In January 2014, Google Inc was considering the acquisition of Nest Labs Inc for $3,200 million Nest Labs manufactures and distributes smart thermostats and smoke alarms, with auto programming and detection capabilities that allow users to control remotely Nest sold about 40k devices monthly for $119 million in annual revenue for 2013 Overall, the home hardware industry is expected to grow 3 2 annually The transaction allows Google to deliver products in smart home applications, which is expected to grow more rapidly than the general home industry In the first year under its ownership, Google is anticipating cash flows of $22 4 million Googles cost of capital is estimated at 6 5 Based on the information above, what growth rate in cash flows is required to cover the cost of acquiring Nest Would you have bought Nest Labs Please describe Did Google have the financial capacity to acquire Nest Labs in 2014 Use the data below to assess this question Hint calculate financial ratios, specifically illustrating leverage and liquidity USS (Millions) Total Revenue Cost of revenues Gross Profit Sales Marketing G A R D Operating Profit Net Income 2013 59,825 25,858 33 967 7 253 4,796 7,952 13,966 2012 50,175 20 634 29,541 6 143 3,845 6,793 12,760 2011 37,905 13 188 24,717 4,589 2,724 5 162 12 242 2010 29,321 10 417 18,904 2,799 1,962 3,762 10,381 2009 23,651 8 844 14,806 1 984 1,667 2,843 8,312 12 920 10,737 9,737 8,505 6,520 USS (Millions) Current Assets Total Assets Current Liabilities Short term debt Long term debt Total Liabilities Total Equity 2013 72 886 110 920 15,908 3 009 2 236 23,611 87,309 2012 60 454 93 798 14337 2 549 2 988 22,083 71,715 2011 52 758 72 574 8,913 1 218 2 986 14,429 58 145 2010 41 562 57 851 9 996 3 465 2009 29 167 40 497 2 747 11,610 46,241 4,493 36,004

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In January 2014, Google Inc. was considering the acquisition of Nest Labs Inc. for $3,200 million. Nest Labs manufactures and distributes smart thermostats and smoke

In January 2014, Google Inc. was considering the acquisition of Nest Labs Inc. for $3,200 million. Nest Labs manufactures and distributes smart thermostats and smoke alarms, with auto-programming and detection capabilities that allow users to control remotely. Nest sold about 40k devices monthly for $119 million in annual revenue for 2013. Overall, the home hardware industry is expected to grow 3.2% annually. The transaction allows Google to deliver products in smart home applications, which is expected to grow more rapidly than the general home industry. In the first year under its ownership, Google is anticipating cash flows of $22.4 million. Googles cost of capital is estimated at 6.5%

Based on the information above, what growth rate in cash flows is required to cover the cost of acquiring Nest? Would you have bought Nest Labs? Please describe.
Did Google have the financial capacity to acquire Nest Labs in 2014? Use the data below to assess this question. Hint = calculate financial ratios, specifically illustrating leverage and liquidity.

USS (Millions) Total Revenue Cost of revenues Gross Profit Sales & Marketing G&A R&D Operating Profit Net Income 2013 59,825 25,858 33.967 7.253 4,796 7,952 13,966 2012 50,175 20.634 29,541 6.143 3,845 6,793 12,760 2011 37,905 13.188 24,717 4,589 2,724 5.162 12.242 2010 29,321 10.417 18,904 2,799 1,962 3,762 10,381 2009 23,651 8.844 14,806 1.984 1,667 2,843 8,312 12.920 10,737 9,737 8,505 6,520 USS (Millions) Current Assets Total Assets Current Liabilities Short-term debt Long-term debt Total Liabilities Total Equity 2013 72.886 110.920 15,908 3.009 2.236 23,611 87,309 2012 60.454 93.798 14337 2.549 2.988 22,083 71,715 2011 52.758 72.574 8,913 1.218 2.986 14,429 58.145 2010 41.562 57.851 9.996 3.465 2009 29.167 40.497 2.747 11,610 46,241 4,493 36,004