Google and Microsoft



Google and Microsoft

Ratio Analysis

Google

 

 

GOOGLE

Microsoft

Ratio

Definition

2011

2010

2011

2010

Current Ratio

Current assets/Current liabilities

5.92

4.16

2.60

2.13

Quick Ratio (acid test)

Current assets - Inventories/Current liabilities

5.92

4.16

2.56

2.10

Fixed-asset turnover

Sales/Fixed assets

1.91

1.8

2.07

2.05

Return on Asset

NI/Total Assets

13.42%

14.70%

21.30%

21.79%

Return on Equity

NI/Total Equity

16.75%

18.39%

40.55%

40.63%

Debt Ratio

Total debt/Total assets

19.88%

20.07%

47.38%

46.38%

Dividend payout ratio

Dividends per share/Earnings per share

-

-

4.87%

6.02%

The liquidity of both the companies is very good , however Google is far better than Microsoft when it comes to liquidity ratios. When we compare the businesses Google is far ahead of Microsoft, which is often reflected from its results. Although, Google is facing competition, but it is still not significant enough to create problems for Google. The fixed asset turnover of Microsoft is higher than that of Google, which shows a higher efficiency of utilizing fixed assets. However, the difference is not very significant. Similarly, the return on Equity and Return on Assets of Microsoft is higher than that of Google. Microsoft just needs to keep a check on its debt which is almost twice as that of Google. It is also possible that this debt is acting as leverage for financial figures to go up (Schmidt, Varian, 2005).

Business Model

Google has been in the search engine industry since 1998, and it is now a one of the most successful companies worldwide. Google is the most used search engine worldwide because of its quality services.

Google Inc. was founded in 1998 by two graduate students at Stanford University, American Larry Page and Russian Sergey Brin. They have developed a novel method to analyze the linkages of hypertext - the algorithm BackRub, then renamed it to PageRank, which is used as the prototype in your web browser. The company survived the collapse of the dot-Homemade market and has grown since then, with the support of private investors. Initially, the work on the servers was done by the American Stanford University student, for the domain google.stanford.edu until registration of google.com on September 15, 1997. The first in the history of the financial support was given to Google, equal to the amount of one hundred thousand dollars, given before the actual foundation of the company Google Inc. The donor was Andy Bechtolsheim , co-founder of Sun Microsystems , and it was a financing and business angel (ICFAI, 2003).

In 2004, the company entered the U.S. stock exchange, and since then there has been a substantial acceleration of its expansion, purchasing sites likes YouTube, Writely and acquisitions of several other smaller companies.

Google currently employs over 20 000 employees in several countries, and has revenues of over 10 billion and profits of 3 billion dollars annually. Already during the first four years, the sale increased from 200 thousand to $ 1.5 billion. The corporation is known for the free working climate; unusual privileges for employees. According to the ranking of the Fortune magazine, the company currently occupies fourth place among the best employers. The company's headquarters is located in Mountain View, County of Santa Clara, in California , the USA , in the previously belonging to a SGI.

The company offers world class services to its ...