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Google Inc Capital Structure

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by

Kristofer Wohlgang

on 8 April 2014

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Transcript of Google Inc Capital Structure

Tax benefits
January 2, 2013:
American Taxpayer Relief Act of 2012




Reduced provisioning for income taxes
Added discipline
Observable gap between management and stockholders

Bankruptcy
Values consindered:
Quick R (4.58)
Current R (4.58)
Debt/Equity (0.12)
Income/TA (0.1)
Bankruptcy indicator is below 0.1
Rating > "BB"
Bankruptcy risk is minimal (no serious risk)
Agency costs
BS --> Normal range (Intangible Assets)
High agency conflict

Conclusion
Highly competitive
Financially stable and secure
Flexible
Rapid growth and expansion
Wide service range
Growing Income
Good bankruptcy indicator
Flexibility
CAPEX:
Life Cycle 2
Founded 1996 as university project
First growth: 1999 "Google Search Engine"
Second growth: 2007 "Android Mobile OS"
Now: Leading corporation
Return differential approach
Capital Structure Analysis
Added discipline observable
86.70% are held by external investors
CAPEX not predictable
High flexibility
Easy distribution of new services
Life Cycle 1
Optimal capital structure
Management Effectiveness
Focus: ROA and ROE
Management is giving shareholders more for their money
Good D/E


Good market position
Sector approach 1
Sector approach 2
Leading firm in several sectors
Broad service range
Regular acquisitions
Business solutions
Cost-efficient
Highest growth rate of sectors
Full transcript