Tag Archives: Google

Class Conflict Theory

Question

For this paper, you are to write a paper of at least 750 words that relates to 1 of the sociological theories reviewed in this course: symbolic interactionism, class conflict theory, or functional analysis. Any citations used must adhere to current APA format.

Complete the following for the Current Event Paper:
• Locate a current event article (6 months or less) that addresses a social problem of your choice. The article can be from a local newspaper or through an online search such as Yahoo, Google CNN, etc. The article selected cannot to be a research article.
o Use Liberty University Online Student Library Services to assist you in writing your paper.
• In the first half of the paper, you are to summarize the main points of the event discussed in the article from the sociological perspectives reviewed in the textbook (approximately 375 words).
• In the second half of the paper, you are to analyze the main points of the event using 1 of the 3 main sociological theories reviewed in the course (approximately 375 words).

Sample paper

Class Conflict Theory

This article examines the effects of the widening gap between the rich and the poor in the United States. According to Elliot (2017), eight billionaires who are among the world’s richest men control wealth equivalent to that held by about half of the world’s poorest population. This means that the eight riches billionaires control the wealth equivalent to that of 3.6 billion people. The article asserts that in the U.S., wealth is concentrated among a few individuals, while the masses suffer. Although the U.S. is branded as the land of opportunity, various forces have combined transforming it to the land of inequalities. The article argues that the recent trends in income inequalities could be dangerous in the long run if they remain unchecked. The article recommends for a new economic model that can help reverse the growing income gap.

A key point raised in the article concerns the factors propagating the current wage inequalities in the societies. Elliott (2017) examines two factors that contribute to the growing wage inequalities. First, wage inequalities are the result of aggressive wage restraints by corporations. This means that corporations are exploiting their workers by paying minimal wages, which makes it difficult for the workers to achieve economic mobility (the ability to improve one’s economic status and move to a different social class). By exploiting the workers, the corporations acquire more wealth that ends up with the ruling class or the property owners. The second factor contributing to the rising inequality is tax dodging by the corporations. This prevents the redistribution of income to the poor in the society, and concentrates wealth to the few who are rich.

Elliott (2017) argues that inequality is a major concern to the social stability of the United States. With the ever-increasing income gap, social stability appears to be under a serious threat. The article notes that rising racism and disillusionment among the proletariat are some of the key indicators of social instability. The rate of economic mobility in the U.S. is still low. This means that majority of people in the lower class have stagnated in their respective economic conditions and are likely to continue living in similar or worse conditions in the future. Thus, one is highly likely to remain in the social class in which he/she is born throughout their lives due to the low economic mobility. The author also argues that the government is more responsive to the needs of the privileged compared to the low and middle-income groups.

Related: Lending Institutions, Health Care, and Human Capital

Class conflict theory asserts that exists a dominant class that controls the society’s resources, creates belief systems, and establishes rules that acts as a scaffold to remaining in power (Andersen & Taylor, 2008). The class conflict theory argues that the economic organization of the capitalist states lead to deviance among a segment of the population. This is because the rich control the resources while the poor lack access to vital resources that they could use to improve their standards of living. Elliot (2017) highlights this point by examining the high inequalities in the U.S. society. Conflict theory further argues that in capitalist societies, corporations are used to appropriating profits ill gotten through exploitation of the poor and those in the working class. Elliot (2017) contends this by highlighting the issue of aggressive wage restraints by the corporations.

Class conflict theory propounds the idea that the privileged yields great power that enables them create rules and belief systems meant to protect their interests. As such, they yield tremendous power to shape the political and economic arena of the country. Elliot (2017) contends that the privileged in the U.S. holds great economic and political power. There are thus able to influence decision making in a way that favors them, rather than looking at the interests of the underprivileged. According to class conflict theory, there exist two conflicting groups: the rich and the poor. While the poor grows smaller and richer, the richer group grows larger and poorer (Andersen & Taylor, 2008). This point is highlighted in the article, where Elliot (2017) notes that the poor in the society are experiencing low rates of economic mobility. On the other hand, the rich keeps getting richer.

The class conflict theory holds that the dominant class in the society controls the resources or means of production. On the other hand, a group of people (in this case the majority) can only access fewer resources (Andersen & Taylor, 2008). This creates tension and leads to deviance or crime. Thus, according to the theory, crime in the society is the result of social inequalities between the few rich people and the poor majority. This, however, does not necessarily indicate that the upper class does not engage in deviant acts. Rather, those in the upper class are able to mask their criminal acts due to their wealth. As Elliott (2017) asserts, instability is a recipe for social instability since it leads to deviant acts such as racism, disillusionment, and can even lead to mass protests. As the theory indicates, those in the upper class still commit deviant acts. For instance, the article notes that corporations engage in tax dodging, exacerbating the inequality problem.

References

Andersen, M. L., & Taylor, H. F. (2008). Sociology: Understanding a diverse society. Belmont,   CA: Wadsworth/Thomson Learning.

Elliott, L. (2017, Jan. 16). World’s eight richest people have same wealth as poorest 50%. The      Guardian. Retrieved from https://www.theguardian.com/global-           development/2017/jan/16/worlds-eight-richest-people-have-same-wealth-as-poorest-50

Demographics

Management at Google

Management at Google

Google is one of the most popular search engines. The company is headquartered in Mountain view, California. Larry Page and Sergey Brin founded the company in 1996, which was then providing search engine services to a growing number of internet users. In 1998, Google received its first financing from an investor, Andy Bechtolsheim. Over the same period, Google received millions in investments from interested individuals enabling the company’s top leadership to grow the business. In 2000, Google began listing advertisements based on search keywords. The sale of advertisements proved much productive by generating revenue for the company. In 2004, the company made its first initial public offering, generating enough capital to support its expansion strategies. This purpose of this paper is to examine Google’s management, operations, and the overall management’s impact to the company from inception to the current day.

Key Changes in Google’s Management Style

One of the key changes in Google’s management style was in 2001 when the founders appointed Eric Schmidt as the company’s chief executive. Eric played a critical role in transforming Google from a small little known company into a multinational corporation. Eric’s role has primarily been tailoring products for the global market. His role has been instrumental in scaling to a global level various products such as the Android mobile operating system. The structure under the reign of Eric Schmidt has been largely a flat organizational structure (Steiber & Alänge, 2013). In a flat organizational structure, there are few middle-level management positions coming between the junior employee and the top management. This ensures that employees can easily reach the top management. The management style has been largely laissez-fair. In this management style, the leaders are more of mentors. Google is quite different from other organizations in that employees are allowed to play games or engage in other social activities during work.

A key change in Google’s management style came in 2015, when the founders Larry Page and Sergey Brin announced a major restructuring. The restructuring aimed at creating a holding company, Alphabet Inc., which is a collection of companies, the largest being Google. The restructuring aimed at reducing the complexities of managing a large organization with multiple services and products in the market. Following the restructuring strategy, Google became leaner and focused on the core services. Other subsidiaries under Alphabet Inc. handle products and services that are not part of Google’s core operations (providing internet products), for instance, health services. Following the restructuring, Sundar Pichai became Google’s new chief executive. Under his reign, Google has largely operated based on a divisional structure (Price& Nudelman, 2016). Each division operates as a separate brand and handles unique products.

It is clear that Google has one of the best management structures. Since inception, Google has experienced high market growth and maintained a strong brand presence. It’s strong management has seen the company introduce a variety of products to consumers including Google Maps, Google+, Google Drive, Android mobile operating system, self-driving cars, YouTube, AdSense, and recently artificial intelligence and among other technologies. In addition, Google has continued to enjoy significant growth in its stock, indicating a strong performance in the industry. The company’s stock price has increased to $1,078 per share since the last stock split in mid-2015 (YAHOO FINANCE, 2018).

Senior Management’s Role in Preparing for Recent Change

The most recent change was the restructuring of the company to form the conglomerate firm, Alphabet Inc. The top management (Larry Page and Sergey Brin) and CEO Eric Schmidt played a critical role in preparing the company for a restructuring strategy. The top management focused on creating a leaner company that could be held more accountable for the decisions made. Larry Page and Sergey Brin focused on exploiting bigger opportunities that Google provides, while other executives focus on other segments (“Brad Green,” 2016). By restructuring the company, each division is able to pursue a unique product and service with the parent company providing the capital necessary for the success of each. According to Brad Green (2016), the restructuring would allow each subsidiary to have its own CEO, thus improving independence of each. Eric Schmidt was also key in planning the restructuring of the company.

Google’s top management executed a seamless transition in its restructuring drive. Following the restructuring, Google acquired a new chief executive, Sundar Pichai. Former Google’s Executive Chairman, Eric Schmidt, continued with his role at the newly formed Alphabet Inc. Larry Page became the new Chief Executive Officer at Alphabet Inc., a position he held prior to the hiring of CEO Eric Schmidt. Sergey Brin became Alphabet’s President. The transition was smooth since no managerial wrangles have emerged from the company since the restructuring in 2015. In his blog post, Larry Page asserted that they strongly believe that Sundar Pichai is the right CEO to steer the company to greater heights (Alphabet, n.d). Pichai’s vision reflects that of the co-founders in better ways.

Management’s Decision on its use of Vendors and Spokespersons

Google’s management relies on vendors for the supply of critical products to the company. Google relies on various third-party technology vendors to run products on its sites. In addition, Google employees can purchase various products or serves from listed vendors by the company. Google prefers to work with a small number of vendors, which enables the company to check on quality and to review the terms of trade with a few sellers. Google outsources certain services and products such as transportation and food. Google has developed a program dubbed Small Business Supplier diversity that helps in developing better relations with suppliers. The use of vendors allows the company to focus in areas where it has greatest strengths. Google also relies on spokespersons to improve on communication dynamics.

Spokespersons enable the company to fulfill its communication efforts. Spokespersons are relevant in communicating with external persons such as media and political entities. Management’s use of spokespersons for external communication helps in managing public relations. The spokespersons act as representatives in key external events such as providing briefings about projects to key stakeholders or government officials. Spokespersons are also relevant in fulfilling internal communication efforts, for instance, managing press briefings on new products. Spokespersons help in clearly communicating the company’s products to potential customers. Another role that spokespersons play in the company is advising employees or teams about the company’s culture.

Innovative Idea that could have a Positive Impact on Employees and Customers

An innovative idea that could have a positive impact on both employees and customers is encouraging innovation among employees to come up with solutions that directly address the needs of customers. Google should allow employees to take active roles in making critical decisions relating to their work areas. Allowing employees to make critical decisions without too much management interference is likely to boost innovativeness in the company. Companies that support their employees to express their ideas and to use their imagination in solving problems are likely to build innovation from the workforce. Google must focus on individual employees in order to harness their full innovativeness potential at the company. In implementing innovation among employees, it is important to create positive relations in order to improve knowledge sharing (Ullah et al., 2016). Through continued innovation, customers benefit through improved or cheaper products and services.

Google’s ability to Adapt to the Changing Needs of Customers

Google has a strong ability to adapt to the changing needs of the customers as well as the market environment. A look at the company’s operational history reveals that Google has been one of the trendsetter in the field of technology. Over the years, Google has pioneered the development of unique products and serves, which have significantly contributed to its growth and current market share in the field of technology. Google’s top innovations that have had a strong impact in its market share include autocomplete feature during searches, Google translations, Google +, Google Maps, universal search (consumers can search text, images, video, and applications), smart devices such as watches, voice search, knowledge graphs, and among other great innovations. In the current period, Google is pioneering the introduction and application of artificial intelligence. Open communication channels provide the basis for change in organizations. According to Men (2014), open communication channels facilitate sharing of ideas and development of a strong company culture in which change can occur.

In summary, Google is one of the most popular search engines. The flat organizational structure has been critical in encouraging innovation at the company. Google’s management style is laissez-faire, where organizational leaders play a supportive role to employees. The recent changes at the company, notably the coming of Eric Schmidt as the company’s CEO, and the subsequent restructuring in 2015, has largely been seamless and improved the company’s market position. Google’s outlook remains that of a competitive company owing to the high level of new product development.

References

Brad Green – Director, Engineering, Google Inc., Alphabet Inc. (2016). Boardroom Insiders         Profiles,

Men, L. R. (2014). Strategic internal communication: Transformational leadership,           communication channels, and employee satisfaction. Management Communication             Quarterly, 28(2), 264-284. doi:10.1177/0893318914524536

Page, L. (n.d). Alphabet. Retrieved from https://abc.xyz/

Price, R. & Nudelman, M. (2016). Google’s parent company, Alphabet, explained in one chart.    Business Insider, Available at: http://www.businessinsider.com/chart-of-alphabet-google-    parent-company-infographic-x-gv-2016-1

Steiber, A., & Alänge, S. (2013). A corporate system for continuous innovation: The case of        google Inc. European Journal of Innovation Management, 16(2), 243-264.            doi:10.1108/14601061311324566

Ullah, I., Akhtar, K. M., Shahzadi, I., Farooq, M., & Yasmin, R. (2016). Encouraging knowledge             sharing behavior through team innovation climate, altruistic intention and organizational             culture. Knowledge Management & E-Learning, 8(4), 628-645.

YAHOO FINANCE! (2018). Alphabet Inc. (Goog).

 

Google Inc Financial Analysis

Question

Prepare an eight- to ten-page fundamental financial analysis (excluding appendices, title page, abstract, and references page) that will cover each of the following broad areas based on the financial statements of your chosen company:a.Provide a background of the firm, industry, economy, and outlook for the future.b.Analyze the short term liquidity of the firm.c.Analyze the operating efficiency of the firm.d.Analyze the capital structure of the firm.e.Analyze the profitability of the firm.f.Conclude with recommendations for the future analysis of the company (trend analysis).

Answer

Google Inc Financial Analysis

Abstract

Google Inc. is one of the largest technology companies in the world. The company provides various products and services to customers. Originally providing internet search services to computer users, the company has diversified to include software and hardware products in the recent period. The overall purpose of this study is to evaluate the financial health of the company and evaluate its future prospects. Through a detailed examination of its financial statements, it will be possible to describe the company’s financial health as well as its future prospects. The study takes into consideration various ratios relating to liquidity, operating efficiency, capital structure, and profitability ratios. The major findings of the study indicate that Google is currently in good financial health. This is after a thorough examination of the various financial ratios. This is explained in more details in the report below. Further, the study indicates that Google needs to diversify its revenue base to overcome stiff competition from a variety of sources.

Google Inc. Financial Analysis

Google Inc. is an American multinational company that specializes in technology and internet-related products and services. The company has its headquarters in Mountain View, California. Its core operations include managing online search requests, cloud computing, online advertising, building software and hardware, and other activities. The company commenced operations in 1998. The pioneering developers are Larry Page and Sergey Brin, who established the company together while they were students at Stanford University. Since its inception, Google Inc. has continued to experience growth and exert dominance in the market especially as the world’s most popular search engine. The company went public in 2004 through an IPO offer to the public. In 2006, Google acquired YouTube through purchase of its stock. Nonetheless, YouTube continued to operate as a separate entity from Google. In 2015, Google became part of Alphabet Inc., a holding company, in an effort to restructure Google.

Background

Google Inc. is in the technology industry. The company began operations as an online search firm. Currently, the company offers over 50 technology-related products and services to consumers worldwide. The most notable technology products and services are in the line of e-mail, online search, software, mobile phones, tablet computers, and cloud services (Alphabet Inc., 2016). Specifically, these include YouTube/video, Gmail, Google Books, Google Earth, Google Chrome, Android operating system, and Google Apps. Each of these products is in use by more than one billion users each month. The company primarily earns revenue from various sources including AdSense Google Network, Google Website, cloud service, hardware, digital content, and advertising (Alphabet Inc., 2016). Advertising involves performance and brand advertising.

Google faces competition from various sources in the technology industry. Search engines and information service providers search as Yahoo, Bing, Baidu, Yandex, Seznam, and Naver are competing with Google for customers (Alphabet Inc., 2016). Google is also facing competition from e-commerce websites, job query websites, travel query websites, and health query websites. The most popular e-commerce websites are Amazon and eBay. Social networks also compete with Google in terms of advertising. The traditional advertising media such as radio, television, billboards, and others also offer stiff competition for advertisements (Alphabet Inc., 2016). Companies that provide enterprise cloud services such as Microsoft and Amazon also offer competition to the technology giant. Projections into the future indicate that Google could be headed for tough times as revenue sources may decline. This is due to increasing competition, availability of multiple online advertising platforms, and declining rate of user adoption of the company’s products.

Short Term Liquidity of the Firm

The short-term liquidity of the company concerns the ability of the company to service its short-term obligations, including the current portion of the long-term liabilities. Short-term liquidity is critical in evaluating whether the company holds the ability to service debts, including the long-term liabilities. The evaluation of the short-term liquidity risk involves the analysis of the operating cycle of the company. If a firm has high cash inflows compared to the cash outflows, it stands a higher change of being able to clear short-term liquidities. It is possible to evaluate the short-term liquidity of the firm using three key ratios: current ratio, quick ratio, and cash ratio.

The current ratio indicates the firm’s ability to settle current liabilities using current assets. A higher current ratio indicates that the firm is in a better position to settle current liabilities using current assets. Generally, the current ratio value falls at 2 or more than two. A current ratio figure of below 1 indicates the firm is not able to settle current liabilities using current assets. The current ratio is given by: Current ratio = current assets/current liabilities. From the annual report, Google had total current assets worth $105,408, 000 and total current liabilities worth $16,756,000 (Alphabet Inc., 2016). Current ratio = 105,408,000/16,756,000 = 6.29. The current ratio of 6 indicates that Google has six times current assets compared to the current liabilities. As such, the company can be able to settle its current liabilities using current assets.

The other measure of short-term liquidity is the quick ratio, also known as acid test. The quick ratio is a better measure of short-term liquidity because it evaluates the firm’s ability to settle short-term liabilities without having to sell its inventories. In other words, the quick ratio evaluates the firm’s ability to settle short-term liability using the most liquid assets. The calculation of quick ratio follows the following formula: Quick ratio = (current assets – inventories)/current liabilities. Thus quick ratio = (105,408 – 268)/16,756 = 6.27. This ratio means that Google has $6.27 of liquid assets for every $1 of the current liabilities. This means it is easy for the company to settle its current liabilities without having to sell inventory.

The other measure of short-term liquidity is cash ratio. The cash ratio is a comparison of the company’s cash and cash equivalents and its current liabilities. The cash ratio utilizes the most liquid current assets while ignoring others including the cash receivables. It shows the company’s ability to pay current liabilities at the particular period without having to liquidate other assets. The formula for cash ratio is: Cash ratio = (cash equivalents + marketable securities)/current liabilities. The cash ratio for Google is: cash ratio = 86,333/16756 = 5.15. The results indicate that Google can be able to settle its current liabilities using cash equivalents and marketable securities only. Google has $5.15 of cash equivalents and marketable securities for every $1 of its current liabilities.

Operating Efficiency of the Firm

The operating efficiency of the firm involves measures to determine its utilization of assets as well as management efficiency. Operating efficiency helps in evaluating the utilization of assets by the firm (Rich, Jones, Mowen, & Hansen, 2013). It helps in informing the management the efficiency of asset utilization by looking at how fast the firm converts the assets into sales. As such, efficiency ratios help in examining the relationship between the firm’s assets and sales or the cost of goods sold. There are three main efficiency ratios. These are total asset turnover, receivables or debtors turnover, and inventory or stock turnover. By calculating efficiency ratios, it will be possible to tell how well Google is managing various resources in the course of generating revenues.

Total asset turnover is an efficiency ratio that measures the company’s ability to generate sales with regard to the total investment made in the total assets (Rich, Jones, Mowen, & Hansen, 2013). The calculation of total asset turnover involves making comparisons of the total assets and the net sales of the company. The ratio shows the company’s efficiency in using its assets to generate sales. The formula for total asset turnover is as follows: total asset turnover = net sales/average total assets (Rich, Jones, Mowen, & Hansen, 2013). Total asset turnover = 90,272/167497 = 0.54. This means that for every 1 dollar the company invests as assets, the company obtains $0.54 as revenues. However, it is worth noting that the asset turnover ratio may differ according to the industry. For instance, asset turnover ratio tends to be higher in the retail industry.

The inventory or stock turnover ratio indicates how many times stock is replaced within a year. It helps in telling how quickly goods are sold (Rich, Jones, Mowen, & Hansen, 2013). A low inventory turnover indicates the company is having weak sales, hence excess inventory. On the other hand, a high ratio indicates that the company is having high sales. The formula for calculating inventory turnover is as follows: Inventory turnover = sales/average inventory. The average inventory is calculated as follows: average inventory = (opening inventory + closing inventory)/2. Google’s average inventory is (491 + 268)/2 = 379.5. Inventory turnover = 35,138/379.5 = 92.6. This indicates that Google moved inventory over 92 times a year. By dividing 365 by the inventory turnover, it is possible to see that the inventory is on hand approximately for 3.9 days.

Receivables or debtors turnover ratio highlights the firm’s effectiveness in advancing credit and collecting the accumulated credit as debt (Rich, Jones, Mowen, & Hansen, 2013). It helps in assessing the effectiveness of the firm in utilizing its assets. The receivables or debt turnover ratio is calculated as follows: Debt turnover ratio = net credit sales/average accounts receivable. Debt turnover ratio = 26,064/14,137 = 6.39. The average duration for the accounts receivable is (365/6.39) = 57 days. This means it takes an average 57 days to clear the accounts receivable. The company should reevaluate its credit policy and aim at reducing the average duration to 30 days.

Capital Structure of the Firm

The capital structure of a firm concerns how the firm finances operations and drive growth. A firm may use various sources of fund to finance operations or growth such as issuing of bonds, common stock, retained profits, and among others (Palepu, 2007). Firms may apply a combination of capital structures to finance operations and growth. For instance, the firm may apply short-term and long-term debt, preferred equity, common equity, and including others. The capital structure of the firm comprises of debt and equity. When the amount of debt is significantly high, the firm may present a risk to investors due to the higher possibility of the firm being unable to cater for the current portion of debts. The firm may prefer debt to equity because debt provides tax advantages to the firm (Palepu, 2007). In addition, debt allows the firm to retain total ownership. Financing through equity requires that the firm give up a share of the ownership as determined by the amount of equity. The major benefit of equity is that the firm does not have to pay interest when it makes losses.

The debt-to-equity ratio is key in evaluating the capital structure of the firm. This ratio compares the firm’s total liabilities against the shareholder equity (Palepu, 2007). In other words, the debt-to-equity ratio provides an analysis of the percentage of capital structure financed through debt and that financed though equity. Debt-to-equity ratio is calculated as follows: Debt-to-equity ratio = (Current debt + non-current debt)/shareholders’ equity. Debt-to-equity ratio = 28,461/139,036 = 0.20. The debt-to-equity ratio is below 1, meaning that the company mainly relies on equity to finance operations. Google may consider increasing the portion of debt since it is cheaper to finance operations using debt rather than equity.

Another important ratio is the debt-to-capital ratio. This ratio measures a firm’s application of financial leverage by making comparisons with the total capital and the obligations it is facing (Palepu, 2007). The debt-to-capital ratio shows how the firm applies debt in financing operations with regard to its total capital. Debt-to-equity ratio is calculated follows: Debt-to-capital ratio = total debt/(total debt + shareholder equity) = 28,461/(28,461 + 139,036) = 0.17 or 17 percent. As such, it would be safer to invest in this company since it has a lower debt-to-capital ratio. A company having a high debt-to-capital ratio may face problems with repaying the debt since this could be an indication that the debt exceeds total capital in the company.

Profitability of the Firm

Profitability ratios enable the management to analyze the firm’s earnings and expenses (Gibson, 2012). The firm’s profitability determines its ability to meet operational costs and reward the investors who include the owners and the shareholders. Profitability is one of the critical measures of business success. Profitability is the reward that business owners expect at the end of the financial year (Gibson, 2012). The management is constantly looking for ways to improve profitability. Various profitability ratios can assist managers in evaluating the returns made by the business. Profitability ratios can help in determining the attractiveness of the business to investors. The most popular profitability ratios include return on equity (ROE), gross profit margin, and return on assets.

ROE measures the total returns made by the firm as a percentage or fraction of the shareholder equity. In other words, ROE measures the total returns in terms of profits associated with every dollar committed by the shareholders in form of equity (Gibson, 2012). The formula for ROE is as follows: ROE = Net income/shareholder equity. ROE = 19,478/139036 = 0.14 or 14 percent. This indicates that each dollar of stockholder equity (common stockholders) generates $0.14 worth of net income. A return on equity of 14 percent indicates that the company does not generate high returns for the common stockholders. This is a cause for concern among the management.

Gross profit margin enables the management to evaluate the percentage of income available to cater for operating expenditures. Gross profit margin reveals the amount of money left after the company settles operating costs and expenditures (Gibson, 2012). The formula for calculating gross profit margin is as follows: Gross profit margin = gross profit/revenues x 100 = 55,134/90,272 x 100 = 61%. This figure indicates that 61 percent of the income is available for operations, debt repayment, expansion, payment to shareholders, and for other expenditures. Return on assets (ROA) is a measure of the firm’s profitability in relation to its assets. It measures the efficiency of the management in utilizing assets to yield profits (Gibson, 2012). The formula is as follows: ROA = net income/total assets = 19,478/167,497 = 11.63%. This indicates that the yield on the assets is 11.63 percent of their total value.

Conclusion

Google Inc. is one of the most profitable technology companies in the world. The company is primarily involved in managing online search requests, cloud computing, online advertising, building software and hardware, and other activities. The financial analysis indicates that Google has a strong financial health in various sectors. In particular, the company shows strength in its profitability, capital structure, liquidity levels, and performance. There is need to conduct valuation in order to determine what the firm is worth. Valuation can enable investors know the relative worth of making an investment in the firm. The trend analysis indicates that an increasing number of users are individuals are turning to online world for advertising. Google can take advantage of this to earn higher advertising revenues. Another trend is the use of multiple devices to access the internet and including Google company products. Lastly, Google is set to reap big from non-advertising activities in the future such as Google Play, Google Cloud, and hardware products.

 

References

Alphabet Inc. (2016). Alphabet Inc.: Form 10-K. United States Securities and Exchange   Commission. Retrieved from

Gibson, C. H. (2012). Financial reporting and analysis. Boston, MA: Cengage Learning.

https://abc.xyz/investor/pdf/20161231_alphabet_10K.pdf

Palepu, K. G. (2007). Business analysis and valuation: IFRS edition, text only. London:    Thomson Learning.

Rich, J., Jones, J., Mowen, M., & Hansen, D. (2013). Cornerstones of Financial Accounting.        Boston, MA: Cengage Learning.

 

Appendices

  1. Alphabet Inc. CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts
  2. Alphabet Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions)

Retrieved from https://abc.xyz/investor/pdf/20160331_alphabet_10Q.pdf

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