Financing Proportions for Google & Microsoft

Jun 15

It’s often useful to understand how a company makes financing decisions, and where funds for investment originate. While financing decisions may not be a good indicator of likely growth or profit, they may be an effective indicator of company health.

One way to segment this analysis is

  • Internal funds
  • Net equity issues
  • Net borrowing

Gather the data

The data for this type of analysis is available on After searching for your desired company, click “Cash Flow” under “Financials”. Using that I found the cash flow details for Google and Microsoft.

Net borrowing is listed directly. Net equity issues are listed as “Sale Purchase of Stock”. In order to get the amount of investment that came from internal funds (plowback), I take the “Total Cash Flows From Investing Activities” and subtract away Dividends, Sale Purchase of Stock and Net Borrowings. I can then get the proportions by dividing each of these by the total investing amount.

I used the standard three years shown on the cash flow statement for this analysis.

Microsoft funding sources

Period Ending 29-Jun-10 29-Jun-11 29-Jun-12
Internal funds -18% 43% 62%
Net equity issues 79% 62% 13%
Net borrowing -2% -41% 0%


Google funding sources

Period Ending 30-Dec-10 30-Dec-11 30-Dec-12
Internal funds 125% 104% 110%
Net equity issues 8% 0% 0%
Net borrowing -32% -4% -10%




Based on the last three years it is observed that Microsoft much more frequently resorts to issuing stock and borrowing than Google. Also, the majority of the investment made by Google is from internal funds, even to the extent of investing savings from previous periods. They even purchased back some stock in one period to achieve a net positive equity issue.

Here’s the original spreadsheet if you want to see how I arrived at the numbers above: Sources of funds for Google and Microsoft.

One comment

  1. On review, I notice that I subtracted away dividends in my effort to find the amount of plowback, or internal funds. This would seem to be a mistake, since dividends are internal.

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