Google is growing at an alarming rate.  As shown in Exhibit 1, Google’s net income has grown from $100 million in 2002, to $3.077 billion in 2006.  Google’s common size analysis, Exhibit 2, shows that their net income has fluctuated slightly, but increased overall from 22.67% of sales in 2002 to 29.02% of sales in 2006.  Also, cost of goods sold has maintained a level of around 40% of sales, while selling, general, and administrative costs have fluctuated around a level of 26% of sales.  Earnings before interest and taxes have maintained levels of roughly 33-35% of sales, with the exception of 2003, which was due to increased SG&A costs.  The common size chart shows that cost of goods sold and selling, general, and administrative costs fluctuated slightly in 2003 and 2004, but have started to level off in recent years.  Google’s common base analysis, Exhibit 3, shows that their sales have grown by 2,412% from 2002 to 2006, while net income has increased by more than that, at a rate of 3,088% over the five year period.  Breaking growth down by year, Exhibit 4 shows that Google’s sales grew by 233% in 2003, 117% in 2004, 92% in 2005, and 72% in 2006.  This downward trend in growth is not perfectly correlated with net income growth because of the increases in economies of scale as Google matures as a company.  Google’s historical balance sheet, as shown in Exhibit 5, shows that Google has a tremendous amount of excess cash, represented by significant balances in short term investments.  Furthermore, Google does not have any short term or long term debt, but their IPO is reflected by the increase in capital surplus in 2004.  Furthermore, Google’s capital surplus continued to increase as the share price increased along with the number of shares outstanding.  Also, because Google is a service-oriented company, there is no inventory on hand.  Google’s ratio analysis, Exhibit 6, shows that their sales per day have increased from 1.20 in 2002 to 29.05 in 2006.   Google has had over 100 days of cash on hand in three of the past five years, which does not include short-term investments.  This means that Google has more money than they know what to do with, which accounts for many of the significant acquisitions recently made.  Exhibit 7 shows that Google’s gross profit margin has fluctuated in the past five years, but it has increased in each of the past three years, to 60.2% in 2006.  In addition, Google’s return on equity shows a similar trend, increasing in the past three years after a steep decline in the first two.  Overall, Google has posted outstanding growth figures in the past five years.