Question
-Calculate several ratios—I would suggest at least one from each of the categories (profitability, liquidity, solvency, and activity/efficiency) from chapter 4 (chapter 11 in Marshall) in the text plus at least one ratio that you have found somewhere else or even made up.
-Examine the numerator and denominator of your primary ratio.
-Examine your primary ratio more thoroughly.
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Millions
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Dec. 31, 2015 Dec. 31, 2014
Current assets: Cash and cash equivalents $ 16,549 $ 18,347 Marketable securities 56,517 46,048 Total cash, cash equivalents, and marketable securities (including securities loaned of $4,058 and $4,531) 73,066 64,395 Accounts receivable, net of allowance of $225 and $296 11,556 9,383 Receivable under reverse repurchase agreements 450 875 Income taxes receivable, net 1,903 591 Prepaid revenue share, expenses and other assets 3,139 3,412 Total current assets 90,114 78,656 Prepaid revenue share, expenses and other assets, non-current 3,181 3,187 Non-marketable investments 5,183 3,079 Deferred income taxes 251 176 Property and equipment, net 29,016 23,883 Intangible assets, net 3,847 4,607 Goodwill 15,869 15,599 Total assets 147,461 129,187
Current liabilities: Accounts payable 1,931 1,715 Short-term debt 3,225 2,009 Accrued compensation and benefits 3,539 3,069 Accrued expenses and other current liabilities 4,768 4,408 Accrued revenue share 2,329 1,952 Securities lending payable 2,428 2,778 Deferred revenue 788 752 Income taxes payable, net 302 96 Total current liabilities 19,310 16,779 Long-term debt 1,995 3,228 Deferred revenue, non-current 151 104 Income taxes payable, non-current 3,663 3,340 Deferred income taxes 189 758 Other long-term liabilities $ 1,822 $ 1,118 Commitments and contingencies
Stockholders’ equity: Convertible preferred stock $ 0 $ 0 Class A and Class B common stock, and Class C capital stock and additional paid-in capital 32,982 28,767 Accumulated other comprehensive income (loss) (1,874) 27 Retained earnings 89,223 75,066 Total stockholders’ equity 120,331 103,860 Total liabilities and stockholders’ equity 147,461 129,187 Google Inc.
Current assets: Cash and cash equivalents 16,549 18,347 Marketable securities 56,517 46,048 Total cash, cash equivalents, and marketable securities (including securities loaned of $4,058 and $4,531) 73,066 64,395 Accounts receivable, net of allowance of $225 and $296 11,556 9,383 Receivable under reverse repurchase agreements 450 875 Income taxes receivable, net 1,903 591 Prepaid revenue share, expenses and other assets 3,139 3,412 Total current assets 90,114 78,656 Prepaid revenue share, expenses and other assets, non-current 3,181 3,187 Non-marketable investments 5,183 3,079 Deferred income taxes 251 176 Property and equipment, net 29,016 23,883 Intangible assets, net 3,847 4,607 Goodwill 15,869 15,599 Total assets 147,461 129,187
Current liabilities: Accounts payable 1,931 1,715 Short-term debt 3,225 2,009 Accrued compensation and benefits 3,539 3,069 Accrued expenses and other current liabilities 4,768 4,408 Accrued revenue share 2,329 1,952 Securities lending payable 2,428 2,778 Deferred revenue 788 752 Income taxes payable, net 302 96 Total current liabilities 19,310 16,779 Long-term debt 1,995 3,228 Deferred revenue, non-current 151 104 Income taxes payable, non-current 3,663 3,340 Deferred income taxes 189 758 Other long-term liabilities $ 1,822 $ 1,118 Commitments and contingencies
Stockholders’ equity: Convertible preferred stock $ 0 $ 0 Class A and Class B common stock, and Class C capital stock and additional paid-in capital 31,313 28,767 Accumulated other comprehensive income (loss) (1,874) 27 Retained earnings 90,892 75,066 Total stockholders’ equity 120,331 103,860 Total liabilities and stockholders’ equity $ 147,461 $ 129,187
Explanation / Answer
PROFITABILITY RATIO
Return on Asset = (Net Income/Total Asset) X 100
2014 Net Income: $ 14,136.00
2014 Total Asset: $ 129,187.00
ROA: (14,136.00/129,187) X 100
ROA: 10.94%
LIQUIDITY RATIO
Current Asset Ratio = Current Asset /Current Liabilities
2015 Current Asset: $ 90,114.00
2015 Current Liability: $ 19,310
Current Asset Ratio: 90,114/19,310
Current Asset Ratio: 4.67
SOLVENCY RATIO
2015 Total Equity = $ 120,331
2015 Total Asset = $ 147,461
Proprietary Ratio = 120,331/147,461
Proprietary Ratio = 0.81
ACTIVITY RATIO
Total Asset Turnover Ratio = Net Income/Total Asset
2015 Net Income: $ 16,348.00
2015 Total Asset = $ 147,461
Total Asset Turnover Ratio = (16,348/147,461) X 100
Total Asset Turnover Ratio =$11.09
