Capital Valuation Paper - 1358 Words

Capital Valuation Paper: Google Inc. FIN 370 University of Phoenix This paper will justify the current market price of Google’s debt and equity, using various capital valuation models. Calculations to support the finding will be detailed, including those involving rates of return. The valuation model that best supports the finding will also be detailed and defended in this paper. Google History Google is a publically owned company and the shares of Class A common stock are listed on the Nasdaq Stock Market LLC under the symbol GOOG (Yahoo Inc., 2012). Google’s Class B common stock is not publicly traded. Google’s initial public offering was on August 18, 2004 at a price of $85 per share. As of March 15, 2012, Google shares are†¦show more content†¦A lower PEG means that the stock is undervalued, but the numbers used are projected over different periods of time and this can be very confusing for investors. The five year expected PEG ratio for Google according to Yahoo Finance (2012) is 0.80. High risk companies will trade at lower PEG ratios than lower risk companies. Price to book ratio tells an investor how much he or she is paying for one dollar of net assets, with net assets equal to total assets minus total liabilities. According to the key statistics data provided by Yahoo Finance (2012), the Price/Book ratio is 3.44. Book value per share is the proceeds per share that would be received if all the firm’s assets were sold for the exact book value. The proceeds are what is remaining after paying all liabilities and then divided among common stockholders. Financial Highlights Some key financial highlights for the period ending Dec 31, 2011 are listed in the chart below: Revenue | 37.90B | Gross Profits | 24.72B | Net Income | 9.74B | Profit Margin | 25.69% | Operating Margin | 32.30% | Return on Assets | 11.73% | Return on Equity | 18.66% | Total debt | 6.21B | (Yahoo Finance, 2012) Analysts try to compare price to sales, price to earnings, and price to book ratios from one company to other companies in the same or related industries so that they can keep investors informed about which stocks to buy, hold andShow MoreRelatedCapital Valuation Paper1634 Words   |  7 Pages750-word paper in which you justify the current market price of the organization’s debt, if any, and equity, using various capital valuation models. Complete the following in your paper: †¢ Show calculations that support your findings, including those involving rates of return. †¢ Defend which valuation model best supports your findings. 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