Dear Fumi,

Thank you for your third message sent on > Date: 29 May 98 15:40:13.

This is the second of two messages from me this week. Both messages are

my reply to your third message.

> Dear Dr. M. Susan Stiner,

>

> I really thank you for sending me your second message.

> It was very useful to search in Internet about US CPA and

> Memorial Day and to understand them well. Thank you very much.

>

> My French teacher says that French and English are like

> brothers while Japanese and they are quite different. I sometimes

> find the words that have the same spelling and almost the same

> meaning or are very alike in French and English. So, I enjoy

> learning both English and French.

I think Chinese, Japanese and Korean must also be like brothers.

English and French are members of another family who live in the next

prefecture. Spanish and Italian are much like English, too. They would

also be easy languages for you to learn. Was English the first Western

language you learned? Was it hard to learn the first one? I find

Japanese incredibly difficult because it is so unlike English. Am I not

provincial?! ;)

I still laugh when I remember my husband and I standing in front of a

subway route map in Tokyo. Someone had written the destination stop in

Japanese characters. I said to Fred, "OK, you look for the [character]

that looks like a house, and I'll look for the one that looks like a

flag and a flower pot."

> Looking at Microsoft's income statements and financial

> highlights, I think Year 1997 is the most favorable year for

> it as its Revenue and Net income are increased. But I couldn't

> understand the meaning of Return on revenue. Please advise.

To answer your question:

"Return on revenue" (ROR) is a financial ratio that measures net income

as a portion of revenue. It is calculated by dividing net income by

revenue of the same year, and expressing the result as a percentage.

For 1997, it is ($11,358/$3,454). (Drop the zeros. It won't affect the

result and is easier to punch into the calculator.)

Of course, you know that the difference in revenue and net income is

expenses. Therefore, by now, you've realized that the higher the return

on revenue (sometimes called the return on sales), the better the

company is doing, in general. Since Bill's ROR has been increasing

steadily, the company must be doing better. And it seems to be.

It will be very interesting to see if the 1998 ROR continues to climb.

Bill Gates has been undergoing some intense scrutiny by the Justice

Department here for some of his business practices. There is real

pressure on Microsoft to unbundle its Internet Explorer from the rest of

the software. That would open up an opportunity for Netscape and other

browsers to compete on more even footing. We'll see if the antitrust

allegations stick. If they do, we'll see if it affects Microsoft's

"bottom line" (net income).

In this week's lesson, we mention EdgeOnline as a source of financial

accounting information. They have good, basic explanations of many

items. If you want to know more about ratio analysis, click on this:

They discuss ratio analysis and show you how to calculate many common

ratios. ROR is a profitability ratio. Unfortunately, it is not

discussed in their list. However, ROR is a very common ratio to

determine. It is of great importance to investors.

I loved your question. Keep them coming!

> In my homework, I found 53 categories and 3085 sites for

> accounting in search engine. That's quite a lot of information.

> I would like to read as much as possible.

Go to it and good luck! Which engine did you use? I assume it was

Yahoo. Just for fun, try another engine. For example:

Did you get the same number of hits? Were the locations the same?

>

>

> Best regards,

> Fumi

Sincerely,

--

Prof. M. Susan Stiner