Google
Business Models
Google and Microsoft are competitors in two different businesses, search engines and mobile operating systems. Google is the industry leader in search engines, garnering massive amounts of traffic on its different sites. Google has a number of different search sites (maps, scholar, images, translate) that are in line with its mandate to make information more freely accessible. The company's Android mobile operating system has become a major product for the firm, spurring strong growth in the past few years. Android is licensed by OEM companies (smartphone and tablet makers) to use as an operating system. Much of Google's revenue comes from advertisement sales, which are based on search terms and customer information that has been gathered. The company holds a dominant position in this market.
Microsoft's main business is in the Windows operating system and in the company's suite of software. These generate revenues both from OEM computer makers and from end users. The company has a major corporate market as well, including both software and a range of enterprise solutions. Microsoft launched Bing as one of its online properties, but Bing remains much smaller than Google in terms of market share. Microsoft also has a mobile operating system that trails Android by some distance as well. The other major business for Microsoft -- a business in which it does not compete with Google -- is in gaming, with its Xbox property.
Both companies target broad audiences with mass market products, yet both are also focused on earning high margins on those products through differentiation. Both are global companies, though earning the bulk of their revenues from the American market. Both firms have undertaken moves into entirely different product segments in order to augment their businesses and utilize some of the excess capital that they have. There are, therefore, many similarities between these companies.
Financial Analysis
Financial ratio analysis is a means of comparing different companies. Ratios are based on financial statements, which are compiled in accordance with generally accepted accounting principles (GAAP) so that the statements are roughly comparable with one another. This is especially true of firms that compete in the same industry. Google and Microsoft are close enough competitors that ratio analysis is a fair way to analyze the differences between the two of them and determine which company is financially stronger and which one is the better investment.
The first type of ratio to be analyzed is the liquidity ratio group. The most important liquidity ratio is the current ratio. This is a measure of the firm's capacity to meet its financial obligations for the next year, by comparing those obligations to the assets that can be easily liquidated in the coming year. The formula for the current ratio is the current assets divided by the current liabilities. Both of these firms are incredibly wealthy, so both should have fairly high current ratios. Google's current ratio at the end of FY 2011 was 5.91, while Microsoft's current ratio was 2.6. This means that while both firms are very liquid, Google is exceptionally so.
The return on assets (ROA) and return on equity (ROE) statistics measure the ability of the company to convert its assets and its equity into profits. The higher these metrics are the better. For Google, the ROA is 14.9% and the ROE is 18.66%. For Microsoft, the ROA is 22.9% and the ROE is 41.68%. These figures indicate that Microsoft has the better investment returns in both categories. The company's exceptional profits are very high in relation to its asset base and to owner's equity. The latter could well be a function of higher debt levels in its capital structure.
The debt ratio is one of the indicators of the firm's capital structure. A high debt ratio signifies that the firm is heavily leveraged. A high degree of leverage reflects a high degree of risk in the firm, as more of the firm's cash flows from operations must be diverted to debt service. However, this high leverage provides shareholders with superior returns, and debt financing costs less than equity financing. For those reasons, some firms prefer to have a high level of debt. The key to understanding the debt ratio, therefore, is to know when a company is in a difficult financial situation, or when its debt levels are not entirely within the company's control (i.e. they exist to cover steep losses). Google's debt ratio is 0.2, while Microsoft's is 0.47. Google has very little long-term...
Of all future directions, the communications hub seems to make the most sense. Summary What makes Google such a powerful business model is its ability to translate customers' needs into technology that can be used to generate advertising revenue. Google's highly unique business model resists competition and being treated as a commodity as a result. What Google does very well is listen to customers, no matter how they choose to communicate
Additionally, the risk factor is something to take into consideration. Firms that have very high debt ratios are not only closer to insolvency, but because they are riskier will also have higher borrowing costs. There is little to choose form in terms of solvency between these companies, but the higher debt ratio at Microsoft will ultimately be better for investors because more of their money is returned in the
Google and Microsoft Financials Strayer University Assignment 5 Financial management Bus 508 Google, aleader internet information searching, challenged big manes internet technology.Compare contrast Google's business model financial management Micrsoft's, launched Bing Google and Microsoft financial and business performance The increase in internet users and technological advancement has made Microsoft and Google record increased number of customers. The success of any company will entirely be dependent on the financial position and financial records it
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Google is an information services company that makes most of its money in online advertising. The company owns the world's #1 website by traffic (Google.com) and several other top websites in Blogspot and its nation-specific search sites (Google.de, etc.). Google has a number of different product/service offerings including online advertising, the Chrome web browser and the Android mobile operating system. Revenues last year were $37.9 billion and net income was
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