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Organization Ratios Against Industry Averages

Researchers Madiha Latif, Muhammad Hassan, Abdul Latif, Imran Rasheed, and Usman Yusaf, reviewed the financial performance of Google Inc. against the technology industry in a 2014 study, of which, they ultimately found that the most recent data demonstrates that the number of Google users are increased on a day-to-day basis and that subsequently, business consumes its sales and profits. Upon completion of the financial ration analysis of Google Inc. and the Technology industry, Google was shown to come out ahead with a comprehensively satisfactory report, of which highlighted an efficient and adequate solvency and liquidity position that will thus allow the ability to take future challenges head-on (Latif, Hassan, Latif, Rasheed, & Yusaf, 20114). According to the performed financial analysis (2014), Google is the strongest within the liquidity category against the technology industry, and according to the figures, financial institutions may be more interested in providing them a loan or credit on account of its said strong liquidity position.

As far as the average collection period, Google comes out as inefficient comparable to the technology industry as a whole, and furthermore, indicates that Google should have to revise their credit policies within operations (Latif, et al, p. 105, 2014). Additionally, both the fixed assets and inventory turnover ratio figures reflect a satisfactory report, and it expresses the fact that Google has been utilizing its assets precisely and efficiently in deploying its resources [the 2013 Google versus Industry financial ratio analyses results are as follows: Google current ratio: 4.58, industry current ratio: 2.13; Google quick ratio: 3.41, industry quick ratio: 1.83; Google inventory turnover: 140.43, industry inventory turnover: 32.89; Google net profit margin: 21.60%, industry net profit margin: 18.91%; Google return on equity (ROE): 14.80%, industry return on equity (ROE): 23.32%; and Google return on assets (ROA): 11.65%, whereas industry return on assets (ROA) equaled 12.53%] (p. 105, 2014).

In further assessing the above stated ratio figures, we can conclude that Googles debt-to-equity ratio confirms that it has been more efficient and properly leveraged compared to the industry as a whole. Moreover, we can also see that meager return on assets and equity within Google Inc. tends to lead to an inefficient usage of said assets and equity (2014). Moving along, Google has a significant net profit margin (21.60%) compared to the technology industrys 18.91%, hence signifying likely favorable conditions for Google going forward as it continues to meld into new segments (2014). A word of recommendation for Google would be to focus more time and energy on governing its operating costs. Relative to the technology industry, Google does have an advantage in its leverage ratio (ROA) and with respect to its use of assets; however, it does also have a worse return on equity record on account of its low net profit margin (2014). In addressing its issue to effectively generate profits from sales, Google would benefit from critically evaluating the reasons behind it losing market share in some of its essential business areas or segments.

Risks and Impacts of Business

Just as with any organization, business, or firm, Google is also subject to various risks and uncertainties that have the potential to affect its operations and financial results. The industry along with technology is rapidly changing and Google constantly faces extraordinary competition. In addition to the sheer competition, Googles ongoing investment in new businesses and products, services, and technologies is intrinsically risky, and could negatively disrupt its progressing business (Google 10-K, n.d.). A significant portion of its revenues are derived from advertising, and a reduction in spending by or loss of advertisers may seriously impede or harm its business (n.d.). Each of the aforementioned potential risks and impacts thus far have the wherewithal to create a decline in revenue growth over time, thereby also dragging down Googles operating margin as well.

Google is also subject to increased regulatory scrutiny as they continue to expand into an assortment of new fields as an organization, which could in turn negatively impact its business; not only this, but they are regularly subject to claims, suits, government investigations, and other proceedings that may easily result in detrimental outcomes (n.d.). Google currently expels a great deal of time, energy, and funds on acquisitions, of which, may result in operating issues, dilution, and other potential negative consequences. Furthermore, a multitude of both new and existing laws may interfere with or harm business; for instance, according to Googles latest 10-K Report, we face similar risks and costs overseas as our products and services are offered in international markets and may be subject to additional regulations. Any failure on our part to comply with these laws and regulations can result in negative publicity and diversion of management time and may subject us to significant liabilities and other penalties (p. 10).

Additionally, Googles international operations also expose them to subsequent risks that could harm its business, operating results, and/or financial situation. Its international operations and segments are substantial to its revenues and net income, as it accounted for nearly 57% of its consolidated revenues in 2014 (n.d.). However, in certain international markets, Google has limited operating experience and may not possess the ability to fully benefit from any first-to-market advantages (n.d.). Supplemental risks and impacts of conducting global business include the following, but are not limited to: changes in political, economic, regulatory, social, or labor conditions; restrictions on foreign ownership and investments and stringent foreign exchange controls; import and export requirements, tariffs, trade disputes and barriers; an increased credit risk from longer payment cycles in certain countries; different employee/employer relationships, and other challenges presented by distance, language, and cultural differences (n.d.).

Ethical and Regulatory Considerations

According to the most recent Google Inc. 10-K Report (2014), its management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act (p. 79), and furthermore, there were no changes to report regarding its internal control over financial reporting occurring the quarter ended December 31, 2014 (n.d.). Author Katrine Juel Vang (2013) offers that Googles credibility as a knowledge provider should largely depend upon its accountability as an editor; meaning that this ethical standard should not simply be believed or taken for face value, but rather, that in light of how profoundly Googles services have become relied upon and trusted, there ought to be a discussion on the critical role and responsibilities of the service it provides concerning Googles filtering capabilities. Additionally, authors David Crowe and Wasim A. Al-Hamdani (2013) propose that with an ever-expanding portfolio of service offerings, Googles privacy policy ought to clear, explicit, and upfront about its the types of data collected from its users, and relating to said data usage. After all, Google is not the sole proprietor in the information marketplace, and it is definitely not going anywhere, but as the global leader in this space, it must remain visible in what it strives to accomplish while we persist in defining what the Internet actually is, how to effectively utilize it, and even in learning how to efficiently limit its seemingly-boundless applications.

Organization and Industry

Not only is Google Inc. a nationally-known name and organization within the United States, rather, it is an internationally-renowned American multinational technology company, specializing in Internet-related services and products such as online advertising technologies, search engine, cloud computing, and software (Google, n.d.). Importantly, as a technology company, Google Inc. (GOOG) provides products and services that aim to organize information, and reports four extensive revenue segments: the Google website, AdSense Google Network websites, total advertising and other revenue (Investopedia, 2014).

As reported by Investopedia (2014), within the Google website segment, the leading competitors are as follows: search innovator Yahoo (YHOO), Internet pioneer and media company AOL (AOL), technology behemoth Microsoft, business and career social networking sites LinkedIn and Facebook, in addition to an assortment of other companies as well. Subsequently, relating specifically to the AdSense Google Network websites, they also directly-compete with the aforementioned Yahoo and AOL among others (2014). With respect to the total advertising revenue segment, Googles top competitors in this sphere in addition to Yahoo and AOL are the following: employment website operator Monster Worldwide, online travel conglomerate Expedia (EXPE), media company Scripps Interactive (SNI), and media conglomerate E.W. Scripps Company and Online Auctioneer eBay (EBAY) (2014). The following does not represent an all-inclusive and final list of top contenders; however, each company listed hereafter is its [Googles] biggest competitors in this area: the Gannett Company, Inc., the Walt Disney Company (DIS), IAC Interactive (IACI), Facebook, Priceline, and Twitter (2014).

Within the other revenues subdivision, Google competes with database pioneer and technology services gargantuan Oracle, software company PTC, Intel, and independent software companies CA Technologies and Compuware (2014). Moreover, other direct-competitors within this area include very big names such as: Cisco Systems, Hewlett-Packard, Symantec, Moodys Investor Services, IBM, Salesforce and even Microsoft (2014).

Market Share

According to Netmarketshare.com, as of May 16, 2016, Googles reach is quite extensive and continues to enjoy the majority of the global search engine market share. In fact, Googles services represent 69.89% of the global share, by far surpassing its closest competitor Bing at 11.94% by a colossal 57.95% (2016). The subsequent six remaining top competitors global search engine shares are rather insignificant comparable, for example, coming in third place, Baidu, currently represents 8.53%, Yahoo claims 7.78%, Ask represents a modest 0.25%, AOL consists of 0.14%, Excite makes up 0.01%, and other represents 1.46% of the total pie (2016). Additionally, the following represents the breakdown of global online visitors to Google.com as of March 216, by country: The United States makes up 34.4% of visitors, India accounts for 10.2%, Japan for 3.5%, Iran at 3.2%, and Russia at 2.6% (Statista.com, 2016).