Internet Exercise As you know, a company’s return on investment (or ROI) is the

Question

Internet Exercise

As you know, a company’s return on investment (or ROI) is the product of its margin and

turnover. Financial analysts often compute and analyze a company’s ROI by obtaining the

required data from its annual report. Unfortunately, the analyst is usually unable to determine the

precise amounts of the company’s operating and nonoperating assets. Although this obstacle is a

limitation, the information is still useful to some extent.

Search the Securities and Exchange Commission’s EDGAR corporate filings data base at

http://www.sec.gov/edgarhp.htm for the annual report on Form 10-K of each of the two

companies listed below.

• Google Inc. (choose the one with the Standard Industrial Code (SIC) of 7370)

• Yahoo Inc. (choose the one with the SIC of 7373)

Using data from the two most recent annual reports of these two companies, compute the margin,

turnover, and ROI for each company for the two most recent fiscal years. After reviewing the

ratios, briefly discuss each company’s performance, and then compare and contrast the

performances of the two companies.

Explanation / Answer

Yahoo is acquired by Verizon and there is no seperate data available for Yahoo

Google Verizon (Yahoo) 2017 - Margin (Gross) 58.88% 59.09% 2016 - Margin (Gross) 60.82% 59.18% 2017 - Turnover $ 110.86 Billion $ 126.03 Billion 2016 - Turnover $ 90.27 Billion $ 125.98 Billion 2017 - ROI 7.33 % 6.32% 2016 - ROI 12.92% 6.08%

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