Select a publicly traded company you are interested Read and

Select a publicly traded company you are interested. Read and analyze the Management Discussion and Analysis included the last 10K or 10Q filing. answer the following: What ratios are discussed What industry trends are discussed which of the financial statements is the most informational for the company what did you learn about the company

Solution

We have selected the \"Google Inc\" (GOOG) as our publicly traded company

The ratios that are discussed are:

1. The net profit margin which is a ratio of the net income to the total revenue/sales generated by the business. A higher net profit margin means the business is more profitable. Google Inc has had on average about 21% as the net margin which is much higher than that of the industry.

2. Current ratio: The current ratio is the ratio of the current assets to the current liability. Google has an extremely healthy current ratio of 5.14 as the financial reports of the last full year. A current ratio of more than 1 is good meaning the firm has enough current assets to cover for current liabilities. Here, we have it as 5.14 meaning this is excellent

3. Debt/Equity ratio: This ratio gives a picture of the proportion of debt and equity for the business. Always lower debt is more attractive to investors due to lower probability of distress. Google has a debt to equity ratio of 1.29 meaning it has slightly higher than the industry. It is recommended to reduce the debt on the long run.

4. Return on Assets: The return on assets depicts as to how well the assets are being utilized by the business to generate the profits. A higher ratio would be better. Google on average over the last 10 years has had a healthy ROA of 12% which is a tad better than that of the industry at 10.5%

5. Return on Equity: The return on equity is important for the investors as it gives the expected return on equity of the firm. It is the ratio of net income to total shareholder equity. A higher ratio would be better. Here also Google has a ROE of about 15-20% over the last 10 years which is better than that of the industry.

The income statement was the most comprehensive and I learned the most from here. The income statement depicted the net income (bottom line) and the revenue generated along with costs associated and taxes.