Google Vertical Analysis
Executive Summary
Google is one of the leading companies in Internet Information Providers industry, which controls over 66 percent of the internet search market. The company has developed a vast portfolio of products to support its expansion strategy, with Android OS, Google Docs, Google Maps, and the Social Network Google+, among many others. Its primary source of revenue is generated from advertising. Despite the sluggish economy of past years, Google managed to consistently increase its revenues at an average pace of 23 percent per year, increasing its total shareholders’ equity by 286 percent since 2007. The company maintains healthy financials with significantly lower than industry average debt to equity ratio of 25 percent. Its P/E ratio has been consistently decreasing in row with its maturing industry. The company is a dominant player in its sector and is expected …show more content…
They key revealing element of the analysis (Appendix B), is that horizontal and vertical analysis have to be done together to avoid misinterpretation of information. The horizontal analysis has shown an average 26.53 percent annual growth in total equity. However, when paired with relative vertical analysis, a year to year average growth is in decline of -2.36 percent. The “cash” position has increased by 164.2 percent from a base year; the comparative vertical indicator shows a decline from 11.33 percent in 2007 to 6.49 percent in 2011 relative to total assets. Despite market downfall in 2008/09, the company has maintained a stable growth in gross profit at an average pace of 26 percent, according to the horizontal annual income analysis, and comparatively to a vertical analysis, a steady average growth of 62.5 percent from 2007 through 2011 with average upward change of 1.319 percent relative to total revenue. Also, liabilities experienced a decline of nearly 107 percent from two previous years of
Google is one of the leading companies in Internet Information Providers industry, which controls over 66 percent of the internet search market. The company has developed a vast portfolio of products to support its expansion strategy, with Android OS, Google Docs, Google Maps, and the Social Network Google+, among many others. Its primary source of revenue is generated from advertising. Despite the sluggish economy of past years, Google managed to consistently increase its revenues at an average pace of 23 percent per year, increasing its total shareholders’ equity by 286 percent since 2007. The company maintains healthy financials with significantly lower than industry average debt to equity ratio of 25 percent. Its P/E ratio has been consistently decreasing in row with its maturing industry. The company is a dominant player in its sector and is expected …show more content…
They key revealing element of the analysis (Appendix B), is that horizontal and vertical analysis have to be done together to avoid misinterpretation of information. The horizontal analysis has shown an average 26.53 percent annual growth in total equity. However, when paired with relative vertical analysis, a year to year average growth is in decline of -2.36 percent. The “cash” position has increased by 164.2 percent from a base year; the comparative vertical indicator shows a decline from 11.33 percent in 2007 to 6.49 percent in 2011 relative to total assets. Despite market downfall in 2008/09, the company has maintained a stable growth in gross profit at an average pace of 26 percent, according to the horizontal annual income analysis, and comparatively to a vertical analysis, a steady average growth of 62.5 percent from 2007 through 2011 with average upward change of 1.319 percent relative to total revenue. Also, liabilities experienced a decline of nearly 107 percent from two previous years of