Unformatted text preview: major success stories for companies going public in the last decade. As
internet traffic has increased, Google has captured a dominant share in search engine activity. The
company’s business model sells advertising to companies, allowing the advertiser to directly target
internet users based on search requests. More searches will mean more advertising dollars to Google.
Technological changes and a very profitable business model have brightened the future for Google. The
stock market has reacted to those heightened expectations for cash flow and profits by driving the stock
price higher. ID12–10
a. Both Rhodia and Segway issued equity because of losses that would be evident on the Income
Statement. The influx of funds would be evident in the Financing Activities section of the Statement of
Cash Flow. The Balance Sheet would also show an immediate increase in the Cash asset, but that would
soon be converted to other assets as the company employed the funds. b. When companies issue new stock, the concept of ownership dilution mu...
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