Financial Analysis of Google
GOOGLE
Financial Analysis Report
Prepared for:
Financial Management Class –
Florida Institute of Technology
February 2011
TABLE OF CONTENTS
EXECUTIVE SUMMARY 3
COMPANY INTRODUCTION 4
FINANCIAL ANALYSIS 5
Summary Financial Analysis Report 6
WEIGHTED AVERAGE COST OF CAPITAL (WACC) 10
FUTURE CASH FLOWS 12
ANALYSIS OF CASH FLOWS 13
Sensitivity Analysis of Google’s 2011 Future Cash Flow 14
Sensitivity Graph for Google’s 2011 Future Cash Flow 15
Sensitivity Graph for Google’s 2011 Future Cash Flow 15
Inflation Analysis 15
Google Inc. Discounting Future Cash Flows for Inflation @ 1.7%: 16 Footnotes effect on future cash flows 17
Analysis of Google Competitors 19
ANALYSIS OF CASH FLOWS 20
Footnotes effect of future cash flows 21
Analysis of Google Competitors 23
Major Project “post audit” 24
HISTORICAL STOCK PRICE 26
SECURITY ANALYST’S REPORTS 28
DIVIDEND and CAPITAL STRUCTURE 29
CORPORATE GOVERNANCE 30
MERGER and INTERNATIONAL STRATEGY 32
EXECUTIVE SUMMARY
This report provides a detailed analysis of Google, an Internet search engine, which will offer information in order to make an informed decision as to whether to invest in Google. This report will also provide information regarding debt securities.
The financial report shows that Google is in a stability strategic focus. During the years of 2007 – 2009 their Gross Margin continued in an upward trend. The Net Profit Margin was stable and sales shows that Google is expanding their business. The financial condition ratios show an upward trend as well and the company’s debt ratio is within industry standards. Google does not carry any inventory and therefore remains above the industry’s standards in a Quick Ratio. Google’s financial leverage is also stable. Google has made key acquisitions and therefore, their Return on Equity has remained below the industry average. However, their Return on Equity has far exceeded their
Financial Analysis Report
Prepared for:
Financial Management Class –
Florida Institute of Technology
February 2011
TABLE OF CONTENTS
EXECUTIVE SUMMARY 3
COMPANY INTRODUCTION 4
FINANCIAL ANALYSIS 5
Summary Financial Analysis Report 6
WEIGHTED AVERAGE COST OF CAPITAL (WACC) 10
FUTURE CASH FLOWS 12
ANALYSIS OF CASH FLOWS 13
Sensitivity Analysis of Google’s 2011 Future Cash Flow 14
Sensitivity Graph for Google’s 2011 Future Cash Flow 15
Sensitivity Graph for Google’s 2011 Future Cash Flow 15
Inflation Analysis 15
Google Inc. Discounting Future Cash Flows for Inflation @ 1.7%: 16 Footnotes effect on future cash flows 17
Analysis of Google Competitors 19
ANALYSIS OF CASH FLOWS 20
Footnotes effect of future cash flows 21
Analysis of Google Competitors 23
Major Project “post audit” 24
HISTORICAL STOCK PRICE 26
SECURITY ANALYST’S REPORTS 28
DIVIDEND and CAPITAL STRUCTURE 29
CORPORATE GOVERNANCE 30
MERGER and INTERNATIONAL STRATEGY 32
EXECUTIVE SUMMARY
This report provides a detailed analysis of Google, an Internet search engine, which will offer information in order to make an informed decision as to whether to invest in Google. This report will also provide information regarding debt securities.
The financial report shows that Google is in a stability strategic focus. During the years of 2007 – 2009 their Gross Margin continued in an upward trend. The Net Profit Margin was stable and sales shows that Google is expanding their business. The financial condition ratios show an upward trend as well and the company’s debt ratio is within industry standards. Google does not carry any inventory and therefore remains above the industry’s standards in a Quick Ratio. Google’s financial leverage is also stable. Google has made key acquisitions and therefore, their Return on Equity has remained below the industry average. However, their Return on Equity has far exceeded their