Financial Analysis of Google
Comprehensive Analysis of Financial Ratios and Share Performance: Google
(2010, 2000 words)
The scope of this report is to analyse the financial health of Google, the pinnacle search engine in the present times. It proceeds by giving a brief introduction of the company Google Inc then heading onto the detailed assessment of financial ratios for 3 financial years such as Profit Margin, Return to Equity, Return to Assets, P/E Ratio and EPS as well as share performance. Lastly, it tells about the overall financial condition of the company with respect to the said analyses and results (ratios and share performance).
Google, Google Inc, P/E ratio, EPS, Profit Margin, Return to Equity, Return to Assets, Share …show more content…
Annual Report 2009, 2010). It has been the company policy since its very first public issue regarding non issuance of dividends in any form and according to the founders they wish to maintain the same. Instead, all profits are retained by the business to be ploughed back in future. Therefore, Dividend ratios are not applicable in the case of Google Inc (Dividend Ratio – Table 1.1).
Investor Ratios: These are the most important and relevant ratios in case of Google Inc. Investor ratios are mainly calculated for the purpose of investors who wish to invest their funds with the company. As given in Table 1.1, Return on Capital Employed tells how much the company has earned on per unit of capital employed. As mentioned before, due to the occurrence of unusual expense (refer Note 1, Table 3) in the year 2008, the earnings before interest and tax was affected leading to a lower ratio in year 2008 as compared to the year 2007. In other cases, the company has performed well as the ratios portray optimistic figures.
Earnings per share or EPS is one of the most important ratios and is used in assessing the share performance of the company as well. It is a successful indicator in showing the per share earnings generated by the company and a true indicator of the performance of the company in terms of its outstanding shares. It is worth noting that the EPS rose as much as 53.3% (estimated from Investors Ratio (EPS) – Table 1.1) in the year 2009 ($20.41) but the rise from year 2007