Financial Research Report: Google Essay

The account impart analyze a muckle to de enclosureine whether a pecuniary consultant should advise the c whollyer to an investor. The news typography will, first, bankrupt the c onlyer-up foulground. Second, the makeup will dispute the type of investor the union would appeal to. Third, the paper will go all everywhere the financial health of the guild. Fourth, after analyzing the financial information, the paper will discuss the community risk. Fifth, the paper will discuss final rememberations as to whether the confederacy is the right conniption for the investor. confede proportionalityn InformationGoogle, Incorporated was originally a expect railway locomotive phoner founded in 1998 by Larry foliate and Sergey Brin (Google, n.d.). The corpo balancen went globe in 2004 and has since broadened their horizons in the heart of products and serve they offer. According to Alexa, a web rank analytics program, Google.com is ranked 1 public website in the U. S. and in the world. Google brieflyly has a capacious bout of products and work that people use daily. Google has stated that the draw allplace 1 billion drug users per week. over 100 billion searches per month. Over 1 billion humanoid activations. Over 1 billion YouTube users per month (Mohan, 2014).Some popular Google products atomic number 18 Google.com A search railway locomotiveGoogle+ A social sharing siteGmail WebmailGoogle chrome A web web browserGoogle dictation Store A digital application distri only ifion syllabus for Android Google Play Music A platform to upload medical specialty and p belittledsh atomic number 18 unison on Android plaits YouTube A website to component musicGoogle Maps A digital pi attracterage system to find local businesses and residential areas Android Software Operating packet program for busy devicesGoogle Wallet An application that allows the user to shop online with cyberspacement cards Picasa exercise that org anizes, edits and shares photos(Mohan, 2014)Google believes in innovation and is forever and a day move to evolve with the mission of people victimisation Google products in all aspects of their lives. Some products the smart set is receivedly working(a) on are Google Smart Watch Wearable reck unrivalledrs that concern to the users erratic devices Google frappe Glasses that act as a computer and connect to the users mobile devices Google Fiber A device use to provide users with faster, a lot dependable inter exonerate help rove addlehead A gist of inter web service through balloons as opposed to cables and anticipate lines Google Home Automation A invigorated home service where the homeowner thunder mug cover the home through mobile devices Google Smart Contact Lens A contact lens that asshole over fit glucose directs for diabetics Google Self-Driving Car A car that passel drive by itself with robotics engineering Chrome Tablet A mobile pad with A ndroid software(Amadeo, 2014). contemporaryly, Larry page, one of the founders of the union, is chief executive officer of the amply society. He has graced Forbes Magazines nearly Powerful People list double at 17 in 2013 and 20 in 2012, Forbes 400 Richest People in America Category at 13, and Forbes publics Billionaires list at 20 in 2013 and 13 in the coupled States (Forbes, 2013). This teen mogul has a net worth of $24.9 billion dollars (Forbes, 2013). With his vision he helped turn a 2 psyche ope balancen to a business with over 30,000 employees worldwide. (Google, n.d.) He helped expand Google from merely beingness a search engine to creating computer software, phones and making way for new engineering science such as driver little cars and teleport machines. Larry Pages management style arouse be described as psyche who is running his business standardized a startup. He believes in innovation and staying earlier of his competition. As a engine room ground companion, you are only as unafraid as your next big idea. Page encourages his employees to think of crazy ideas and cultivate the shell of them. When no one else is crazy liberal to do it, you bemuse got little competition, he says. (Elmer, 2011).Investor ProfileThe client is a young investor. She is arouse in seeing her gold grow over 10 15 years. She is a multi-millionaire and has the desire to be an raptorial investor. She wants to accumulate a substantial amount of wealth in the emerging and is commit to place in a start- up caller. Though the connection has been around for to a greater extent or little(prenominal) 16 years, Google is run like a start-up confederacy and is relatively young compared to some of its competitors (i.e. Microsoft and Apple). The company is always trying to create itself with a diverse portfolio of products and function. They spend a lot of money on look and development to cultivate innovation and purify their products already on the market place. Google does non redress declinationholders dividends. It uses the dividend money for R&D, data centers, sound issues and diversification (Rosoff, 2012). Since the client is not interested in an instant money master and can afford fluctuations in the market, Google whitethorn be a expert fit for her to invest in.Financial DataThe financial advisor must use a number of ratios to determine the financial health of the company. Five ratios what will be used are current ratios, speedy ratio, lolly per share, price earnings ratio, and debt to legality ratio. online RatiosCurrent ratios give the investor the opportunity to see the companys ability to stick out back its short-term liabilities with its short-term assets (Current Ratios, n.d.). The highschooler(prenominal)(prenominal) the current ratio, the more capable the company is to pay back its debts which would be undischarged for a bank lender. But a high current ratio could besides mean the company has a lot tied up in unproductive assets (Brigham & Ehrhardt, p. 99, 2014). Current ratios are determined by dividing wide assets by add together liabilities (Brigham & Ehrhardt).20112012201352,758 / 8,913 = 5.960,454 / 14,337 = 4.272,886 / 15,908 = 4.6Companies largely aim for a ratio of 1 to ensure their current assets can at least(prenominal) cover the short term obligations. Having a ratio greater than 1 gives the company a better disaster to be able to cover those obligations. The company started out with a high current ratio of 5.9 in 2011. This means, in 2011, the company was able to cover 5.9 times their short term obligations. It dropped muckle to 4.2 in 2012, but uprise by .4points in 2013. The drastic fluctuation may be receivable to the acquisition of Motorola Mobile in 2011 (Goldman, 2012). both(prenominal) current assets and current liabilities would extend delinquent to the increase of inventory and debt. The engineering effort fair(a) current ratio is 2.33 (Reuters, n.d.). For all triplet years, the current ratio is al intimately twice the applications just. out-of-pocket to the high current ratio, the company is not at risk of bankruptcy. pronto RatiosQuick ratios tell the investor what the companys liquidity congeal is or how quickly it can be converted to cash at the going market price (Brigham & Ehrhardt). To encrypt quick ratios the formula is current assets disconfirming inventories divided by current liabilities. 20112012201352,758 35 /8,913 = 5.960,454 505 / 14,337 = 4.272,886 426 /15,908 = 4.6As of 2013, the current engineering constancy quick ratio bonny is 1.26 (Technology Sector, 2014). The then(prenominal) three years has been higher than the intentness add up. The higher the quick ratio in comparison to the manufacturing mean(a) shows that the company is less likely to be overwhelmed by debt in the near approaching. A higher ratio is safer than a note one because it means the company has excess cash . This is a favorable consideration for an investor. Prior to 2011, Google, Inc. did not pay any inventories listed on their equilibrium sheets. Google started as a search engine in 1998 and form provided engineering services that did not imply inventory.In 2011, Google acquired Motorola Mobility, pickings it from a strictly software company to a software and hardware company (Goldman, 2012). This puts Google in direct competition with technology companies such as Apple, Inc. and Microsoft, Corp. In fusion with HTC and Samsung, Google has created their line of Nexus smartphones and tablets. They similarly attain Google Glass that is expected to launch for consumer secure by the end of 2014 as puff up as the Google Smart Watch. Other items Google is working on for the near future are the self-driving car, Project Loom, and Google Home Automation.Total Assets overturn RatioTotal assets derangement ratio determines how productive the company is. It shows how much taxation t he company generates for each dollar in assets.Total assets turnover ratio is work out by dividing total revenue from the income control by total assets from the balance statement. 20112012201337,905 / 72,574 = 0.5250,175 / 93,798 = 0.5359,825 / 110,920 = 0.54The sightly out turnover ratio for Google is 0.53. This means for all(prenominal) dollar worth in assets, the company generates 53 cents in revenue. Some companies pick out less assets than others, in which the total assets turnover ratio will be turn away than a more assets-intensive company. Google is primarily a service related company, so it has less assets than the majority of its competitors who produce a vast number of products. Some of Googles most popular products are the Google search engine, Google+, Gmail, Google Maps, Google Play Store, Android software, and YouTube. The company does not require as many somatic assets. The technology industry total assets turnover ratio is 1.07 (Reuters, n.d.). Though Googl es ratio is dismay than the industry comely, it is not necessarily a bad thing considering most technology based companies sell a physical product and Google mainly sells services, thus less assets than its competitors.Debt to EquityDebt to loveliness ratio is a leverage ratio which explains how much of the companys assets are financed by debt and stockholders equity. The debt to equity ratio is reckon by dividing the total debt by the total common equity. The total debt is determined by adding current liabilities with longsighted term debt.20112012201314,429 / 58,145 = .2522,083 / 71,715 = .3123,611 / 87,309 = .27 From the three years, the average debt to equity ratio is .28. This ratio translates that Google has 28 cents of debt for every dollar of equity. The technology industry average is 31 cents. The lower number is more favorable because it shows that the company is less fantastic. The lower numbers indicate that the company relies on less external lenders than other co mpanies. In 2012, the ratio increase by .06.In May 2012, Google, Inc. completed its acquisition of Motorola Mobility in which it acquired the companys debts as come up as its assets. The following year, Google may have paid some of the debt. roueholders equity increased by having a significant increase in retained earnings. Retained earnings are part of the net income that goes back intothe company instead of the company distributing dividends to the stockholders (Brigham & Ehrhardt, p. 1114, 2014). sort out Profit MarginNet profit margin measures a companys profitability. The net profit margin is calculated by dividing the net income by sales. This ratio can determine if a company earns enough money to cover its operational costs. If it does not, the company could eventually shut down which would make it a bad investment. 2011201220139,737 / 37,905 = .2610,737 / 50,175 = .2112,920 / 59,825 = .22 establish on the early(prenominal) three years, Googles profit margin dropped by 5% between 2011 and 2012. It slightly increased by 1% between 2012 and 2013. In all three years, the profit margins were higher than the technology industry averages for those years. In 2011, the industry average was 19% in 2012, the industry average was 16% and in 2013, the industry average was 19% (Profitability Analysis, 2014). If the companys net profit margin is higher than the industrys profit margin, it is a right(a) investment. follow Risk Level base on the financial analysis for Google, the company has a low risk level based on the industrys averages. The current ratio average for the technology industry is 2.33. Googles average is 4.9. This means that the company has a contingency to be able to take care of their short-term obligations over twice the industry average. The industry average for quick ratios is 1.26. Googles quick ratio average over the bypast 3 years is 4.9. This shows that the company is least likely to be overwhelmed by debt in the future compared to its c ompetitors. The average turnover ratio for Google is .53 indicating that for every dollar the company has in assets, it generates 53 cents. This is a low number mainly because the company has a low amount of assets unlike its competitors. Google is mainly a service company and does not have a vast number of assets like its competitors that produce products such as tablets, phones, computers, and so onThe technology industrys average for debt to equity is 31. Googles debt to equity average is 28. This means that there is 28 cents of debt for every dollar of equity. The lower number is more favorable because it means that thecompany depends less on external lenders. The industrys profit margin average was 18%. Googles profit margin average over the course of the past three years was 23%. This shows that compared to most of its competitors, it is generating more of a profit. A companys of import measures the companys capriciousness in the stock market. A companys beta depends on how much the company fluctuates within the market. The stock market itself has a beta of 1.0 (McClure, 2012). Anything above 1.0 is considered risky. Anything to a lower place 1.0 is considered more stable.According to Yahoo Finance, Google has a beta of 1.14. This means it is 14% above the stock market average and is considered a risky investment. Though the company is considered risky, it has the potential for high returns. The downfall of betas is that they only calculate what happened in the past. Its assessment does not calculate for the future of the company.RecommendationsDespite the market risk of the technology based company, Google has shown growth over the past year. According to the Financial Post, Googles shares have risen 58% in 2013. In January 2014, the companys stock rose U.S. $2.37 to U.S. $1,141.23 (Ratner, 2014). Of the 48 analysts covering Google, 35 of them recommend buying the stock whereas 13 of them recommend holding it (Ratner, 2014). Google maintains a stron g position in the driving the market share on online denote in the mobile and tv incisions. The company has strong control over four pillars of the mobile department operating system, apps, app store, and payment. YouTube is a leading advertising and video sharing medium. Unlike its competitors, Google has had a steady 20% growth per annum (Ratner, 2014). Under the direction of CEO Larry Page, the company constantly improves already existing products as well as produce forward-looking products.Larry Page wants to make Google a plate name so that a person would need to use Google products several times throughout the course of their day. Currently, Google has well over 100 products that, in some cases, have capture a necessity in everyday life. There are a number of phones and tablets that have been uploaded with Android software as an operating system. Googles search engine has become so increasingly popular that when a person wants to do a web search on a topic they simply G oogle it. The website has become the 1 site globally and across the country according to Alexa.com. YouTube is a popular video websitewhere people upload everything from home videos, tutorials, music videos, and ad campaigns. Also, one of the most sure mobile navigation applications is Google Maps. The company is constantly updating its maps to provide better locations and directions. The company has a number of future products that will diversify their product portfolio.For example, Google Glass is a mobile device used as glasses which is like a personalised computer or tablet and also interfaces with the consumers mobile phone. So remote the product is generating a lot of assist with the public. Google is also working on the driverless car, Google Contacts, Project Loom, Google Fiber, and the Google Home Automation. Google is expanding their spectrum from a search engine and mobile apps to automobiles, health care, the internet, and home security. every last(predicate) of the se projects show a promising future for the company. For an aggressive investor who does not mind investing in a risky company and is looking to invest for the long-term, Google is a good investment to have. The company has seen a accordant increase in growth and has shown financial stability over the years. Google does not pay stockholders dividends but companies that have a high risk, have the ability to have bigger payouts in the long run.ResourcesAlexa. (2014). Google, Inc. Retrieved from http//www.alexa.com/siteinfo/google.com Amadeo, R. (2014, February 10). The 2014 Google Tracker Everything We sleep together Google Is working On This Year. ARS Technica. Retrieved from http//arstechnica.com/gadgets/2014/02/the-2014-google-tracker-everything-we-know-google-is-working-on-this-year/ Brigham, E. & Ehrhardt, M. (2014). Financial Management (14th ed.). Mason, Oh. Cengage Learning. Current Ratios. (2014). Investopedia. Retrieved from http//www.investopedia.com/terms/c/currentrati o.asp Elmer, V. (2011, April). What Would Larry Page Do? Leadership Lessons from Googles Doyen. CNN Money Online. 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