 were franchised or licensed (including
19,527 franchised to conventional franchisees, 3,929
licensed to developmental licensees and 3,619 licensed to
foreign affiliates (affiliates)-primarily Japan) and 6,435 were
operated by the Company.
• McDonald’s menu includes hamburgers and cheeseburgers,
Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several
chicken sandwiches, Chicken McNuggets, Snack Wraps,
French fries, salads, oatmeal, shakes, McFlurry desserts,
sundaes, soft serve cones, pies, soft drinks, coffee, McCafe
beverages and other beverages.

5. P/E Ratio and valuation for the current
year
PRICE
COMPANY INDUSTRY S&P 500
• Earnings per share (EPS) Ratio = NET RATIOS
INCOME/WEIGHTED AVERAGE SHARES
Current
18.9 27.2 43.7
P/E Ratio
5,464.8/1,020.2 =5.357576946 P/E Ratio
5-Year NA 10.7 12.4
High
• P/E Ratio- MPS/EPS P/E Ratio
NA 3.1 2.9
5-Year Low
101.42/5.36=18.92
Price/Sales
3.69 2.93 2.49
Ratio
• Valuation
Price/Book
6.65 7.34 6.99
Value
101.42*27.2/18.92=145.8046512
Price/Cash
14.6 15 15.7
Flow Ratio

7. Cash from Operating Activities
2012 2011 2010 2009 2008
Net Income/Starting Line 5,464.8 5,503.1 4,946.3 4,551.0 4,313.2
(+)Non cash expenses
Depreciation/Depletion 1,488.5 1,415.0 1,276.2 1,216.2 1,207.8
Amortization 0.0 0.0 0.0 0.0 0.0
Deferred Taxes 134.5 188.4 -75.7 203.0 101.5
Non-Cash Items 1.4 3.6 323.8 -390.2 48.9
(+) Changes in Working
Capital
Changes in Working
-123.1 40.0 -129.0 171.0 245.8
Capital
Cash from Operating
6,966.1 7,150.1 6,341.6 5,751.0 5,917.2
Activities

8. 2012 2011 2010 2009 2008
Net cash provided by
operating activity 6,966.1 7,150.1 6,341.6 5,751.0 5,917.2
(-) capital expenditure
(-3,049.2) (-2,729.8) (-2,135.5) (-1,952.1) (-2,135.7)
(-) dividend
(-2,896.6) (-2,609.7) (-2,408.1) (-2,235.5) (-1,823.4)
Free cash flow 1020.3 1810.6 1798 1563.4 1958.1

10. CAPITAL ASSETS PRICING MODEL
• Risk free rate =7%
• Rm= YTD S&P 500 = 6.38
• Beta=0.94
CAPM formula (Expected return =
Risk-free rate + Beta (Rm(?) - Risk-free).
=0.07+0.94(6.38-0.07)
=1.01*6.45
=6.5145

12. Gordon Growth Model
• Dividend Yield= 3.02
• Dividend 1Yr=13.44
• 5 Year Dividend Growth=13.86
• ROI=17.78
• Stock Value (P) = D / (k – G)
• Where:
• D= Expected dividend per share one year from now
• k= required rate of return for equity investor
• G= Growth rate in dividends.
=13.44/(17.78-13.86)
=13.44/3.92
=3.42857

13. Exchange: NYSE
Stock: International Business Machines Corp.
Industry: Diversified Computer Systems
Employees: 434,246

14. • International Business Machines Corporation (IBM) is an information
technology (IT) company.
• IBM operates in five segments: Global Technology Services (GTS), Global
Business Services (GBS), Software, Systems and Technology and Global
Financing.
• GTS provides IT infrastructure services and business process services.
• GBS provides professional services and application management
services.
• Software consists of middleware and operating systems software.
• Systems and Technology provides clients with business solutions
requiring advanced computing power and storage capabilities.
• Global Financing invests in financing assets, leverages with debt and
manages the associated risks.
• In December 2012, it acquired Kenexa.
• In February 2013, it completed the acquisition of StoredIQ.
• In March 2013, the Company acquired Star Analytics Inc.
• Effective March 19, 2013, the Company acquired Star Analytics Inc.

16. P/E Ratio and valuation for the current
year
PRICE
COMPANY INDUSTRY S&P 500
• RATIOS
Earnings per share (EPS) Ratio = NET
INCOME/WEIGHTED AVERAGE SHARES Current P/E
14.5 12.6 43.7
Ratio
16,604.0/ 1,155.45=14.37015881 P/E Ratio 5-
NA 0.2 24.1
Year High
• P/E Ratio- MPS/EPS
P/E Ratio 5-
NA 0 2.6
Year Low
209.41/14.37=14.57
Price/Sales
2.23 2.01 2.49
• Valuation Ratio
Price/Book
12.41 10.58 6.99
Value
209.41*12.6/14.57
=181.0958133 Price/Cash
11 9.5 15.7
Flow Ratio

18. Cash from Operating Activities
2012 2011 2010 2009 2008
Net Income/Starting Line 16,604.0 15,855.0 14,833.0 13,425.0 12,334.0
(+)Non cash expenses
Depreciation/Depletion 3,392.0 3,589.0 3,657.0 3,773.0 4,140.0
Amortization 1,284.0 1,226.0 1,174.0 1,221.0 1,310.0
Deferred Taxes 797.0 1,212.0 1,294.0 1,773.0 1,900.0
Non-Cash Items -41.0 355.0 -172.0 163.0 321.0
(+) Changes in Working
Capital
Changes in Working Capital -2,451.0 -2,390.0 -1,237.0 418.0 -1,193.0
Cash from Operating
19,585.0 19,847.0 19,549.0 20,773.0 18,812.0
Activities

19. 2012 2011 2010 2009 2008
Net cash provided by
operating activity 19,585.0 19,847.0 19,549.0 20,773.0 18,812.0
(-) capital expenditure
(-4,717.0) (-4,667.0) (-4,754.0) (-4,077.0) (-4,887.0)
(-) divident
(-3,773.0) (-3,473.0) (-3,177.0) (-2,860.0) (-2,585.0)
Free cash flow 11095 11707 11618 13836 11340

21. CAPITAL ASSETS PRICING MODEL
• Risk free rate =7%
• Rm= YTD S&P 500= 0.37
• Beta=0.70
CAPM formula (Expected return =
Risk-free rate + Beta (Rm(?) - Risk-free).
=0.07+0.70(0.37-0.07)
=0.77*0.3
=0.231

23. Gordon Growth Model
• Dividend Yield=1.62
• Dividend 1Yr=13.79
• 5 Year Dividend Growth=17.08
• ROI=22.19
• Stock Value (P) = D / (k – G)
• Where:
• D= Expected dividend per share one year from now
• k= required rate of return for equity investor
• G= Growth rate in dividends.
=13.79/(22.19-17.8)
=13.79/4.39
=3.14123

24. Exchange: NASDAQ
Stock: Google Inc
Industry: Internet Information Providers
Employees: 53,861

25. • Google Inc. (Google) is a global technology company focused on
improving the ways people connect with information.
• The Company generates revenue primarily by delivering online
advertising.
• As of December 31, 2011, the Company’s business was focused on areas,
such as search, advertising, operating systems and platforms, and
enterprise.
• Businesses use its AdWords program to promote their products and
services with targeted advertising.
• In addition, the third parties that comprise the Google Network use its
AdSense program to deliver relevant advertisements that generate
revenue.
• In May 2012, Google acquired Motorola Mobility Holdings, Inc.
• As of January 2012, over 90 million people had joined Google+.
• In April 2011, the Company acquired PushLife.
• On July 31, 2012, it acquired marketing start-up Wildfire.
• In September 2012, it acquired VirusTotal and Nik Software.
• In February 2013, Google Inc acquired Channel Intelligence, Inc. one of
the consolidated companies of ICG Group Inc.

27. P/E Ratio and valuation for the current
year
PRICE COMPAN
INDUSTRY S&P 500
• Earnings per share (EPS) Ratio = NET RATIOS Y
INCOME/WEIGHTED AVERAGE SHARES Current
24.1 18.8 43.7
P/E Ratio
10,737.0/332.31=32.3109229 P/E Ratio
5-Year 46.6 33.7 24.1
High
• P/E Ratio- MPS/EPS
P/E Ratio
5-Year 18 12.4 2.6
783.05/32.31=24.2355308 Low
Price/Sale
5.14 7.01 2.49
• Valuation s Ratio
783.05*18.8 /24.23=607.5666529 Price/Boo
3.6 4.79 6.99
k Value
Price/Cash
18.8 39.9 15.7
Flow Ratio

29. Cash from Operating Activities
2012 2011 2010 2009 2008
Net Income/Starting Line 10,737.0 9,737.0 8,505.0 6,520.45 4,226.86
(+)Non cash expenses
Depreciation/Depletion 1,988.0 1,396.0 1,067.0 1,240.03 1,212.24
Amortization 1,988.0 1,396.0 1,067.0 1,240.03 1,212.24
Deferred Taxes -266.0 343.0 9.0 -268.06 -224.65
Non-Cash Items 2,288.0 2,004.0 1,270.0 1,053.52 2,023.53
(+) Changes in Working
Capital
Changes in Working Capital 898.0 630.0 -99.0 485.99 327.23
Cash from Operating
16,619.0 14,565.0 11,081.0 9,316.2 7,852.86
Activities

30. 2012 2011 2010 2009 2008
Net cash provided by
operating activity 16,619.0 14,565.0 11,081.0 9,316.2 7,852.86
(-) capital expenditure
-3,273.0 -3,438.0 -4,018.0 -809.89 -2,358.46
(-) dividend
0.0 0.0 0.0 0.0 0.0
Free cash flow 13346 11127 7063 8506.31 5494.4

32. CAPITAL ASSETS PRICING MODEL
• Risk free rate =7%
• Rm=(YTD)S&P 500=1.55
• Beta=0.39
CAPM formula (Expected return =
Risk-free rate + Beta (Rm(?) - Risk-free).
=0.07+0.39(1.55-0.07)
=0.46* 1.48
=0.6808

34. Gordon Growth Model
• Dividend Yield= --
• Dividend 1Yr= --
• 5 Year Dividend Growth= --
• ROI=ROI: 15.08
• Stock Value (P) = D / (k – G)
• Where:
• D= Expected dividend per share one year from now
• k= required rate of return for equity investor
• G= Growth rate in dividends.
Zero growth

35. Exchange: NASDAQ
Stock: Microsoft Corporation
Industry: Application Software
Employees: 94,000

36. • Microsoft Corporation is engaged in developing, licensing and
supporting a range of software products and services.
• The Company also designs and sells hardware, and delivers online
advertising to the customers.
• It operates in five segments: Windows & Windows Live Division
(Windows Division), Server and Tools, Online Services Division (OSD),
Microsoft Business Division (MBD), and Entertainment and Devices
Division (EDD).
• The Company' products include operating systems for personal
computers (PCs), servers, phones, and other intelligent devices; server
applications for distributed computing environments; productivity
applications; business solution applications; desktop and server
management tools.
• In July 2012, Comcast Corp. acquired the Company's 50% stake in
MSNBC.com.
• In October 2012, it acquired PhoneFactor Inc.
• On July 18, 2012, it acquired Yammer, Inc. (Yammer).
• Effective March 19, 2013, it acquired Netbreeze GmbH.

38. P/E Ratio and valuation for the current
year
PRICE
COMPANY INDUSTRY S&P 500
• Earnings per share (EPS) Ratio = NET RATIOS
INCOME/WEIGHTED AVERAGE SHARES
Current P/E
15.7 21.6 43.7
Ratio
16,978.0/ 8,506.0 =1.996002822
P/E Ratio 5-
19.1 10.4 24.1
Year High
• P/E Ratio- MPS/EPS
P/E Ratio 5-
8.2 2.2 2.6
Year Low
28.70/
1.996002822=14.37873719 Price/Sales
3.3 7.13 2.49
Ratio
• Valuation Price/Book
3.31 4.49 6.99
28.70* 21.6/14.38 =43.10987483 Value
Price/Cash
12.8 17.1 15.7
Flow Ratio

40. Cash from Operating Activities
2012 2011 2010 2009 2008
Net Income/Starting Line 16,978.0 23,150.0 18,760.0 14,569.0 17,681.0
(+)Non cash expenses
Depreciation/Depletion 2,967.0 2,766.0 2,673.0 2,562.0 2,056.0
Amortization 0.0 0.0 0.0 0.0 0.0
Deferred Taxes 954.0 2.0 -220.0 762.0 935.0
Non-Cash Items 10,901.0 4,079.0 2,199.0 1,322.0 3,375.0
(+) Changes in Working
Capital
Changes in Working Capital -174.0 -3,003.0 661.0 -178.0 -2,435.0
Cash from Operating
31,626.0 26,994.0 24,073.0 19,037.0 21,612.0
Activities

41. 2012 2011 2010 2009 2008
Net cash provided by
operating activity 31,626.0 26,994.0 24,073.0 19,037.0 21,612.0
(-) capital expenditure
-2,305.0 -2,355.0 -1,977.0 -3,119.0 -3,182.0
(-) dividend
-6,385.0 -5,180.0 -4,578.0 -4,468.0 -4,015.0
Free cash flow 22936 19459 17518 11450 14415

43. CAPITAL ASSETS PRICING MODEL
• Risk free rate =7%
• Rm= YTD S&P 500= -1.32
• Beta=0.95
CAPM formula (Expected return =
Risk-free rate + Beta (Rm(?) - Risk-free).
=0.07+0.95((-1.32)-0.07)
=1.02*(-1.39)
= -1.4178

45. Gordon Growth Model
• Dividend Yield= 3.21%
• Dividend 1Yr= % 25.00
• 5 Year Dividend Growth= 14.87%
• ROI=16.84
• Stock Value (P) = D / (k – G)
• Where:
• D= Expected dividend per share one year from now
• k= required rate of return for equity investor
• G= Growth rate in dividends.
=25.00/(16.87-14.87)
=25.00/2
=12.5