Analyzing a Company’s Future Financial Health – Google
Step 7: Viability of 3-5 Year Plan
Google seems to have numerous projects in the pipeline, which it hopes to accomplish shortly. Some examples of these projects include; robotics, self-driving cars, Project Ara modular phones, project tango 3D mapping, Calico projects, acquisitions, e-commerce, and many more. All these projects require a huge financial resource to take off; all these projects depend on the financial viability of the company. Checking on the financial viability of Google, it is clear that the company stands a better chance of accomplishing most of the projects (Hongkiat, 2020). Google has a good financial position meaning that it will have enough resources to execute most of these projects. Some of the financial indicators that support this claim are; first, Google’s operating margin stood at 19% in 2020.
The operating margin measures how profitable it is from the internal operations; anything above 10% is considered good, and since Google’s operating margin is 19%, it means the company is profitable from its internal operations. In 2020, Google’s revenue growth was 13% higher than the previous year. This implies that the company’s revenues are growing. Hence, it can fund its projects comfortably. Price to earnings is another metric that indicates that Google stands a better chance of executing its short-term projects. Its price to earnings was 29.02; anything above 15 is considered good (Hongkiat, (2020). The price-to-earnings compares a company’s share price to earnings per share. This ratio shows whether the stock is priced high or low. A high price to earning implies that investors are optimistic and confident of the stock of the company. Since Google’s financial indicators are positive, we can say that its projects are viable because there will be financial resources to execute these projects.
Step 8: Stress Test under Scenarios of Adversity
Stress tests can be defined as computer processes that are done to assess and determine the flexibility of a company and its investment portfolio against future financial circumstances. The tests help in measuring the risks and the adequacy of the assets. Stress testing also entails the evaluation of the internal processes and other controls (Heiligtag, Maurenbrecher, &Niemann, 2017). Stress tests are becoming popular and important to companies to help them curb the challenges before the situations become worse. Google’s tests reveal that the company is strong; the company has strong financial muscles and its financial components show that the company can survive many disasters. Despite the COVID-19 pandemic that ravaged many countries and brought down many firms, Google still made profits and continued with its expansion strategy (Heiligtag, Maurenbrecher, &Niemann, 2017). Covid-19 is one of the toughest adversity that has ever happened, and thus, companies that have been less affected such as Google, are said to be strong.
Step 9: Current Financing Plan
Many of Google’s projects would be financed by internal financing. Google will be using its profits and other resources to finance its projects. Currently, Google has a strong financial standing, meaning that the company will have enough resources to finance most of its projects. Internal financing is a fundraising option that exists within the firm. Examples of internal financing are the sale of stock, the sale of firm assets, and the use of day-to-day profits. Internal sources of finance are appropriate for small and medium-sized projects (Tsidulko, 2019). However, with a large project, the company would have to seek external financing. External sources of finance are those that come from outside the business; this is the money that comes from loans and shares. External finances are always hard to raise, but when a firm has positive financial indicators the way Google’s financial indicators are; then it will be easier for such a firm to secure external financing. Creditors check a firm’s financial indicators and its creditworthiness before accepting to extend credit facilities. Google is well placed to raise both internal and external finances because it has enough financial resources; therefore, its plan of financing its projects will come from both internal and external sources.
References
Heiligtag, S., Maurenbrecher, S &Niemann, N. (2017). From scenario planning to stress testing: The next step for energy companies. References https://www.mckinsey.com/business-functions/risk-and-resilience/our-insights/from-scenario-planning-to-stress-testing-the-next-step-for-energy-companies
Hongkiat. (2020). 10 Projects Showing Google Has The Future Figured Out. References https://www.hongkiat.com/blog/google-products-and-future
Tsidulko, J. (2019). Google’s Five-Year Plan For GCP Has Funding Strings Attached: Report. References https://www.crn.com/news/cloud/google-reportedly-set-ambitious-goal-and-possible-deadline-for-gcp?itc=refresh
ORDER A PLAGIARISM-FREE PAPER HERE
We’ll write everything from scratch
Question 
Analyzing a Company’s Future Financial Health – Google
The purpose of this assignment is to analyze a company’s future financial health.
This assignment is the fourth component of your group’s comprehensive financial analysis project. The steps referenced here follow the nine-step assessment process detailed in Assessing a Company’s Future Financial Health.
Component 4 – Part 1
For this part of the assignment, your group will write a 550-word analysis of your chosen company (GOOGLE) based on the final three steps of the nine-step assessment process.
Step 7: Viability of the 3-5-Year Plan
Step 8: Stress Test Under Scenarios of Adversity
Step 9: Current Financing Plan
Prepare this part of the assignment according to the guidelines found in the APA Style Guide located in the Student Success Center. An abstract is not required.