Financial And Accounting Essay

4081 words - 17 pages

Content

1.0 Executive summary………………………………………………………………..…………3

2.0 Introduction………………………………………………………………………..…………4

3.0 Company profile……………………………………………………………………..……….4

3.1 Google………………………………………………………………………..……….4

3.2 Market performance…………………………………………………………..………4

3.3 Yahoo…………………………………………………………………………………5

3.4 Market performance………………………………………………………………..…5

4.0 Financial ratios………………………………………………………………………………..6

5.0 Interpretation of ratios…………………………………………………………………….….7

5.1 Profitability ratio………………………………………………………………...……7

5.1.1 Return on asset…………………………………………………………...…7

5.1.2 Return on ...view middle of the document...

16

1.0 Executive summary

The focus of this report is to analyze and get a clear picture of the market performance of the two companies and to get a clear picture of the financial information so that a possible potential investment could be made in between the two listed companies. As the investment manager of the company it will be most appropriate to analyze the annual report of the companies for the past two years so that the interpretation could be done for the positives and negatives alongside the financial and market strength.

The two competitors and rival giants that we have chosen form the IT industry for the analysis are

1. Google

2. Yahoo

Both the companies are well established and have consistently been performing in the market. The task of selecting between these two companies is a dilemma and hence we have decided to study the performance of both these giants based on finance and markets before making a possible investment.

According to an E- business report by Larry Freed in 2009 Google has retained its position in the E businesses a market leader, the report shows that in 2009 Google internet searches amounted to 63. 9% total internet searches while yahoo amounted to 21.3% of total searches. These results show that Google internet searches are triple those of the yahoo company. (Larry Freed, 2009)

The report also indicates the customer satisfaction indices for the company; in 2002 Google customer satisfaction index was 80 while in 2009 the customer satisfaction index was 86. On the other hand yahoo customer index was 76 in 2002 and 78 in 2009. This shows that yahoo the second largest E business company customer satisfaction index has remained relatively lower than the Google company value. (Larry Freed, 2009)

This paper discusses the differences and similarities of the two companies and which company would be the best investment option, a number of financial ratios are indicated to highlight the level of activity, debt, profitability and liquidity of the two companies.

2.0 Introduction

Financial ratios are a calculated to interpret the financial performance of any firm. The ratios can be calculated from the information available in the balance sheet with the help of some classical formulas. By calculating the ratios we can see the trends, patterns and behavior of the company so that it will be easy for comparing with another company or with the industry standard.

The companies selected for us are Google and Yahoo. Both the companies are form IT industry. Due to the financial crisis started by 2007 the markets have been dull. The stock market securities suffered major loss during 2008 and 2009 and investing options for the year still has some significant risk. Henceforth before investing trends of the markets have to be analyzed.

3.0 Company profile

3.1 Google

Google is a multi-national public company. Their main business streams are internet search, advertising and...

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