Key comparative figures ($ millions) for both Apple and Google appear below: Key

Question

Key comparative figures ($ millions) for both Apple and Google appear below:

Key Figure Apple Google

Liabilities and Equity $290,479 $147,461

Net income 53,394 16,348

Revenues and Sales 233,715 74,989

a. What is the total amount invested in (i) Apple and (ii) Google?

b. What is the return on assets for (i) Apple and (ii) Google? Apple’s beginningyear assets equal $231,839 (in millions) and Google’s beginning-years assets equal $129,187 (in millions)

c. How much are expenses for (i) Apple and (ii) Google?

d. Is return on assets satisfactory for (i) Apple and (ii) Google (Assume competitors average a 10% return).

e. What can you conclude about Apple and Google from these computations?

Explanation / Answer

Apple Google a Total amount invested = Liabilities (outsiders) + equity (insiders) $290,479 $147,461 b Return on assets = Net income/Average assets Net income $53,394 $16,348 Beginning of the year Assets $231,839 $129,187 Ending of the year Assets $290,749 $147,461 Average assets (Beginning assets+Ending assets/2) $261,294 $138,324 Return on assets 20% 12% c Expenses = Revenue and sales-Net Income Revenue and sales $233,715 $74,989 Net income $53,394 $16,348 Expenses $180,321 $58,641 d Is return on assets satisfactory Yes Yes Both the companies has return on assets more than competitors average thus, it is satisfactory e All these computations state that the Apple is doing much better than Google, its return on assets is 8% higher than Google, also the net income of Apple is 200% above Google

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