Q1. Review the following accounts, subtotals, and totals; (1) describe your observations; and then (2) identify what your observations indicate. A response is given for Cash and Short-term Investments to help with understanding.
a. Cash and short-term investments. more than doubled from 12/31/2008 to 12/31/2011, comprising more than 80% of total assets on 12/31/2011, indicating a company that is rich in cash.
b. Goodwill... _________________________________________________________________
c. Total assets. ________________________________________________________________
d. Contributed capital totals __________ million on 12/31/2011. ______________________________________________________________________________
e. Retained earnings... ___________________________________________________________
Q2. Compute the ratios requested in the chart below. For ratio formulas and explanation refer to Appendix B€”Ratios.

* Industry: Internet Information Provider€”Industry ratio averages from money.msn.com
For each ratio, (a) compare the two years of company ratios and circle the ratio indicating lower financial risk, (b) cross out any company ratio indicating greater financial risk than the industry norm, and (c) comment on the results.
Q3. Overall, the balance sheet and related ratios indicate a (_________________/ steady / weakening) financial position. Why? List observations that support your conclusion and explain why.
INCOME STATEMENT
Q4. Compute the ratios requested in the chart below. For ratio formulas and explanation refer to Appendix B€”Ratios.

* Industry: Internet Information Provider€”Industry ratio averages from money.msn.com
Q5. Review the DUPONT ANALYSIS of ROE for Google on the previous page.
a. Regarding overall profitability (ROA), the most significant influence can be attributed to
(_______ / Asset Turnover / both contribute about equally).
Regarding ROE, the most significant influence can be attributed to
(_______ / Financial Leverage / both contribute about equally).
c. For each ratio, (a) circle the stronger ratio, (b) cross out any ratio that is weaker than the industry norm, and (c) comment on the results.
Q6. Compute the missing information for 2011 in Google€™s common-size income statements below.

a. Common-size operating expenses (_______/ decreased), indicating (_______/ interest income / provision for income tax) increased as a percentage of revenue.
b. Provision for income tax (increased / _______) as a percentage of revenue.
c. Since 2010 2009, ROS (increased / _______), indicating profitability is (_______/ up).
Q7. The income statement and related information indicate (strengthening / _______ / weakening) earnings potential. Why? List observations that support your conclusion and explain why.
Q8. The primary source of cash was (________________ / issuing debt / issuing capital stock) and the primary use of cash was (purchasing PPE / ________________/paying dividends).
For investments, there was a net cash outflow during (________________/ ________________/ ________________/ 2008), indicating that more investments were (________________/ sold).
Q9. Compute the ratios requested in the chart below. For ratio formulas and explanation refer to Appendix B€”Ratios.

For each ratio, (a) circle the company ratio the strongest cash position and (b) comment on the results.
Q10a. Complete the missing information in the common-sized statement of cash flows for 2011.

* Only select amounts are listed above so will not sum to the total.
b. In what year did Google issue a significant amount of debt? (2011 / _______ / 2009 / 2008)
c. In what year did Google report a net decrease in cash? (_______ / 2010 / 2009 / 2008)
What was the cause of the decrease?
Q11. The statement of cash flows and related information report a (__________ / steady / weakening) cash position. Why? List observations that support your conclusion and explain why.
Q12a. Complete the statement of retained earnings below.

b. As of 12/31/2011, since incorporation Google has earned profits and losses totaling _________ million.
c. Does Google pay dividends? (Yes / _______) What might be the reason for this?
Q13. Based on the financial statements presented for Google, would you invest in this company? (_______/_______) Why? Support your response with at least five good observations.

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Industry Norm* 5.0 2990 Google 12/31/2011 12/31/2008 Current ratio Debt ratio Google DUPONT ANALYSIS of ROE ROS Asset tumover | Industry Norm 22.4% 0.63 2011 2008 ROA Financial leverage ROE 14.1% 1.24 17.5% Google Common-Size 2011 2010 2009 2008 INCOME STATEMENT 100% 36% 29% +1% 8% 29% | 100% 37% 27% +0% 8% 28% | Revenue Cost of goods sold Operating expenses Nonoperating revenues (expense) Provision for income tax Net income 100% 4090 30% .4% 8% 19% | - - 25.7% Google RATIOS Industry Norm NA NA NA NA 2011 2008 Free cash flow (S in millions) Cash flow adequacy Cash flow liquidity Quality of income Google STATEMENT OF CASH FLOWS Common-Size (S in millions) 2008 100% 20190 196% -30% 2011 2009 100% 33590 | 23790 | -407% | -313% 2010 Net cash from operating activities Sale of investments Purchase of investments Purchase of PPE, net Issuance (repayment) of debt, net Cash dividends paid Net change in cash 100% | -3690 31% 09.0 25% 31% 17% 33% Google STATEMENT OF RETAINED EARNINGS (S in illions) For the years ended December 31, 2011 2010 20092008 Retained eamings, beginning Net income Dividends paid Other adjustments Retained eamings, ending S 9,335 4,227 (719) 0 | | $ 13,562