Question

In: Accounting

Access years 2017, 2018, and 2019 financial statements of Yahoo and Google. Complete the following preliminary...

Access years 2017, 2018, and 2019 financial statements of Yahoo and Google. Complete the following preliminary analytical procedures for both companies, and compare between the two companies:
a. Analyze trends in the ending cash balance over time.
b. Compute trends in interest returns on investments.
c. Analyze cash balances, and changes therein, in relation to new or retiring debt obligations.
d. Compute the current ratio (current assets/current liabilities).
e. Compute the quick ratio (cash + cash equivalents + net receivables)/ current liabilities.
f. Compare cash flow to sales (operating cash flow/sales) and profitability (operating cash flow/net income).

Solutions

Expert Solution

GOOGLE
PARTICULARS 2019 2018 2017
CASH BALANCE
- Cash and cash equivalents 1,84,98,000 1,67,01,000 1,07,15,000
- Other Short term investments 10,11,77,000 9,24,39,000 9,11,56,000
% CHANGE
- Cash and cash equivalents 11% 56%
- Other Short term investments 9% 1%
Current debt        11,99,000 0 0
Cash to current debt (times)               15.43 - -
Interest return on investment
Interest income (as per SOPL)

24,27,000

18,78,000

13,12,000
Investment
% interest return on investment
Current assets (A)

15,25,78,000

13,56,76,000

12,43,08,000
Current liabilities (B)

4,52,21,000

3,46,20,000

2,41,83,000
Current ratio (A/B)                 3.37               3.92               5.14
Quick ratio
Cash and cash equivalents plus net receivables (A) 147167000 130333000 120576000
Current liabilities (B)

4,52,21,000

3,46,20,000

2,41,83,000
Quick ratio (A/B)                 3.25               3.76               4.99
PARTICULARS 2019 2018 2017
Operating cash flow

         5,45,20,000

         4,79,71,000

         3,70,91,000
Sales

       16,18,57,000

       13,68,19,000

       11,08,55,000
Cash flow to sales 34% 35% 33%
net income          3,59,28,000          3,13,92,000          2,88,82,000
profitability (cash flow / net income)                       1.52                       1.53                       1.28
YAHOO $ MILLION
PARTICULARS 2019 2018 2017
CASH BALANCE
- Cash and cash equivalents 2,594 2,745 2,079
% CHANGE
- Cash and cash equivalents -6% 32%
Current debt                   10,777                     7,190                     7,040
Cash to current debt (times)                       0.24                       0.38                       0.30
Interest return on investment
Interest income (as per SOPL) 121 94 27
Investment
in financial assets
short term investments 14,284 12,246 13,390
Total 14,284 12,246 13,390
% interest return on investment 1% 1% 0.2%
Current assets (A) 37,473 34,636 29,913
Current liabilities (B) 44,868 37,930 33,037
Current ratio (A/B)                       0.84                       0.91                       0.91
Quick ratio
Cash and cash equivalents plus net receivables (A)                   28,023                   27,847                   25,572
Current liabilities (B) 44,868 37,930 33,037
Quick ratio (A/B)                       0.62                       0.73                       0.77
PARTICULARS 2019 2018 2017
Operating cash flow                   19,788                   16,039                   30,550
Sales 1,31,868 1,30,863 1,26,034
Cash flow to sales 15% 12% 24%
net income 30,378 22,278 27,425
profitability (cash flow / net income)                       0.65                       0.72                       1.11

ekkarill92 answered 1 year ago
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