Alphabets Financial Ratios Analysis

Introduction

Alphabet is a large multinational company working in a field of innovation and technology, which also owns Google. Financial ratios help examine and analyze a companys financial status. Based on debt and equity, assets turnover, liquidity, and return on investment, one can make a judgment regarding Googles strengths and weaknesses, as well as performance. This paper will examine performance, activity, financing, and liquidity warnings of Google.

Essence

Googles gearing ratio is 2%, and it displays the debt and equity of the business (Alphabet Inc. (GOOG), n.d.). This is a good indicator, suggesting that this company does not have much debt. In regards to liquidity, Googles current ratio, based on 2018 performance, is 3.9 (Alphabet Inc. (GOOG), n.d.; Brigham & Ehrhardt, 2017). Next, to evaluate the activity, the total assets turnover will be examined, and for Google, it is $260,073 million for the second quarter of 2019 (Alphabet Inc. (GOOG), n.d.).

The quick ratio is 3.75, and the cash ratio is 3.15. When analyzing the companys past performance, one can state that all three liquidity ratios have deteriorated. This means that Google either increased its short-term debt or decreased its assets.

To examine profitability, return on investment can be used, and for Google, it is 18.67 % (Alphabet Inc. (GOOG), n.d.). Notably, this ratio has decreased since the same period of the last year. The strengths of Google; hence, it possesses a large number of assets and can invest in its development. The weaknesses include the companys liquidity since all ratios decreased significantly since 2017. Based on these ratios, one can argue that Googles performance is excellent overall. However, the liquidity of the company has decreased significantly. In general, the paper examined the financial ratios of Google Inc. and analyzed its performance based on this information.