Project - 3. Observations on Firms A and B. The COGS for...

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Unformatted text preview: 3. Observations on Firms A and B. The COGS for Firm A, Microsoft, has been relatively constant over a period of 3 years, between ranges of 19.20% to 20.80%, but the COGS for Firm B, Google, has been declining over the past 3 years. The reason could be that Firm B has been able to produce its services/ products at a cheaper price. This improvement in its products is clearly shown in its gross margin59.93% in 07, 60.44% in 08, and 62.61% in 09. An interesting thing to note is that despite a strong growth in its Gross Margin, Firm B experienced a sharp decline in its Net Income in the year 2008. Firm A also faced a similar decline in its Net Income in the year 2008. These declines could be because of the financial crisis. Firm A had to increase the cost of manufacturing its products and spend more money into R&D while Firm B had to increase its S&A expenses and invest more into R&D as well. 4. (A) Net Sales Firm A The revenues increased by almost 7% from years 08-09, relative to its prior years, 07-08 which showed a decline by almost 3.3%. This increase could be because of the global recession that made the firm to sell more products at a cheaper price. Firm B Although the revenues show a positive change from years 08-09 by 8.5%, the firm has lost its sales relative to its prior years that had a positive significant change of almost 31% from years 07-08. This positive decline shows that the search engine was not able to attract as many advertisers on their site as they were in its prior years and thus losing its pie of sales....
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This note was uploaded on 06/06/2011 for the course ACC 202 taught by Professor - during the Spring '11 term at SUNY Plattsburgh.

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Project - 3. Observations on Firms A and B. The COGS for...

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