5.

Financial information
5.1 Budgets & Sales Projections

It is not a secret that Google makes one of the most awesome tools. Many of the things
they offer are particularly popular with teachers and students. They tick a few of the biggest
boxes theyre easy to use, integrate well with each other, and most of all, theyre free. But
despite their excellent utility in classrooms, Google is making way cooler stuff than GMail,
Drive, and hangouts.
It is a wide variety of stuff, which the graphic refers to as their roadmap to world domination.
Will we be ruled by Google? If it means you never have to drive all the way back to work to get
your house keys, do you care?
As for the future, Google has made clear future projections. Until 2018, Google expects
to have more than 100,000 millions USD in sales, with an operating profit of 40,000 million
USD.




Operating profit is the profit earned from a firm's normal core business operations. This
value does not include any profit earned from the firm's investments (such as earnings from firms
in which the company has partial interest) and the effects of interest and taxes. Google has
settled the target of 40,000 million USD until 2018, an almost 10 % increase compared to the
current year and of 15% compared with 2010, when the crisis began. Googles operating profit
increase is an important change considering the fact that this company registered this in the crisis
period, when the majority of the companies have had the opposite and it is expected to be more
or less constant, as is was starting with 2008.
When talking about the net income, Google also has future expectations. The company
estimated that its net income will triple until 2018, from the value of 10,000 million USD, thet
the company registers in the current year uptil 30,000 million USD in 2018.
As for the net margin and the operating margin, the company forecasted a slow and
constant increase, not as significant as its sales, or operating profit.

The following graph represents a future projections for sales, finance or debt, EBITDA
and leverage.
What is important here is the fact that Google expects future important investments,
especially for 2017 and 2018 for its own developing projects. This major finance will get up the
to value of 155,000 million USD for 2017 and 200,000 million USD in 2018, exceeding its
future expected sales with almost 100,000 million USD.



Also, Googles EBITDA (earnings before interest, tax, depreciation and amortization)
expectations are mainly about a constant increase which was registered starting with 2008.
Considering the companys projections, it is expected that by 2018 the firm will have a small, but
constant increase.
Actuals in M $ Estimates in M $
Fiscal Period December 2011 2012 2013 2014 2015 2016
Debt - - - - - -
Finance 40 422 42 551 53 472 54 751 76 320 98 387
Operating income (EBITDA) 16 067 18 929 21 334 26 156 31 088 36 510
Leverage
(Debt/EBITDA)
- - - - - -
Capital Expenditure 3 438 3 273 7 358 8 381 8 101 8 151
Book Value Per Share (BVPS) 89,5 $ 109 $ 130 $ 157 $ 186 $ 218 $
Cash Flow per Share 22,3 $ 25,0 $ 27,5 $ 30,9 $ 38,2 $ 45,4 $
Announcement Date
01/19/2012
09:01pm
01/22/2013
09:02pm
01/30/2014
09:01pm
- - -

The company has not included its debts in the projections , as they considered as part of
the finance. What is also important, is that Google expects that by 2016 the companys Cash
flow per share will almost double its value compared with the current year value.
Even though the company has future positive projections, when talking about the price
earning per share, Google seems to be more pessimistic. The company expects a future and
constant decrease in the value of its price earning ratio, which is not that good.


Price per share ratio is a valuation ratio of a company's current share price compared to
its per-share earnings and it is calculated as a ratio between market value per share (MVPS) over
the earning per share (EPS). This ratio is very important because is suggests the investors
expectations of higher earnings growth in the future, which cannot be the case for Google. If in
2014 the company has a PER of 24.8 %, until 2018 this value will get to 12.7 %. Moreover, the
companys forecasts reveals that starting with the next year its price earnings per share with
decrease, considering the change of 24.8 % to 20.3 % in only one year. And the decrease is
evidentiated for the following years, with the values of 16.6% (for 2016) , 14.4% (for 2017) and
12.7% (for 2018).


The Book value per share is s measure used by owners of common shares in a firm to
determine the level of safety associated with each individual share after all debts are paid
accordingly, and has the following formula:




Even if the company has the forecast concluded for the price earning per share as a
declining one for the following years, when talking about the book value per share, Google has
the expectation for a future increase in respect with its book values, getting to almost 300 USD in
2018, compared to 2008 when the book value per share was only 5 USD.
The cash flow per share (a measure of a firm's financial strength),
shows the after-tax earnings plus depreciation, on a per share basis. Many financial analysts
place more emphasis on the cash flow per share value than on earnings per share values. While
an earnings per share value can be easily manipulated to appear more positive than it really is,
therefore putting its reliability in question, cash is more difficult to alter, resulting in what some
analysts believe is a more accurate value of the strength and sustainability of a particular
business model.
As it can be seen in the figure presented above, the cash flow per share are not expected
to have such a constant and high increase. Upto 2018, the company seems to forecast its value
upto 55 USD compared to Book Value per share of almost 300 USD.