COMPANY’S FINANCIAL ANALYSISVitor Silva

Keiser University

ACG 501

Dr. Williams

GOOGLE INC. BACKGROUND

• Created by PhD students Larry Page and Sergey Brin - Stanford

University, CA

• By 1996, Larry and Sergey had created BackRub

• Later renamed to “Google”, a play on the mathematical term “googol”

(1 followed by 100 zeros)

• Today’s company mission: “Organize all the information available in order

to make it accessible and useful to the end user”

GOOGLE INC. EXPANSION AND PRODUCTS

• Headquarters in Mountain View, CA

• New ventures and market acquisitions

• More than 72 offices in 40 countries

• More than 50 different services and

solutions available

GOOGLE INC. COMPETITORS

GOOGLE INC. GOING CONCERNS

• Google was built around 10 Principles; top principles are:

• No. 1 “Focus on the user and all else will follow”

• No 2 “It’s best to do one thing really, really well”

• NO. 6 “YOU CAN MAKE MONEY WITHOUT DOING EVIL”

• The concern: Due to its rapid growth, Google Inc. is straying away from its

core principles.

GOOGLE INC. FINANCIAL INFO AND BACKGROUND

• Google Inc. launched into the stock market on September 1st, 2004

• Consistently performing above S&P 500 Index

• Most of Google’s revenue comes from advertising

• Responsible for 89% of the revenue in 2014

GOOGLE INC. FINANCIAL ANALYSIS

• Revenue Growth:

GOOGLE INC. FINANCIAL ANALYSIS (CONT.)

• Revenue Growth

GOOGLE INC. FINANCIAL ANALYSIS (CONT.)

• Decline in Cash & Equivalents

GOOGLE INC. PROFITABILITY

• Profitability ratios: The company’s ability to generate earnings effectively,

when compared to its expenses

• Gross Margin; Profit Margin; ROA; ROE; ROI

GOOGLE INC. LIQUIDITY

• Liquidity ratios: The company’s ability to pay off current liabilities and

debt

• Quick Ratio; Acid-Test Ratio; Current Ratio; Working Capital (Ratio)

GOOGLE INC. SOLVENCY

• Solvency ratios: The company’s ability to sustain operations, while

keeping debt levels low, when compared to equity, assets, and earnings.

• Debt-Equity Ratio

GOOGLE INC. EFFICIENCY

• Asset Turnover Ratio: the company’s ability to use its assets in order to

generate sales

GOOGLE INC. STOCK MARKET

GOOGLE INC. NOTES TO FINANCIAL ANALYSIS

• “Our ongoing investment in new businesses and new products, services,

and technologies is inherently risky, and could disrupt our ongoing

businesses.”

• Concern for investors

• “Our company is constantly facing claims, suits, and government

investigations”

• EU antitrust complaint, reopened in September, 2014

GOOGLE INC. NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS SUMMARY

• Supporting the findings in this report:

• On April 17th, 2013, Google Inc. sold Motorola Home to Arris Group, and

Motorola Mobile to Lenovo Group Limited

• Google values its revenue from advertising as “Certain Risks and

Concentrations”

• Acquisitions in 2014: Nest, Dropcam, and Skybox

GOOGLE INC. NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS SUMMARY(CONT.)

• European Commission’s Directorate General for Competition: investigation

into various antitrust-related complaints against Google Inc. (Nov. 30, 2010)

• Comision Nacional de Defensa de la Competencia in Argentina; Competition

Commission of India; Taiwan Fair Trade Commission; Brazil's Council for

Economic Defense; Canadian Competition Bureau: investigations into certain

of the business practices.

GOOGLE INC. FORECAST

• The negative facts have already been reflected on the company’s stock price

• S&P Capital IQ expects a price-earnings ratio of 17 in 2015 (compare to 26.09

in 2014)

• Could imply the company is focusing on new areas for revenue growth

• Android Mobile Dominance

• Google has 91.5% market share in mobile search

• Android powers 84.8% of devices around the globe

GOOGLE INC. FORECAST (CONT.)

• Investment Concern:

• Android (2005) and YouTube (2006) proved to be very successful

• EU Antitrust Complaint:

• Settlement offered in May, 2014

• EU is facing press concerns, as the contingent is facing a

recession

GOOGLE INC. REFERENCES

• Google. (2015). Retrieved March 29, 2015, from the Securities and Exchange Commission webpage: http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001288776&owner=exclude&count=40&hidefilings=0

• Financial Accounting Standards Board. (2015). Retrieved March 29, 2015, from https://asc.fasb.org/home

• Google. (2015). Retrieved March 29, 2015, from https://www.google.com/intl/en/about/company/

• Google Investor. (2015). Retrieved March 29, 2015, from https://investor.google.com/earnings.html

GOOGLE INC. REFERENCES (CONT.)

• Google. (2015). Retrieved March 29, 2015, from http://www.reuters.com/finance/stocks/overview?symbol=GOOGL.OQ

• Google. (2015) Retrieved March 29, 2015, from http://finance.yahoo.com/q?s=GOOG

• Mergent, Inc. (2015). Google Inc. data report. Retrieved April 12, 2015, from Mergent Online database.

• My Accounting Course. (2015). Financial Ratios Analysis. Retrieved April 12, 2015, from http

://www.myaccountingcourse.com/financial-ratios/

GOOGLE INC.

THANK YOU!