CAPITAL STRUCTURE ANALYSIS -
GB550: Financial Management
Prof. Dale Prondzinski
MBA Candidate | Class of 2012i iiiiii
Graduate School of Business | Kaplan University Online I fiii iand Management| GB540i fi iiiiiiiiiiiiiiii
Apr 6, 2012
Jason’s Portfolio Note on April 16, 2012:
The course project involved developing a great depth of knowledge in analyzing capital structure, theories behind it, and its risks and issues. Before I began this assignment, I knew nothing but a few things about capital structure from previous unit weeks; however, it was not until this course’s final project that came along with opening doors for me to developing a real understanding of why capital structure is important, what to expect from it, and how to evaluate in determining value of a firm. For the first time, various financial statements were closely examined and retrieved via online including Google, MSN, and Yahoo and an extensive amount of research were referred to in order to ensure quality in the project and report any findings that may be relevant to this research. One of the most stimulating part about this assignment was that we were allowed to select a firm of our interest and it was not until this project that I’ve came to suddenly realize there is plentiful amount of information available to enrich us to knowing more about how and why the values are placed about in a firm which convinced me enough to feel that this was the main reason why I selected this assignment to be included for my program portfolio.
TABLE OF CONTENTS
i. Table of Contents
ii. Abstract 1
1. Introduction: GOOGLE, INC.2
1.1 Capital Structure2
1.2 Key words3
2. Capital Structure of Google3
2.1 Preview of Capital Structure Issues4
2.2 Capital Structure Risks4
2.3 Modigliani and Miller (MM) Theory6
i. Criticisms of MM6
2.4 Capital Structure Evidence and Implications7
3. Google's Optimal Capital Estimations & Conclusion8
The primary goal of this research is to view and analyze Google Inc. finance and its capital structure to determine whether the quality of the organization’s liabilities structure exists. While this paper investigates how the corporation finances its assets, it will provide findings using various online tools to indicate the financial performance currently and over a period of time. Capital structure theory, issues, and debates will be examined to understand how capital structure decisions affect Google’s return on investment (ROI), return on equity (ROE), return on invested capital (ROIC), and its risk profile. I
To show how capital structure choices affect how Google’s profitability measures, we will closely take a look at and review the corporation’s profits generated with the amount of money shareholders have invested in it by evaluating the financial ratios and figures provided by various websites including Reuters.com and Yahoo.com. This research will also include a gather data from related studies pertaining to the results of Google’s capital structure and analyze the pros and cons with a comprehensive review and evaluation of its functions and market standpoint. It is anticipated for Google to have been succeeding over the last several years in financing its assets through a combination of equity, debt and various hybrid securities.
1. Introduction: GOOGLE, INC.
Google, Inc, an index member of Nasdaq 100 is one of the most successful global technology company dominating in various countries and of the world’s most popular marketplaces offering products and services that’s centered around improving ways for people to connect and network with information. One thing Google may...