The Cost Of Revenue For Google Inc Essay

The Cost Of Revenue For Google Inc Essay

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Google Inc. generates revenue “primarily by delivering both performance advertising and brand advertising, and we recognize revenues when the services or products have been provided or delivered” (google citation). In 2014, $45,085million was generated from ads on google websites and $13,971million from google network members’ websites while other revenue was only $6,945 million.
The cost of revenue for Google Inc. is similar to the cost of goods sold account for manufacturing and retail companies. As a percentage of total revenue, cost of revenue it went from 40% in 2013 to 39% in 2014. The cost of revenue consists of “traffic acquisition costs which are the advertising revenues shared with our Google Network Members and the amounts paid to our distribution partners who distribute our browser or otherwise direct search queries to our website” (google citation).
Research and development as a percentage of total revenue went from 13% in 2013 to 15% in 2014. Included in the research and development expense is the software development costs. Software development costs “also include costs to develop software programs to be used solely to meet our internal needs and cloud based applications used to deliver our services” (google citation). Google Inc. spent $1,992 million, $2,389 million, and $3,004 million on advertising in 2012, 2013, and 2014 respectively. As a percentage of total revenue, sales and marketing was 12% in both 2013 and 2014.
From 2012 to 2013 and 2013 to 2014, sales growth increased as cost of revenue and gross profit significantly increased for Microsoft Corporation. The gross profit margin increased because there was a result of lower cost of goods sold, and higher selling prices. The reason was that non-recurring i...

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...r-year increase in other income and expense during 2013 was due primarily to higher interest and dividend income resulting from the Company’s higher cash, cash equivalents and marketable securities balances and lower premium expenses on foreign exchange contracts, partially offset by interest expense on debt issued in the third quarter of 2013 and higher expenses associated with foreign exchange rate movements. The weighted-average interest rate earned by Apple Inc. on its cash, cash equivalents and marketable securities was 1.11%, 1.03% and 1.03% during 2014, 2013 and 2012, respectively.
The provision for income taxes for 2012 was $14,030 million later decreasing to $13,118 by 2013. In 2014 there was not much of a change just an increase by a few dollars. The effective tax rate differs from federal income tax rate of 35% due primarily to certain foreign earnings.

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