Question 2: Conduct a research regarding Googles last five (5) years two (2) key

financial ratios. Evaluate and conclude whether investors should be impressed with its
financial performance by comparing to that of Microsofts and Apples financial
Year 2010/2011

Firms
(ROA
)

Firms
Curre
ROA
nt
Ratio

Curre
nt
Ratio

Google

performance.
Apple
Microsof

Averag
t
e
Year 2011/2012
=
=
=
= 72%
Google
Apple
Microsoft
Averag
$12,384 $34,205
$28,366
3
e
= 24%
Year 2012/2013
=
=
=
=
Google
Apple
Microsoft
Average
$72,574 $116,371 $14554
$108,70 $56,285
$22,647Year 67%
2014/2015
=
=
=
=
= 17%
= 29%
4
Firms
Google
Apple
Microsoft
Average
3
Year 2013/2014
$15980
$50291
$27,481
=
26%
ROA
=
=
=
=57(%)
Google
Apple $93,798Microsoft
Average
$176,064
$121,271 =
== $17360
= = $53867
=
=
$19,755
$73,248
$19288
49% 3
== 19%
22%
= $74,918
16% = $28417
= 10.13
32%
Average for 5 years
$52,758 $44,988
$110,92 $207,00
$142,431 = 3
$231,839
$172,384
53%
Firms
Google
Apple
Microsoft
3
=19%
16%
0 3
= 19%
= 23%= $
= 17%
$147,461
$290,479
$176,223
=
==
=08.32
$129187 Retur
= 17+16+22+13+13
29+32+24+23+25(%)
= 26+19+19+17+11(%)
=
3.38
=
14%
=
24%
=
$8,913
$27,970
$28,774
=
13%
=
25%
=
11%
60,454
$57,653
$85,084
3
= 13%
n on
(%)
5
5
=
=
18%
= 5.92
=Total
1.61
= 2.60 Current
=
==
==
5
= 133 ==
= 92
$73,286 $124,712
$101,466 8.28
8.97
= $78,656 = $68,531
= Ratio
$114,246 $90,114
= $72,886 $89,378
2.77
Asset
=
81
5
5
$14,337
$38,542
$32,688
3
$16,779
$63,448
$45,625
8.27
$80,610
3
s
5
27%
= 18%
= 1.50
==
2.60
=
2.99
= 4.69
= 1.08= 4.22 = 2.50
3
=
1.11
=
$15,908
$43,658
$37,417
(ROA)
= 16%
$19,310
$49,858
= 2.76
2.76
= 4.58
= 1.68
= 2.50
2.71=
Curre
=
=
= 4.67
=
nt
5.92+4.22+4.58+4.69
1.61+1.50+1.68+1.08+1.
2.60+2.60+2.71+2.50+2.
Ratio
+4.67
11(%)
50 (%)
5
5
5
= 24.08
= 6.98
= 12.91
5
5
5
= 4.82
=1.40
= 2.58

Source: Annual Report of Google, Apple and Microsoft (2010-2015)

Return on Total Assets (ROA)

Average of 3 firms for 5

years
= 16+27+18%
3
= 61
3
= 20%
= 4.82+1.40+2.58
3
= 8.8
3
= 2.93

Google's ROA
20%

17%

15%
10%
5%
0%
2010/2011

2011/2012

2012/2013

2013/2014

2014/2015

ROA

Source: Annual Report of Google, Apple and Microsoft (2010-2015)

According to the table and graph above, we can conclude that the result of Return on
Total Assets (ROA) of Google decline gradually which is from 17% in the year of
2010/2011 to 16% in the year of 2011/2012.After that, the ROA raise from 16% in the
year of 2011/2012 to 22% in the year of 2012/2013. Then it drops again from 22% in the
year of 2013/2013 to 13% in the year of 2014/2015. Throughout the first 5 years from
2010/2011 to 2014/2015, Google score lower result in its ROA compared to Apple and
Microsoft Company but during the year of 2012/2013, Googles ROA score higher than
Microsoft at the same time also score same result with the average of ROA for each firm
although it is still lower than Apple Company.
During the year of 2014/2015, Google did well in using its assets to generate earnings
before contractual obligations must be paid compared to Microsoft. That is why Google
can achieve 14% in its ROA which is 2% more than Microsofts ROA which is 11% only.
In short, throughout the 5 years, Google achieve its ROA result which is below the
average because the average result of ROA for 5 years is 20% while Google only score
15% in average throughout the 5 years. In other words, Google has least efficiency to use
its assets compared to other 2 companies throughout the 5 years. At the same time, the
table shows that the total assets of Google increase faster than its profits. In term of the
recommendation, Google should use less its assets in operations in order to generate more
profits in the future since capital assets are often the biggest investment for most
companies.
Current Ratio

Google' Current Ratio

5.92
4.22

2010/2011

2011/2012

4.58

4.69

4.67

2012/2013

2013/2014

2014/2015

Source: Annual Report of Google, Apple and Microsoft (2010-2015)

Based on the table and graph above, we can determine that the Googles current ratio
decline gradually which is from 5.92 in the year of 20120/2011 to 4.22 in the year of
2011/2012. In the next 4 years, Googles current ratio raise slowly which is from 4.22 in
the year of 2011/2012 to 4.67 in the year of 2014/2015. Throughout the 5 years, Googles
current ratio is ranked as foremost for having the highest result compared to Apple and
Microsoft Company. Besides, the average of Googles current ratio throughout the 5
years score 4.82 which is higher than the total average of current ratio for 3 firms, 2.93.
Hence, the result shows that Google has a greater ability to pay off its short-term
liabilities with its current assets compared to its competitors throughout the 5 years
because the Googles current assets grow faster than its current liabilities. In short,
Google did well in its liquidity ratio throughout the 5 years compared to its competitors.