5 Interesting Facts About Google's Treasury Operations

Google celebrated its 10th anniversary in the stock market last August. Since IPO, Google has achieved almost unparalleled business and commercial success and is now ranked among the world's largest and most respected companies. IPO investors aren't too much trouble investing -1 dollars is now worth about $ 12. However, at that time, the IPO was considered a failure in many areas because Google sold fewer shares than originally expected at the bottom of the guided range. The Dutch auction mechanism used to allocate stocks to investors has caused great confusion and has been rarely used ever since.

It was n’t all Google ’s fault. The market situation in 2004 was not ideal [Dotcom's scar organization] and Google had an unproven business model. Looking back at the 10 years since August 2004, the IPO may be considered a low point in terms of funding and finance in its outstanding performance. In this article, we will look at Google ’s growth and commercial success through the “Finance Lens” to better understand some of the key metrics behind growing into one of the world's largest corporate finance and investment operations.

To fit Google numbers into context, we use two other ICT heavyweight IBM and Microsoft comparison numbers. IBM IPO was published more than 100 years ago and Microsoft was published in the mid-1980s.

Fact 1: Google ’s asset base has grown by 1200% to $ 130 billion over 10 years

Google's asset base has increased by nearly 1,200% over the past decade and increased by 3,800% since the IPO. In contrast, IBM assets increased 11% over the same period and Microsoft assets increased 140%. Some assets require more active management than others. For example, goodwill and intangible assets are passive from a financial perspective, while cash requires daily management.

Fact 2: Google currently has a $ 60 billion cashpile

All organizations manage cash flow and, in some cases, surplus cash. Few people manage Cash Mountain. Google's latest 10-K shows that the sum of cash and cash equivalents is close to $ 60 billion, growing nearly 3,000% since the IPO. Microsoft hasn't experienced an increase in cash reserves as much as Google, but continues to hold huge amounts of cash, ranking second after Apple in the company's cash reserve league table.

Cash accounts for about 50% of Google's asset base. This is roughly the same as Microsoft's asset to cash ratio, but about five times that of IBM. While Google and Microsoft operate in different areas [advertising and business software], one thing in common is the amazing ability to consistently turn revenue and profit into cash. This led to a situation in which both companies generated more cash than the underlying business could reinvest in their business activities.

Fact 3: Google traded over $ 100 billion in securities last year

Transaction volume was defined as the sum of the purchases and sales of investments shown in each company's cash flow statement. While it may not represent an overall picture of the work involved in managing an investment, it will give you a good understanding of the scale of the investment activities each company is doing. Most large organizations now operate “banks” like front office, middle office and back office activities, as well as structures that include compliance and risk. Google buys and sells about $ 100 billion. Annual securities value-more than income from business activities.

Fact 4: Google invests heavily in property, plant and equipment

Google's spending on property, plant and equipment [PPE] has increased dramatically in recent years as the finance team invested more than $ 10 billion in such investments in 2014. Google has increased its investment in data centers and other cloud-related fixed assets, actively competing with Microsoft, Amazon, Salesforce, etc., to gain an edge in an immature market. This trend is expected to continue. According to Google ’s fourth quarter 2014 revenue release, “We will continue to make significant capital investments.”

Fact 5: Despite being cash rich, Google still has some debt

While it may seem unusual for a company with such a huge cash reserve to have a debt on the balance sheet, the international nature of Google's business is that most of this cash is Actually it means that you can't reach overseas because of the tax implications of the headquarters finance team taking it home. At present, the total debt is very low, about 5% of the capital.

This high-level overview of Google's financial statements gives insight into the size of the company's financial operations. Today, it ranks as much as medium-sized financial institutions in terms of financial activities. Perhaps the most impressive aspect of the Google Treasury story is the growth rate from IPO and the positive challenges it has brought. Google is truly a world-class organization and is undoubtedly supported by a world-class finance team.