One of the best ways to determine a business’s health is through its financial analysis. Google’s financial ratio, or ROE, is 17.5% while Microsoft’s stands at 39.5%. Microsoft’s ROE from total operations is better than Google’s at 17.5%, making it more likely for investors to put their money in the company. Another indicator to consider is the company’s debt ratio, which divides total debt by total assets. A high ratio isn’t healthy.
According to a recent interview with Fortune, Google aims for a 70-20-10 balance. This means that roughly 70% of the company’s resources are dedicated to incremental growth while the other 10% is credited with transformational initiatives and truly new offerings. This balance is appealing to capital markets, as it implies that the company is balancing short-term predictability with longer-term bets. The Google Ratio suggests a healthy balance between innovation and efficiency.