Fin 516 Mini Case

Topics: Finance, Stock market, Balance sheet, Stock, Dividend yield, Corporate finance / Pages: 7 (1678 words) / Published: Aug 18th, 2013
Mini Case: Google

Christina Santino
FIN 516:Advanced Managerial Finance
July 21, 2013

What is the name of the company? What is the industry sector?

Google Inc. is a multi-billion dollar company in the informational technology (IT) industry.
Google Inc. is one of the leading computer search engines in the world and is continuing to grow as the front runner in their industry.

What are the operating risks of the company?

Within business, there will always be operational risks to consider. "Operating risk is the basic or fundamental potential for failure that is associated with the ongoing function of any type of business entity" (Tatum, 2003, para. 1). The operating risks for Google Inc. include: internal fraud, destruction of company property, and quality of goods.
Internal fraud is common in almost all industries and the same is true for the IT industry. Google
Inc. is no exception to this type of operating risk, especially because of how much Google Inc. is worth.
Yahoo Finance displayed the net worth of Google Inc. after the second quarter of 2013 to be $55.80B
(Yahoo Inc., 2013, Financial Highlights, para. 4). With profit so high, there is always a risk that employees could defraud the company for their own personal benefit.
Another potential operating risk for Google Inc. is destruction of company property. Being in the
IT industry, the equipment used can be very expensive . The amount of equipment, both hardware and software, is quite vast and if employees are destructive of Google Inc. property, the cost to repair or replace such equipment could be an operational disaster. In addition, the Google Inc.campus as a whole is a very large financial aspect of the company and maintaining the ground is costly, therefore, if Google
Inc. is able to avoid destruction of the grounds, they are able to avoid some operational risk.

Lastly, the quality of goods produced from Google must meet industry standard. If



References: Brigham, E. & Ehrhardt, M. Financial Management: Theory and Practice (13e.) 2011. Mason:OH. South-Western Cengage Learning. Tatum, M. What is Operating Risk?. Retrieved from www.wisegeek.com/what-is-operating-risk.htm Yahoo Inc. Google Inc. (GOOG). Retrieved from finance.yahoo.com/q/ks?s=GOOG

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