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which company is performing well and more efficient with respect to its operations. This ratio gives analyst a knowhow of how much the company makes on each dollar of sales before interest and taxes.

 

The operating profit margin was calculated for Google Inc for a period of three years. In 2009 the Operating profit margin was 0.351. In 2010 operating profit margin raised by 0.85%. In 2010 the operating profit came out to be 0.354. In 2011 the ratio came out to be 0.309 representing a 12.71% decrease. The reason of the decrease in operating profit is evident in the increasing cost of research and development. In a nutshell we can say that in 2009 for every $1 revenue Google Inc is making $ 0.351. In 2010 it is making $0.354 and in 2011 it is making $ 0.309 for every $1 sales.

 

In comparison Microsoft is constantly increasing its operating profit margin. In 2009 the operating profit margin is 0.348; leading to 0.385 in 2010 representing a 10.36% increase in operating profit margin. In 2011 this ratio increased a bit and reached to 0.388 representing 0.77% growth. Thus we can say that in 2009 Microsoft is earning $ 0.348 for every $1 revenue, in 2010 it is making $0.385 and in 2011 it is making $0.388 for every $1 revenue.

 

Net profit margin:

 

Net profit margin is another important ratio used to measure the profitability of a company. This ratio measures Net earning in relation to to the Net sales. This ratio helps in finding out how much net profit remains out of each dollar of Sales after all expenses has been paid out. In other words this ratio tells the management’s ability to carry a dollar of sales down to the bottom line for the stockholders. In a nut shell we can say that net profit margin is the amount left over after all expenses has been paid.

 

The Net profit margin was calculated for Google Inc . In 2009 The ratio came out to be 0.276. Indicating that Google Inc is earning $0.276 on every $1 sales. Google has done well in the period 2009-2010 , they were able to increase their Net profit margin by 5.01%. therer net profit margin for the year 2010 is 0.29 representing $ 0.29 earning on every $ 1 sales.. However in 2011 the ratio calculated was 0.256 representing 11.02% decrease in the Net profit margin. This shows that in 2011 Google Inc is making $0.256 for every $1 sales.

 

Similarly Net profit margin for Microsoft was also calculated. In 2009 the result indicates 0.249 , 0.3002 in 2010 and 0.330 in 2011. In other words Microsoft is earning $0.249 for every $1 sales in 2009, 0.3002 in 2010 and $0.330 in 2011 for single dollar sales. Thus we can say that Net profit margin has increased by 20.56% in the period 2009-2010. Microsoft has done well to keep increasing the Net profit margin by 9.92% in the period 2010-2011. We can conclude that in the period under consideration Microsoft has done well than Google Inc.

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