# Financial Management: Google and Microsoft.

Topics: Microsoft, Financial ratio, Financial ratios Pages: 14 (4933 words) Published: January 20, 2013
Strayer University
Doral, Florida Campus
MBA Program

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Date of Submission: June 16th, 2012
Title of Assignment 5: Financial Management: Google and Microsoft.

CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledged and disclosed in the paper. I have also cited any sources from which I used data, ideas or words, either quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course. Student's Signature: ______________________________

1.-Calculate or identify from each company’s most recent annual report the six (6) specific financial ratios listed and provide as an appendix to the paper. GOOGLE FINANCIAL RATIOS:
1. - Liquidity Measurement Ratio
The current ratio compares current
Liquidity Measurement Ratio= Current Assets / Current Liabilities 52,758/8,913 = 5.92 2.-Profitability Ratio:
-Return on Assets= Net Income/Total Assets
= 9,737 / 72,574 = 0.134 = 13.42%
-Return on Equity = Net Income / Average Equity
= 9,737 / 52,193
= 0.186
= 18.66%
3.-Debt Ratio (using 2011 data)
Debt Ratio = Total Liabilities / Total Assets
= 14,429 / 72,574
= 0.198
= 19.88%
4.-Fixed Asset Turnover Ratio:
Fixed Asset Turnover Ratio = Net Sales or Net Income / Net Property, plant & equipment = 37,862 / 9,603 = 3.94

5.-Cash Flow Indicator ration:
Dividend payout ratio = Dividends per common share / earnings per share = zero (according to Internet website they don’t pay dividends) 6.-Investment valuation ratio =Price per Share/Earnings per share 566.69/30.17 = 18.78

MICROSOFT FINANCIAL RATIOS:
1.-Liquidity Measurement Ratio= Current Assets / Current Liabilities 74,917/28,774 = 2.60 2.-Profitability Ratio:
-Return on Assets= Net Income/Total Assets
=23,150/108,704 = 21.30 %
-Return on Equity = Net Income / Average Equity
=23,150/51,629 = 44.84 %
3.-Debt Ratio (using 2011 data)
Debt Ratio = Total Liabilities / Total Assets
= 51,621/ 108,704
= 0.4749
= 47.49%
4.-Fixed Asset Turnover Ratio:
Fixed Asset Turnover Ratio = Net Sales or Net Income / Net Property, plant & equipment = 69,950 / 8,162 = 8.57

5.-Cash Flow Indicator ration:
Dividend payout ratio = Dividends per common share / earnings per share = 0.64 / 2.73
= 0.234 = 23.44% 6.-Investment valuation ratio
Price per share/Earnings per share
=28.12/2.73 = 10.30
2.-Compare and contrast each company’s business model: (1) core business, (2) leading products and/or services (3) management/leadership style, and (4) innovation track record. Google is an American multinational corporation which provides Internet-related products and services, including Internet search, cloud computing, software and advertising technologies. Advertising revenues from AdWords generate almost all of the company's profits. The company was founded by Larry Page and Sergey...