How would MSFT's Balance Sheet appear if they purchased $200B of its own stock?

Currently, the share price of MSFT is around $25. Their market cap is
$214B. Their book value (total stockholder's equity) is around
$46B.
Suppose that they wanted to issue debt to purchase back its own
shares. Their debt is very small, and because theire financial data
is so healthy, they want to borrow $200B from aspiring bond investors
who want MSFT bonds. Of course, after raising this much leverage,
their debt/equity would be more than 4.3x.
I have quite a few questions as to what this transaction would do to
their balance sheet. I would greatly appreciate it if you could give
me assistance here. NOTE: I'm not a student, but just an armchair
economist/econometricist.
Q1: I was told that the book value would DECREASE if they were to buy
back their shares. I realize that their market cap would DECREASE if
MSFT bought back their own shares, becuase there are fewer shares in
the open market. Basically, what would happen to their balance sheet
if (a) MSFT rased $200B in leverage, and (b) they bought back their
own shares at $25?
Q2: Who would then own the corporation, and, thus, enjoy the retained
earnings?
Q3: What is *PREVENTING* from MSFT from becoming private again? By
purchasing its own shares, they would be doing their shareholders a
big favor.
Here is the most recent balance sheet of MSFT below.
Period Ending 30-Jun-10
Assets
Current Assets
Cash And Cash Equivalents 5,505,000  
Short Term Investments 31,283,000  
Net Receivables 15,198,000  
Inventory 740,000  
Other Current Assets 2,950,000  
Total Current Assets 55,676,000  
Long Term Investments 7,754,000  
Property Plant and Equipment 7,630,000  
Goodwill 12,394,000  
Intangible Assets 1,158,000  
Accumulated Amortization -  
Other Assets 1,501,000  
Deferred Long Term Asset Charges -  
Total Assets 86,113,000  
Liabilities
Current Liabilities
Accounts Payable 8,564,000  
Short/Current Long Term Debt 1,000,000  
Other Current Liabilities 16,583,000  
Total Current Liabilities 26,147,000  
Long Term Debt 4,939,000  
Other Liabilities 7,445,000  
Deferred Long Term Liability Charges 1,407,000  
Minority Interest -  
Negative Goodwill -  
Total Liabilities 39,938,000  
Stockholders' Equity
Misc Stocks Options Warrants -  
Redeemable Preferred Stock -  
Preferred Stock -  
Common Stock 62,856,000  
Retained Earnings -16,681,000
Treasury Stock -  
Capital Surplus -  
Other Stockholder Equity -  
Total Stockholder Equity 46,175,000  
Net Tangible Assets 32,623,000  
Reply to
2.7182818284590...
Currently, the share price of MSFT is around $25. Their market cap is $214B. Their book value (total stockholder's equity) is around $46B.
Suppose that they wanted to issue debt to purchase back its own shares. Their debt is very small, and because theire financial data is so healthy, they want to borrow $200B from aspiring bond investors who want MSFT bonds. Of course, after raising this much leverage, their debt/equity would be more than 4.3x.
I have quite a few questions as to what this transaction would do to their balance sheet. I would greatly appreciate it if you could give me assistance here. NOTE: I'm not a student, but just an armchair economist/econometricist.
Q1: I was told that the book value would DECREASE if they were to buy back their shares. I realize that their market cap would DECREASE if MSFT bought back their own shares, becuase there are fewer shares in the open market. Basically, what would happen to their balance sheet if (a) MSFT rased $200B in leverage, and (b) they bought back their own shares at $25?
Q2: Who would then own the corporation, and, thus, enjoy the retained earnings?
Q3: What is *PREVENTING* from MSFT from becoming private again? By purchasing its own shares, they would be doing their shareholders a big favor.
Here is the most recent balance sheet of MSFT below.
Period Ending 30-Jun-10
Assets Current Assets Cash And Cash Equivalents 5,505,000 Short Term Investments 31,283,000 Net Receivables 15,198,000 Inventory 740,000 Other Current Assets 2,950,000
Total Current Assets 55,676,000 Long Term Investments 7,754,000 Property Plant and Equipment 7,630,000 Goodwill 12,394,000 Intangible Assets 1,158,000 Accumulated Amortization - Other Assets 1,501,000 Deferred Long Term Asset Charges -
Total Assets 86,113,000
Liabilities Current Liabilities Accounts Payable 8,564,000 Short/Current Long Term Debt 1,000,000 Other Current Liabilities 16,583,000
Total Current Liabilities 26,147,000 Long Term Debt 4,939,000 Other Liabilities 7,445,000 Deferred Long Term Liability Charges 1,407,000 Minority Interest - Negative Goodwill -
Total Liabilities 39,938,000
Stockholders' Equity Misc Stocks Options Warrants - Redeemable Preferred Stock - Preferred Stock - Common Stock 62,856,000 Retained Earnings -16,681,000 Treasury Stock - Capital Surplus - Other Stockholder Equity -
Total Stockholder Equity 46,175,000
Net Tangible Assets 32,623,000
Reply to
2.7182818284590...
How would MSFT's Balance Sheet appear if they purchased $200B of its own stock?
Currently, the share price of MSFT is around $25. Their market cap is $214B. Their book value (total stockholder's equity) is around $46B.
Suppose that they wanted to issue debt to purchase back its own shares. Their debt is very small, and because theire financial data is so healthy, they want to borrow $200B from aspiring bond investors who want MSFT bonds. Of course, after raising this much leverage, their debt/equity would be more than 4.3x.
I have quite a few questions as to what this transaction would do to their balance sheet. I would greatly appreciate it if you could give me assistance here. NOTE: I'm not a student, but just an armchair economist/econometricist.
Q1: I was told that the book value would DECREASE if they were to buy back their shares. I realize that their market cap would DECREASE if MSFT bought back their own shares, becuase there are fewer shares in the open market. Basically, what would happen to their balance sheet if (a) MSFT rased $200B in leverage, and (b) they bought back their own shares at $25?
Q2: Who would then own the corporation, and, thus, enjoy the retained earnings?
Q3: What is *PREVENTING* from MSFT from becoming private again? By purchasing its own shares, they would be doing their shareholders a big favor.
Here is the most recent balance sheet of MSFT below.
Period Ending 30-Jun-10
Assets Current Assets Cash And Cash Equivalents 5,505,000 Short Term Investments 31,283,000 Net Receivables 15,198,000 Inventory 740,000 Other Current Assets 2,950,000
Total Current Assets 55,676,000 Long Term Investments 7,754,000 Property Plant and Equipment 7,630,000 Goodwill 12,394,000 Intangible Assets 1,158,000 Accumulated Amortization - Other Assets 1,501,000 Deferred Long Term Asset Charges -
Total Assets 86,113,000
Liabilities Current Liabilities Accounts Payable 8,564,000 Short/Current Long Term Debt 1,000,000 Other Current Liabilities 16,583,000
Total Current Liabilities 26,147,000 Long Term Debt 4,939,000 Other Liabilities 7,445,000 Deferred Long Term Liability Charges 1,407,000 Minority Interest - Negative Goodwill -
Total Liabilities 39,938,000
Stockholders' Equity Misc Stocks Options Warrants - Redeemable Preferred Stock - Preferred Stock - Common Stock 62,856,000 Retained Earnings -16,681,000 Treasury Stock - Capital Surplus - Other Stockholder Equity -
Total Stockholder Equity 46,175,000
Net Tangible Assets 32,623,000
Reply to
2.7182818284590...
How would MSFT's Balance Sheet appear if they purchased $200B of its own stock?
Currently, the share price of MSFT is around $25. Their market cap is $214B. Their book value (total stockholder's equity) is around $46B.
Suppose that they wanted to issue debt to purchase back its own shares. Their debt is very small, and because theire financial data is so healthy, they want to borrow $200B from aspiring bond investors who want MSFT bonds. Of course, after raising this much leverage, their debt/equity would be more than 4.3x.
I have quite a few questions as to what this transaction would do to their balance sheet. I would greatly appreciate it if you could give me assistance here. NOTE: I'm not a student, but just an armchair economist/econometricist.
Q1: I was told that the book value would DECREASE if they were to buy back their shares. I realize that their market cap would DECREASE if MSFT bought back their own shares, becuase there are fewer shares in the open market. Basically, what would happen to their balance sheet if (a) MSFT rased $200B in leverage, and (b) they bought back their own shares at $25?
Q2: Who would then own the corporation, and, thus, enjoy the retained earnings?
Q3: What is *PREVENTING* from MSFT from becoming private again? By purchasing its own shares, they would be doing their shareholders a big favor.
Here is the most recent balance sheet of MSFT below.
Reply to
2.7182818284590...

Site Timeline Threads

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.