Google Inc - Essay Example

Google Inc. Financial Analysis Insert Insert Financial Calculations Return on assets Net income = 251,998 Total assets = 454,122 Return on assets =13220/454,122 = 0.029Return on equity return on equity = net income/ shareholder’s EquityNet income = 13220Shareholder’s equity = 357,758Return on equity = 65,220/ 357,758 = 0.182 Gross profit margin gross profit margin = gross income/sales gross income = 37,195Sales = 63,126Gross profit margin = 37,195/ 63,126 = 0.589Debt to equity ratio debt to equity ratio = total debt/total shareholders’ equityTotal debt = 21,976Total shareholders’ equity =357,758Debt to equity ratio = 21,976/357,758 = 0.

061Debt ratio(A) Total debt to asset ratio = total debt/total assets total debt =21,976Total assets =454,122Total debt to asset ratio = 21,976/ 454,122 =0.048(B) Total debt to equity ratio = total debt/ total shareholders’ equityTotal debt = 21,976Total shareholders’ equity = 357,758Total debt to equity ratio = 21,976/ 357,758 = 0.061Current ratio current assets = 294,963Current liabilities = 63,750Quick ratio Quick ratio = Company’s current assets – Company inventory/current liabilities Current assets = 294,963Current liabilities = 63, 750Inventory = 1,291Current assets – inventory = 294,963 – 1,291 = 293,672Quick ratio = 293,672/63,750 = 4.

607Inventory turnover Inventory turnover = cost of goods sold/ inventoryInventory = 1,291Cost of goods = 25,931Inventory turnover = 25,931/1,291 =20.086Total asset turnoverTotal asset turnover = sales / total assetsSales = 63,126Total assets=454,122Total asset turnover = 63,126/ 454,122 = 0.139Price earnings ratio Price earnings ratio = Current market price (per share)/ total earnings per shareMarket price per share = 533.21Earnings per share = net income for the company the available to shareholders/number of shares outstanding earnings per share = 41.

518Price earnings ratio = 533.21/41.518 = 12.838AnalysisInventory turnoverInventory turnover reduced from 45.46 for the period ending at June 2013 to 20.08 for the period ending June 2014 below the average of the company. Since the inventory measures the fastness of a company to turn over the stock, it means that Google Inc. Company will not have enough stock to meet the demand for the customers.Return on assetsThe return on assets has decreased from 17.09% for the year ending June 2013 to 2.9% for the year ending June 2014.

Thus Google Inc. Company has great reduction in the net income.Return on equityReturn on equity is a factor that measures the company’s ability to obtain profits from shareholders’ equity, and it shows how the company has used real investment funds for growth generation. The return on investment for Google did increase from 16.30% to 18.2% for the periods ending 31 December 2013 to 30 June 2014 respectively. Hence, Google Inc. Company is on average.Gross profit marginGross profit margin shows the percentage for availability of revenue to cover cost of operating and expenditures.

The gross profit margin has increased from 43.4% to 58.9% for years 2013 and 2014 respectively. Hence, there is improved profit margin.Debt to equity ratioDebt to equity ratio for Google Inc. Company has deteriorated from 0.27 to 0.061 for years 2013 and 2014 respectively.Current ratioGoogle Inc. company current ratio has slightly improved from 4.58 to 4.626 for years 2013 and 2014 respectively.Quick ratiosGoogle Inc. company quick ratios have slightly improved from 4.25 to 4.607 for years 2013 and 2014 respectively.

Total asset turnoverGoogle Inc. company asset ratio has reduced from 17.09% to 13.9% for years 2013 and 2014 respectivelyPrice earnings ratioGoogle Inc. company price-earnings ratio has reduced from 30.70 to 12.84 for years 2013 and 2014 respectively.RecommendationsGoogle Inc. Company is making average profits, and the financial advantage is poor so the company should attempt to magnify or increase profitability by reducing operating costs Other methods of analyzing financial statements aside from ratio analysisVertical analysisIt analyses financial statements that are operated on a single period.

On income statements, correlation is represented by percentage of each account that is separate to net sales. Express accounts apart from net sales as a percentage of net sales. Net income is calculated as a percentage of net sales that has not been used on expenses.Horizontal analysisIt makes comparison of data for two periods. Users of financial statements review changes in the data that much like an indicator. Analysts determine for growth in assets, net income, revenue, in addition to decreasing in liabilities and expenses.

In determining changes in absolute dollar need users to deduct base figure from the current number. To determine percentage need users to divide by the value now and multiply by 100.Trend analysisHelps to review financial statements of three or more years. The earliest years in the data represent the base year, and dollars can be used for consecutive periods. For comparability, analysts use percentages. Improved financial statements include decreased expenses and an increase in income.ReferencesNASDAQ: GOOLE INC. (2014). Financial Statement for Google Inc.

Retrieved OCT 15, 2014, from Google Inc.: https://www.google.com/finance?fstype=bi&cid=694653