It is required for an investor to analyze the company with a competitive company to analyze the market perfectly. In this report, two companies have been analyzed which are working in the same industry. Various factors of both the companies are analyzed to identify the best company and the lose points of the company. For this report, Alphabet and Baidu have been taken into the consideration such as their KPIs, financial performance, ownership, market share, financial statement etc.
Company overview:
Alphabet Inc. is an American company. This company has been incorporated on 18th January 2000. This company has been founded by Robin Li. Currently, this is the parent company of Google and various others subsidiaries company of Google. The head office of the company is at California, U.S. this company mainly deals in the technology, internet, life sciences, software, research and development etc. the clients of the company are many businesses.
Baidu Inc. is a Chinese company. This company has been incorporated on 2nd Oct 2015. This company has been founded by Robin Li. The head office of the company is at Beijing, China. this company mainly deals in the technology, internet, life sciences, software, research and development etc. the clients of the company are many businesses.
Financial performance of both the companies:
The balance sheet of the ALPHABET INC and BAIDU INC has been analyzed to identify the position of the company. It has been found that the balance sheet of both the companies have been stronger than last 5 years. Currently the growth rate of the assets of BAIDU INC is more than the ALPHABET plc.
The cash flow statement of the ALPHABET INC and BAIDU INC has been analyzed to identify the position of the cash flow of the company (Morningstar, 2017). It has been found that the cash inflow of both the companies have been stronger than last 5 years. Currently the cash inflow of ALPHABET INC is greater than the BAIDU INC.
According to the Income statement of the ALPHABET INC, it has been found that the financial performance of the company has been enhanced from last 5 years. In 2016, the total revenue of the company was USD 90272 million which was 20.38% higher than the 2015 (Morningstar, 2017). Further, the financial performance of the BAIDU has been analyzed and it has been found that the performance of the company enhanced from last 5 years. In 2016, the total revenue of the company was USD 70549 million which was 6.28% higher than the 2015.
Performance of the company:
Both of the companies have been incorporated by their parent company. One has been incorporated by Google and BAIDU has been incorporated by a Chinese web company. The main principal subsidiary companies of both the firms are Google and 91 wireless web soft limited. The main risk factor of both the companies is internet issues and government regulations (Annual report, 2017). They could mitigate this risk through cresting some string strategies and by taking the permission and maintaining good relations with the government.
KPIs:
The major non financial KPI of both the companies are their strong market base, loyalty of customers, relations with their stakeholders, performance in the market, stability in the economy etc. KPIs are quite crucial for every firm to manage its activities and run them smoothly. The value could be created by the company for its stakeholders through applying new policies and strategies for them.
Both the financial reports have been analyzed and it has been found that the reporting of both the company’s statements is bit different from each other. The ALHPABET INC has prepared its report according to US standards and BAIDU INC has prepared its reports according to CHINA standards. Mainly the differences have been seen in the format of the statements. The results of both the companies are same (Annual report, 2017).
International transaction:
BAIDU is mainly focusing on the Chinese market but in 2016, company has also decided to enter into 150 new economies the ALPHABET INC is serving its services all over the world. The huge turnover of the ALPHABET PLC is from US, UK, India, Australia etc. whereas the BAIDU’s main turnover is from China itself. The productions of the company are done in their home country mainly. Both the company’s financial statements are analyzed and it has been found that the GAAP rules have been followed by both the companies. The accounting standards of both the companies are different.
The potential exposure is identified by both the campiness and grab that opportunities to enhance the growth, market share and the performance of the company. The tax purpose of both the companies is different and thus the companies pay the amount of tax to its government according to that rate. The tax rate of china levels from 15 to 20% (trading economy, 2017) whereas the US tax rate levels from 30 to 35% (PWC, 2017). Both the companies are liable to get the extra offers of tax advantages due to their new investments.
Conclusion:
According to the comparative study over both the companies, it has been found that both the companies are performing well in their market and the performance of both the companies sin terms of financial and non financial figures are similar.
References:
Annual report. 2017. ALPHABET INC. retrieved from https://abc.xyz/investor/ as on 9th oct 2017.
Annual report. 2017. BAIDU INC. retrieved from https://ir.baidu.com/phoenix.zhtml?c=188488&p=irol-news&nyo=0 as on 9th oct 2017.
Morning star. 2017. ALPHABET INC. Retrieved from https://financials.morningstar.com/cash-flow/cf.html?t=GOOG®ion=usa&culture=en-US as on 9th Oct 2017.
Morning star. 2017. BAIDU INC. Retrieved from https://financials.morningstar.com/cash-flow/cf.html?t=BIDU®ion=usa&culture=en-US as on 9th Oct 2017.
PWC. 2017. Corporate- taxes on corporate income. Retrieved from https://taxsummaries.pwc.com/ID/United-States-Corporate-Taxes-on-corporate-income as on 9th Oct 2017.
Trading economics. 2017. China corporate tax rate. Retrieved from https://tradingeconomics.com/china/corporate-tax-rate as on 9th Oct 2017.
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