Google Financial Analysis

Google Competitive Strategy Financial Analsis 5. Have Googles business model and strategy proven to be flourishing? Should investors be impressed with the federations financial performance? How does the companys financial performance compare to that of Microsoft and hick? Please conduct a financial analysis to support your positionyou may wish to use the financial ratios presented in the Table 4. 1 of the text as a guide in doing your financial analysis of the company.Throughout the course of its life thus far as an entity, Google has enjoyed great success as one of the worlds trail search engine giants. Although the companys operations are extremely diversified, Google has taken strides since its initial offering in 2004 to establish its dominance over competitors in Internet advertising. Google continues to add products, services, and features to its arsenal, which in turn increases traffic to their websites and gives them increased opportunities to advertise.Googles original s tock price on the date of their IPO was $85, fast anterior eight years and the stock currently trades at $761. 78. Steps such as the acquisition of YouTube in 2006, the introduction of the Android in 2008, their Google TV initiative, and the go on development and sophistication of Google Apps, have all contributed to this almost 800% appreciation. While all of these strategic maneuvers have been more than satisfying for investors pockets, the bulk of Googles earnings uphold in advertising. In 2009, 96. 8% of Googles total revenue came from advertising, over half of which were ads outside the United States. It is misleading to compare Googles stock (GOOG) to that of Microsoft (MSFT) and yahoo (YHOO) solely on the basis of price, since their prices are exponentially lower than Googles because investors rely on dividend payouts rather than stock appreciation to provide returns. However, a more accurate depiction of performance kitty be observed when comparing the stock value of t he three firms on a percentage change basis.From January 2006 with December 2010, Googles stock appreciated 44. 35%. Compare this to Microsofts 6. 5%, Yahoos -57. 22%, and the S&P 500 forefingers -0. 86%. This shows that not only did Google significantly outperform its two major competitors it left the entire S&P index in the patter as well. Some other financial measures to consider are return on righteousness (ROE), earnings per share (EPS), and the current ratio. Return on fair-mindedness is a measure of the return shareholders are earning on their investment in the company. In 2010 Google reported ROE of 20. 8%, meaning that for every dollar of equity capital, they are earning over 20%. Compare this to Yahoos 9. 83% and Microsofts 43. 76%. Generally the higher the ROE, the happier the investors are. EPS on the other hand measures the companys earnings for each share of common stock outstanding. In 2010 Google boasted an EPS of $26. 69, whereas Yahoo and Microsoft reported pe r-share earnings of $0. 91 and $2. 13 respectively. This large gap can be attributed to the fact that Google has significantly less shares of common stock outstanding than the two competitors.Finally, the current ratio is a measure of the companys king to pay short-term obligations with readily available assets. In 2010 Googles current ratio of 4. 16 nearly doubled that of Yahoo and Microsoft who reported 2. 67 and 2. 13 respectively. This ratio demonstrates Googles superior liquidity in comparison with its competitors Not only has Google dominated market share in the industry, in 2010 Google was the worlds most-visited Internet site, with close to 147 million views each month.This goes hand in hand with the fact that people Google things when they need an answer, they dont Yahoo a suspicion or Bing it. Works Cited All historical stock prices, percentages, and figures were provided by Yahoo Finance. AAPL Summary for Apple Inc. Yahoo Finance. Yahoo Finance. N. p. , n. d. Web. 10 Apr. 2013. GOOG Summary for Google Inc. Yahoo Finance. Yahoo Finance. N. p. , n. d. Web. 10 Apr. 2013. YHOO Summary for Yahoo Inc. Yahoo Finance. Yahoo Finance. N. p. , n. d. Web. 10 Apr. 2013.