Problem:
Left with a ton of money, your grandparents want to invest in a company and trust you to recommend which one is best. You decide to make 3 sets of documents for your grandparents to consider: business analysis, combined income and cash flow statement, and trend analysis.
Business Analysis:
Complete a business analysis (external and internal) for Google. Possible sources include the following:
-Annual report or form 10-K
-Magazine or newspaper articles
-Company Web sites
-Government information
-Industry information
-Rating agencies
-Analyst reports
-Internet articles
Combined Income and Cash Flow Statement
Download Google's most recent annual report.
- Does the firm's income, dividends, and other capital transactions explain change in equity for the most current year?
- Does the firm's cash flow statement begin with the net income in the income statement?
- Does the firm's cash flow statement show an equal change in cash to the difference between cash from the balance sheet at the start of the year and end of the year? In Excel, construct a combined income statement and cash flow statement.
Answer the following:
If there was a big difference between the net income amounts and the reported cash flow amounts what would you do?
How could technology limit the likelihood of this happening again?
Trend Analysis
Create a trend analysis of operating ratios for at least 3 years' worth of financial data. Prepare it in Excel.
If you adjusted for any nonrecurring items in step 1, explain the adjustments in a separate Word document. Use any other information in Google's annual report to explain the change in revenues, gross margin percentage, and operating margin percentage. Add this information to the Word document.