Google vs. Yahoo Financial Analysis Essay - 1309 Words

Google vs. Yahoo Financial Analysis Dee Wassenberg Columbia College FINC 350 Business Finance Instructor: Darryl Sanborn February 11, 2011 Liquidity ratios, like the current ratio, provide information about a firms ability to meet its short time financial obligations. Short-term creditors seek a high current ratio from prospective clients since it reduces their risk. For investors in a company, such as shareholders, a lower ratio is sought, so that more of a firms assets are working to grow the business. When computing financial relationships, a good indication of the companys financial strengths and weaknesses becomes clear. Examining these ratios over time provides†¦show more content†¦Googles high networking capital ratio, is an indication that the company also is more reliant on creditors to finance its abundant level of revenue producing assets. Profitability ratios such as the (gross) profit margin, is a measure of a firms gross profit earned on sales. The (gross) profit margin while considering the firms cost of goods sold does not include any other cost. As can be seen in the previous chart, all three profitability ratios for Google are considerably higher than of Yahoo and the industry average, which in short means that for 2006, Google was more effective at managing its return on assets and equity, resulting in the company’s substantially increased level of profitability over its peers. For Activity Ratios the asset turnover ratio calculates the total sales (revenue) for every dollar of assets a company owns. A receivables turnover ratio can be used to quantify a firms effectiveness in extending credit as well as collecting debts. A high ratio implies either that a company operates on a cash basis or that its extension of credit and collection of accounts receivable is efficient. A low ratio on the other hand, implies a company should re-assess its credit policies in order to ensure the timely collection of credit accounts that are not earning interest for the firm. In viewing the two activity ratios on the preceding page, it can be seen that from Google’s higher asset turnover ratio that the company is generating twiceShow MoreRelatedBusiness Google vs Yahoo1618 Words   |  7 PagesYahoo vs. Google Financial Analysis Victoria Schmidt MGMT 479: Strategic Management William Mason January 14, 2011 The two companies that I chose that I feel would be a great acquisition from CBamp;M are Google and Yahoo. These are two highly recommended internet search engines. Although, they have other competitors Google and Yahoo are the most used and well known in the US. They are both easy to use and offer many different tools and sites for individuals with internet access. They mayRead MoreAnalysis Of Apple s Time Series And Cross Sectional Vs. 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