please answer the following questions based on the reading below:

1-whether your company is creating value based on all three parts of your project: stock price analysis, CAPM results, and financial ratios.

2- Specifically, is your company creating value for shareholders? You need to answer this question directly. Support your statement with relevant ratios, stock price movements, and news events.

Google Ratio Analysis and Value Creation

Google LLC is a technology company that is one of the leaders in the sector. It started its operations as a search engine business. Throughout the years, the company has expanded to more revenue streams like software development, hardware development, cloud computing and many more products. The company has a strong brand reputation as one of its key capabilities that gives it a competitive edge over its rivals. The company has been very profitable as seen in the financial ratios for the past six years.

Financial ratio analysis is important to determine the strength and the weaknesses of a company. This is very crucial to know the financial health of Google. We will look at eight financial ratios and discuss them and their patterns over the past 6 years. These are the current ratio, quick ratio, total asset turnover, accounts receivable turnover, total debt/equity ratio, price earnings ratio, return on common equity ratio and the return on assets ratio. These ratios are shown in the table 1 below.

Table 1: Financial Ratios

For the Fiscal Period Ending	LTM 12 months Sep-30-2021	12 months Dec-31-2020	12 months Dec-31-2019	12 months Dec-31-2018	12 months Dec-31-2017	12 months Dec-31-2016
Current Ratio	3.0x	3.1x	3.4x	3.9x	5.1x	6.3x
Quick Ratio	2.9x	3.0x	3.3x	3.8x	5.0x	6.0x
Total Asset Turnover	0.7x	0.6x	0.6x	0.6x	0.6x	0.6x
Accounts Receivable Turnover	8.1x	6.5x	7.0x	7.0x	6.8x	7.0x
Total Debt/Equity	11.5%	12.5%	8.0%	2.3%	2.6%	2.8%
Price Earnings	25.69	29.89	27.20	23.70	58.13	27.71
Return on Common Equity %	30.9%	19.0%	18.1%	18.6%	8.7%	15.0%
Return on Assets %	14.0%	8.7%	9.0%	9.5%	9.9%	9.4%

The current ratio measures the ability of a company to repay its short-term liabilities with their current assets. For Google, the ratio has been on the decline for the last six years. The ratio was the highest in the financial year 2016 with 6.3 times. It reduced to 5.1 times, 3.9 times, 3.4 times, 3.1 times and 3 times in the years 2017, 2018, 2019, 2020, 2021 respectively. Google is a large company that has been expanding its core business and plans to expand it in the coming years. Every business expansion needs capital that is used to finance research and development (Mykov & Hjek, 2017). To do that a company must raise the required capital using equity or debt. On this part, we can see that Google has increased its short-term liabilities or the current liabilities. Increasing the current liabilities has led to the decrease in the current ratio of the company. Though the ratio has been decreasing which may be weakness, the company still can repay its short-term obligations with its current assets as the latest ratio is three times.

The quick or the acid test ratio is almost like the current ratio. This is a ratio that tells us about the ability of a company to repay its current liabilities using the most liquid current assets. It means that the repayment will be done using all the current assets minus the inventories. Just like the current ratio, this ratio has been on the decline in the last six years. The ratio was the highest in the financial year 2016 with 6.0 times. It reduced to 5.0 times, 3.8 times, 3.3 times, 3.0 times and 2.9 times in the years 2017, 2018, 2019, 2020, 2021 respectively. The decline which us a weakness has been caused by an increase in the current liabilities of the company that have been increased to cater for the operations of the company like business expansion.

The total assets ratio is another ratio we are interested in. The ratio has been the same at 0.6 times from the year 2016 to the year 2020. It then increased to 0.7 times in the year 2021. An increase in the ratio means that the company has reduced its inventory. An increase in the ratio also means that the sales of the company have increased. This means that the marketing and sales department have done a good job by increasing the sales of the company. This is a strength of the company as it means that the company has increased its efficiency.

The other ratio is the accounts receivable turnover. It was the highest in the year 2021 with a ratio of 8.1 times. In 2016, the ratio was 7 times, it decreased to 6.8 times in 2017. It then increased to 7 times in 2018 and remained at 7 times in 2019. In 2020, it decreased to 6.5%. This ratio measures how the company is efficient in collecting its. This is a strength of the company as it shows that the payments that the company should be paid are paid in time. The credit policy of the company is good, and the customers are honoring the policy. Thus, the company is collecting its receivables on time. This is a strength of the company.

Another ratio that we have been interested in is the total debt to equity ratio. This is a ratio that evaluates the financial leverage of the company. It measures how a business is financing its operations. This is either through debt or through wholly owned funds or equity. This ratio has been very low for the company with a ratio of 2.8% in the year 2016. The ratio declined in the following two years to 2.6% in 2017 and 2.3% in the year 2018. It has increased to 8% in 2019 and to 13% in 2020 and then slightly declined to 11.5% in 2021. An increase in the total debt to equity ratio means that the company has increased the value of total debt with respect to the total equity in those years. Though the ratio is increasing, the debt is still low with respect to the equity of the firm meaning that this is a strength of the firm. An increase in the debt is due to more financing needed for the business expansion where the funds are used in the research and development department to finance innovation and making of new products.

Another ratio is the price to earnings ratio. This is a very important ratio as it is used to compare the price of the shares with the earnings per share of the business. It will tell if the stock of the company is highly priced, lowly priced or in between with respect to the earnings of the company. Googles price to earnings ratios are 27.71 times, 58.13 times, 23.70 times, 27.20 times, 29.89 times and 25.69 times for the years 2016, 2017, 2018, 2019, 2020 and 2021 respectively. The company has always had a high ratio. The ratio has been increasing and is very high since Google is on the higher range of the technology companies. The high ratio may mean that the company may be overvalued. It also may mean that there is an expected future growth for the company. Thus, the firm may be priced with respect to the future growth thus good in the long term.

The other ratio that we are interested in is the return on common equity ratio. This measures how much the stockholders get from the company with respect to their investment. The largest ratio has been in the year 2021 where the ratio is 30.9%. The lowest was in the year 2017 where it was 8.7% as it decreased from 15% in the year 2016. It then increased to 18.6% in the year 2018 and decreased to 18.1% in the year 2019. It then increased to 19% in the year 2020. An increase in the return on common equity means that the average common equity has decreased. A decrease in the common equity with respect to the debt means that the company has increased its debt and therefore the common equity has shrunk with respect to debt. It may also mean that the dividends given to the investors have increased.

Another ratio that we are interested in is the return on assets. Of the six years that we are interested in, the return on assets is the highest in the year 2021 with a ratio of 14%. From the year 2016, the ratio increased from 9.4% to 9.9% in the year 2017. The ratio decreased to 9.5% in the year 2018 and was on a decreasing trend in the years 2019 and 2020 with a ratio of 9% and 8.7% respectively. When the return on assets increases, it shows that her company is efficiently using its assets to create more profits and when it decreases it means that the assets are generating less. For the year 2021, it means that the profits of the company have increased leading to a very high return on assets. This may be due to an increased use of digital services provided by Google in during the Covid-19 pandemic which has increased the revenues thus the profits.

From the financial ratio analysis, we can say that Google is creating value. This is because the return to the investors is increasing. The efficiency on how the company is using its assets is also on the increase.