Calculation of Financial Ratios for Google - 1550 Words

The company that I have selected for Financial Ratio analysis is GOOGLE. The Ratios that I am going to analyze are grouped under four main headings: 1) Profitability Ratio 2) Liquidity Ratio 3) Debt Ratio 4) Market Ratio 1. Profitability Ratio - Profitability ratios measure the firm s use of its assets and control of its expenses to generate an acceptable rate of return. a. ROE - Return On Equity - Measures the rate of return on the ownership interest (shareholders equity) of the common stock owners. ROE is viewed as one of the most important financial ratios. It measures a firm s efficiency at generating profits from every dollar of net assets (assets minus liabilities), and shows how well a company uses investment dollars to†¦show more content†¦1a. PROFITABILITY RATIOS RETURN ON EQUITY (ROE) = Net Income / Equity 2002 (millions) 2003 (millions) 2004 (millions) 2005 (millions) 2006 (millions) 2007 (millions) NET INCOME $ 99.66 $ 105.65 $ 399.12 $ 1,465.40 $ 3,077.45 $ 4,203.72 EQUITY $ 187.82 $ 602.64 $ 2,929.06 $ 9,418.96 $ 17,039.84 $ 22,689.68 ROE 53% 17.5% 13.6% 15.5% 18.1% 18.5% Data Source: http://finance.google.com/finance?fstype=iiq=NASDAQ:GOOG / http://investor.google.com/fin_dataXXXX.html (Where XXXX = Year i.e 2003; 2004 etc. The data is available from 2003 onwards) Balance Sheet Income Statement. For the Financial Statement file attached with the assignment, click on the annual data and then on either Balance Sheet; Income Statement or Cash Flow to see the data. 1b. PROFITABILITY RATIOS RETURN ON INVESTMENT (ROI) = Net Income / Total Assets 2002 (millions) 2003 (millions) 2004 (millions) 2005 (millions) 2006 (millions) 2007 (millions) NET INCOME $ 99.66 $ 105.65 $ 399.12 $ 1,465.40 $ 3,077.45 $ 4,203.72 TOTAL ASSETS $ 286.89 $ 871.46 $ 3,313.35 $ 10,271.81 $ 18,473.35 $ 25,335.81 ROI 34.7% 12.1% 12% 14.3% 16.7% 16.6% Data Source: http://finance.google.com/finance?fstype=iiq=NASDAQ:GOOG / http://investor.google.com/fin_dataXXXX.html (Where XXXX = Year i.e 2003; 2004 etc. The data is available from 2003 onwards) Balance Sheet Income Statement. For the Financial Statement file attached withShow MoreRelatedFinancial Ratios Of Pepsico Inc Essay868 Words   |  4 PagesThe calculation of ratios is the calculation technique for analyzing a company’s financial performance that divides or standardize one accounting measure by another economically relevant measure. 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