Google Financial Analysis - 4310 Words

| Sumit Das-Assignment 2 | Financial Ratio Analysis-Google Corporation | | Sumit | 3/12/2013 | | Contents Objective of Study 2 Analysis of Auditors Report 2 Common Size Ratio Analysis 3 Analysis of Liquidity Ratios 4 Analysis of Leverage ratios 5 Analysis of Efficiency Ratios 6 Analysis of Profitability Ratios 7 Analysis of Effectiveness/Market Performance Ratios 8 Summary 9 Current Ratio (2011) 9 Average Collection Period 9 Debt Ratio 9 Accounts Payable turnover 10 Gross Profit Margin 10 Return on Assets 10 Recommendations 11 Objective of Study Financial ratio analysis is a very important element of fundamental analysis process. Working through number in a financial statement can†¦show more content†¦From a Managerial perspective the ability of the company to generate revenues is very important. Also from the investors point of view it is very important the company is able to meet running its operations. Firstly looking at the current and quick ratio values for Google Corporation for the year 2011 we can see that both maintained a fair value of 5.92 and 5.7 respectively. The high values of these ratios and very less difference between two values show that the company has been extremely efficient in meeting its operating activities. Also on comparing with the industry average values of 3.53 and 2.82 for the current and quick ratio we can see that Google is much more efficient that other companies in the industry. Another very important measure of the liquidity of the company is the average collection period. For Google Corporation we see that the average collection period has been fairly consistent in the late 50’s (58.93 in 2011). If we compare this value with the industry average of 71.11 we can see that Google has been fairly efficient in collecting cash on credit sales or which go into the account receivables. Another important measure of the liquidity of the company is the percentage of current assets to the total assets. Companies maintaining a high degree of liquidity generally tend to keep this ratio pretty high .For Google Corporation we see that he value of this ratio is as high as 60.41. 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