Google is a global technology champion determined to improve the way people access information. Our interactive innovations as a web search engine have made our website the most popular and the first destination to the billions of internet users on daily basis. Currently, Google brand is the most recognized in the world. The company is much focused in maintain the world’s leading online index of websites and other related contents. This information is made available to any internet user across the world with an internet connection. With our automated search technology, relevant search results can be displayed in a fraction of a second from our vast online index (Google 9).
Google generate revenue by providing online advertising from businesses around the world using our AdWords programs to inform potential targeted clients on their products and services. Other numerous third party websites of companies comprising the Google network use Google AdSense program. Using this program, these companies can deliver relevant ads that generate additional revenue while enhancing the user experience.
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Our mission is to organize global information and avail it in a useful way and make it universally accessible. We focus on using the most effective and profitable means putting the needs of our users first. In Google, we offer high quality user experience leading to increased traffic and strong self-advocacy through the use of word of mouth promotion. In our many years of service, we have seen the company convert from a private owned company to a public company since our first initial public offer (IPO) shares, in the New York Stock Exchange company. Our outstanding performance can be well illustrated using financial ratios as described below.
Current Price Earning (P/E) Ratio
This is a valuation ratio of a company’s current share price compared to per-share earnings.
Meaning that in our case, Google is currently trading at $587 a share and earnings over the last quarter were $ 29.23B per share, the P/E ratio for the stock would be 20.1. This interprets that an investor is willing to pay $20.1 for every $1 of current earnings. This suggests that investors are expecting higher earnings growth as compared to other companies of this nature and this is quite competitive and promising (Tamari 53).
Return on Equity ROE
This is the amount of net income returned as a percentage of shareholders equity. This is the measure of company’s profitability by showing how much profit a company generates with the fund that shareholders invested in the stock market. ROE is calculated as =19.51%
Google Return on Equity = 19.51%
This is the measure of return on net worth. The net income is taken from a whole year before dividends are paid to common stock holders. ROE helps in comparing the profitability of a company to that of other firms in the same industry.
It is the ratio of total liabilities to stakeholders equity calculated as shown below.
Google debt/common Equity Ratio 0.06
A high debt/equity ratio indicates that a company has been aggressive in financing its growth with debt. This results into additional interest expense. This can lead to bankruptcy which may leave shareholders with nothing. This is within the computer company’s debt/equity limit which is set preferably below 0.5 (Tamari 9).
Return on Assets – ROA
This is the measure of how profitable a company is relative to its total assets. Return on assets indicates hoe efficient the management is at utilizing its assets to generate revenue. This is calculated as a ratio of company’s earning to its total assets, this ratio is also referred to as return on investments.
This is calculated as shown in the formula below
Google Return on Assets = 13.9%
Return on assets informs an investor what earnings were generated from the invested capital (assets). This is a comparative measure when choosing on which company to invest in the same industry.
This is a ratio used to know the value of a company by comparing the book value to the market value. This is calculated by examining the firm’s historical accounting value. Market value is determined in the stock market.
Book-To-Market Ratio =1.173
Book-To-Market Ratio = 1.173
Meaning the stock is undervalued. This ratio identifies overvalued or undervalued securities by dividing the book value by the market value. If the ratio is above 1 then the stock is undervalued and if it is less than 1, the stock is overvalued.
This is the ratio of profitability. This is calculated from dividing net income by revenues or net profits divided by sales. A higher profit margin is an indicator of a more profitable company with better control over its costs as compared to its competitors.
Profit margin = 27.05%
Google’s profit margins = 27.05%
The above ratios indicate clearly that investing by buying Google’s shares in the stock market is the best decision for guaranteed returns on your retirement benefits project. In five years’ time, the value of Google’s share will be quite competitive as indicated by the ratios above.
Invest wisely. Invest with a company whose future is bright by buying the least offer of 100 shares, invest with Google Inc.
Company Secretary Google Inc.