Overall Issue: Sun MicrosystemsOverall Issue: Sun MicrosystemsA comprehensive analysis conducted on the financial statements and condition of Sun Microsystems revealed key issues deemed to be of great importance to shareholders. After reviewing the research findings and analysis, it appears that Sun Microsystems' finances have not maintained a consistent slope. In fact, it certainly experienced ups and downs in terms of ROI and equity over the course of a four-year evaluation spanning the years 1998 to 2001. In an effort to decipher issues within the company's operations the company, subsequent report data and ratios offered considerable clues. To collect relevant data, annual percentage change in net income per diluted common share, net income/net revenue, key income statements to net revenue, return on equity, price/earnings (P/E) E) and the book values ​​per share for each year were examined. For Sun Microsystems to achieve greater return on its assets, it must consider an alternative approach to operating its organization. The following is a comprehensive view of Sun Microsystems' financials from 1998 to 2001. Sun Microsystems experienced significant fluctuations in performance. The annual percentage change in net income per diluted common share and profit margins was as follows: Table 1 Percentage change in net income per diluted common share 1999 $0.31 2000 $0.55 2001 $0.27 1998 0. 24 1999 $0.31 $2000. $55 $0.07 $0.24 -0.28+29.2% +77.4% -50.9%Table 2Profit margin1998 1999 2000 20017.66% 8.72% 11.79% 5.08% Sun Microsystems experienced considerable growth in net income between 1999 and 2000, leading to a sharp decline between 2000 and 2001. Income statements show an increase in revenue in 2001, contradicting the data above. Further analysis provides an explanation for the slowdown in revenue growth despite its increase. The ratios of several expenses to net revenues were taken for 2000 and 2001. Table 3Percentage of net revenues2000 2001Net revenues $15,721 $18,250Cost of sales $7,549 48.02% $10,041 55.02%Research and development 1,630 10.37 2,016 11.05S, G and A 4,072 25.90 4,544 24.90 Provision for income taxes 917 5.83 603 3.30The main factor contributing to the decline in return on equity (25.37% to 8.73%) was the decline in profit margin (11.79% versus 5.08%). The decrease in asset turnover (from 1.11 to 1.00) contributed slightly to the decline, as did the drop in the debt ratio (from 48.4% to 41.8%). Return ratios of assets and return on equity support the loss of shareholders. ' equity. Return on assets fell from 13.1 in 2000 to 5.1 in 2001 and return on equity fell from 25.4 in 2000 to 8.7 in 2001. Return on equity represents the return on assets divided by the difference of 1 and debts/assets..