Google's Capital Structure and Factors Influencing It

This article examines Google's capital structure, comparing it to industry standards and discussing the factors that influence it. It also explores the job role of an Audio Visual Engineer and the decisions that can increase or decrease an audio visual company's overall valuation.

Financial Management
Assessment

Contents
MAIN BODY..................................................................................................................................3
Part 1: Initial Post.........................................................................................................................3
Part 2: Second Post......................................................................................................................4
References:......................................................................................................................................6

MAIN BODY
Part 1: Initial Post
1. Latest mix of long-term debt and equity for “GOOGLE.
Capital structure- It is the unique mix of debt and equity that a firm requires to fund its
overall activities and growth. Debt in the form of mortgages or municipal bonds, whereas
equity may form part of common stock, preferred stock, or dividend income. Short-term
debt is often deemed to be component of the system of finance. In the context of
GOOGLE company information about long term debt and equity is mentioned in such
manner:
Data in $ million 2018 2019
Long term debt 4012 4554
Equity 177628 201442
Total liabilities and
stockholders’ equity
232792 275909
The above table shows that company’s long term debts are higher in year 2019 as
compared to year 2018. This indicates that they might be dependent on loans to complete
their projects. In addition to this their equity is also higher for year 2019 compared to
year 2018. As in year 2018, value of equity was of $177628 million which rose by
$201442. This value shows that investors are making investment in the company in the
expectancy of gaining higher return.
2. Google’s capital structure compare to the industry standard.

In the task of project report, capital structure of Google has been compared to rest of
other industry standards. For this purpose, company’s competitor’s capital structure has
been analyzed in such manner:
Data in $
million
Micro soft Amazon Google
2018 2019 2018 2019 2018 2019
Long term
debt
117642 114806 23945 24743 4012 4554
Equity 82718 102330 43549 27709 177628 201442
In accordance of above table, this can be inferred that Google has higher equity from both
of other companies. This shows that there is more number of investors who are willing to
make investment. On the other hands, value of long term debts is lower as compared to
both of companies. This indicates that performance of Google in terms of capital
structure is above from the industries standards.
3. Factors that might have influenced Google’s capital structure.
There are a range of factors which affect the capital structure of Google, some of them
are mentioned below in such manner:
 Size of company- Small firms may continue to rely on the capital of the owner,
but as they expand, they may be available for long-term funding because investors
deem larger businesses less risky. In the context of Google Company, they have
larger size of operations which lead to attract more number of investors for
making investment.
 Risk consideration- Financial risk leads to a condition in which a business is
unable to cover its fixed financial costs, such as interest, dividend of preference,
creditor fees, etc. In addition to financial risk, enterprise still has some operational
risk. The ability of Google to consider the risk is better which affected their
capital structure in a positive manner.

 Control- Google has control over their equity shareholders and preferred
shareholders. Due to which they make investment wisely in the company and this
way of investing lead to effective capital structure.
Part 2: Second Post
1. Job role of “Audio Visual Engineer”.
Job function: Audio Visual Engineer
Job description: AV Engineers are responsible for the corporation in the application of
multimedia technology. As such, to fulfill the organization’s broadcasting requirements,
they pick, mount, introduce and customize both basic and complex AV technologies. In
addition, they are often accountable for configuring the AV systems in query and
sustaining them. An AV team can have many technicians, each with various tasks.
2. Two activities/decisions in the job function for increasing or decreasing an Audio Visual
company's overall valuation.
Choice one: Installing new and advanced audio visualization technology:
The importance of installing new technique
of audio and visualization will lead to
better customer experience. This will be
useful for company to offer a satisfying
technique to customers.
This judgment will lead to increase
company’s overall valuation in an effective
manner.

Choice two: Dependency on foreign company to launch this technique:
In order to install and launch this technique
audio visualization technique has to depend
on foreign company idea and concept. This
may lead to decrease in company’s value. It
is so because in future there can be change
in business trading regulation across the
nation. As well as it will hamper the cost
of this technique due to this option.
This judgment will lead to decrease
company’s overall valuation in an effective
manner.
3. Choice to increase value and 1 choice to decrease value.
Choice one: Possibility to attract more number of customers
Due to this new technique, there will be
strong feasibility that customers will attract
from it. As a result there will be more
number of revenues and returns. In addition
to this, under competitive market goodwill
of company will also raise.
This judgment will lead to increase
company’s overall valuation in an effective
manner.
Choice two: This will lead to additional cost of technology:
Due to dependency on foreign nation, the
overall costing of new technology will be
higher and as consequences, company has
to raise its price. At the initial stage, this
will be hard to company to manage their
sales and cover the cost of this new
This judgment will lead to decrease
company’s overall valuation in an effective
manner.

technology of audio & visualization.
4. Briefly description of the details for each choice.
In accordance of above done analysis of each choice, this can be stated that both options
have certain positive and negative aspects. The positive aspect of option one is that the
new technique of audio and visualization is a unique concept for company and there will
be possibility that more number of customers will attract.
On the other hands, in option two there are some negative aspects for option two which is
that company may face additional cost if they depend on foreign nation to launch this
technique. It is so because company has to pay many charges if they depend on model of
other country.

References:
Grosse-Rueschkamp, B., Steffen, S. and Streitz, D., 2019. A capital structure channel of
monetary policy. Journal of Financial Economics, 133(2), pp.357-378.
Online:
About financial information of Google, 2019 [online] available through :<
https://abc.xyz/investor/static/pdf/20200204_alphabet_10K.pdf?cache=cdd6dbf>
About financial information of Amazon, 2019 [online] available through :<
https://www.annualreports.com/HostedData/AnnualReportArchive/a/NASDAQ_AMZN_
2018.pdf>
About financial information of Micro soft, 2019 [online] available through :<
https://view.officeapps.live.com/op/view.aspx?src=https://c.s-microsoft.com/en-us/
CMSFiles/2019_Annual_Report.doc?version=81841b3a-3b4e-0439-2de2-
08a8ebc5ad8a>