Google is a rapidly expanding company, as shown by percentage increases in its financial statements. From 2002 to 2003 the company has accumulated current liabilities faster than its current assets, as shown by its current ratio moving down. However, its available liquid assets to pay off its debts have risen, as evidenced by an improving cash flow liquidity ratio. Microsoft, on the other hand, had a higher current ratio in 2003 than the year before, meaning that it had more growth in current assets than current liabilities, and the cash flow liquidity also shows this trend.
Yahoo has a slight increase in current ratio, but a decrease in its cash flow liquidity ratio that implies slower conversion of receivables to cash by the company. Google’s debt ratio and debt to equity ratios have fallen, implying that the company is on a fast track to growth, pulling back accumulated retained earnings to finance this instead of borrowing. Microsoft’s debt and debt-to-equity ratios have also fallen, albeit not as much, with probably the same reliance on retained earnings to finance expansion.
Yahoo, on the other hand, has had higher debt ratios from last year, with a greater dependence on borrowed funds than either of the two other companies. The gross margin has been relatively stable, but the operating and net profit margins fell sharply in 2003, suggesting that Google had a difficulty controlling operating expenses. MSN Hotmail or the Microsoft’s profit margins have been relatively stable, with a steady increase in revenue, suggesting that they have kept costs in pace with increase in revenues.
Meanwhile, Yahoo has had its gross margin slip from 2003, but with a much higher operating and net profit margin. This suggests that the company has reined in on its operating costs as opposed to its product costs, with a net positive effect of a higher net profit.
Hoovers. (2004). Free Email: Google, MSN Hotmail and Yahoo. Retrieved February 18, 2008, from Hoovers Web site: http://www. hoovers. com
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