Reagan Lambert commented
Revenue of the Microsoft increases year by year there is upward trend in the revenue of Microsoft. Cost along with the revenue increase in the same proportion and gross profit follow it accordingly. Now if we check operating expenses. We could see that there is no major increases in sales ,General and admin expanses but there is increment in research and deployment expanses every year. Non recurring expenses are made only in the year 2012 and 2015. Now if we check operating income we can see that ,even revenue is more in year 2015 then the year 2014 but operating income is less in the year 2015 then the year 2014 this due to non recurring expenses in the year 2015. Company has no interest expenses . Behavior of net income is same as operating income we can see that ,even revenue is more in year 2015 then the year 2014 but net income is less in the year 2015 then the year 2014 this due to non recurring expenses in the year 2015. Net income applicable to share holder is consistory increase from 2012 to 2014 but it decreases in the year 2015 due to non recurring expenses in the year 2015.
Why do you feel that in order for this company to continue to make more revenue, the operating expense continues to increase? I feel that in order for a company to stay fresh with innovative products, more money does need to be spent in order to stay ahead of the competition
Answer:
when you check the income statement of the Microsoft you will realize that operating income year by year increases along with that operating expenses also increases and this is because of variable portion .So if the revenue increases then variable expanses increases so given statement that operating expense continues to increase is true. And you may be right that, in order for a company to stay fresh with innovative products, more money does need to be spent in order to stay ahead of the competition but it is not only the one reason behind the increment of operating expenses because variable expanses play major role
