FINANCIAL MANAGEMENT

Financial Management of Google vs. Microsoft



Financial Management of Google vs. Microsoft

Introduction

This paper focuses on the financial management of Google and Microsoft for 3 years that are from 2009 to 2011. Google is a technology company focusing on the areas that include advertising, search; operating systems etc. Google has various websites and other content, and make it available through its Google search engine to anyone with an internet connection. The advertising of Google products entails the Google Dsiplay, Google Search etc. The platforms and operating systems of Google comprises of Google Chrome and Android etc. On the contrary, Microsoft is a global technology company which is best known for its ever present Windows operating systems. Microsoft primarily acts as a software publisher and developer, with products ranging from the Microsoft Office productivity suite to the Xbox video game system. Search engines and online advertising are a relatively minor source of revenue for Microsoft. The online services division of Microsoft that entails revenue for the Search Engines industry which is expected to achieve annualized revenue growth of that is 9.2 % during the five years to 2012 to $ 2.9 billion.

Microsoft re-launched its search engine (previously known as Live Search) as Bing in June 2009. The online services business segment offers personal communication services to internet users, most of which are free. Microsoft finally had success with the 2009 relaunch of Live Search as Bing, billed as a "decision engine." Bing offers highly polished "vertical searches" to help users make decisions; for case in point, Bing's travel search helps users buy the cheapest plane tickets by cross referencing discount travel sites. Microsoft is aggressively pursuing partnerships to expand its vertical search specialties.

Ratio Analysis of Google

Profitability Ratios

12 / 31 / 2011

12 / 31 / 2010

12 / 31 / 2009

ROA % (Net)

14.93

17.3

18.05

ROE % (Net)

18.66

20.68

20.3

ROI % (Operating)

20.96

24.22

25.88

EBITDA Margin %

35.41

39.61

40.91

Calculated Tax Rate %

21

21.22

22.2

Revenue per Employee

1,167,493

1,201,680

1,192,365

Liquidity Ratios

12 / 31 / 2011

12 / 31 / 2010

12 / 31 / 2009

Quick Ratio

5.7

4

10.07

Current Ratio

5.92

4.16

10.62

Net Current Assets % TA

60.41

54.56

65.24

Debt Management

12 / 31 / 2011

12 / 31 / 2010

LT Debt to Equity

0.05

-

Total Debt to Equity

0.07

0.07

Asset Management

12 / 31 / 2011

12 / 31 / 2010

12 / 31 / 2009

Total Asset Turnover

0.58

0.6

0.65

Receivables Turnover

6.78

7.17

8.13

Accounts Payable Turnover

70.78

83.91

120.09

Accrued Expenses Turnover

14.36

14.77

15.66

Property Plant & Equip Turnover

4.37

4.65

4.69

Cash & Equivalents Turnover

3.21

2.46

2.51

Per Share

12 / 31 / 2011

12 / 31 / 2010

12 / 31 / 2009

Cash Flow per Share

45.12

34.77

29.46

Book Value per Share

178.97

143.92

113.3

Profitability Ratios

The profitability ratio of Google Incorporation is not suitable as the past trend that is from 2009 to 2011 reflects that the profitability situation of Google is not satisfactory which can be confirmed through the evaluation of the profitability ratios. From the ratios, it can be observed that the return on equity of Google Incorporation is showing that the structure of profitability from 2009 to 2011 of the company is decreased from 20.3 to 18.66. Besides it, the return on assets shows the capacity of the management of company to successfully use the assets to create more profits; moreover, it is observed that return on assets is also declined through ...