Google purchased YouTube. Google is one of the largest and most respected software companies in the world. YouTube has a growth to margin ratio of 25. Determine Google’s growth to margin ratio and then tell me if the YouTube purchase was a good one for Google and specifically why you feel this way (i.e., you can give possible examples that Google might be able undertake with YouTube’s margins or growth).
Here are important numbers for Google:
Enterprise value $2 billion
Cash flow $ 60 million
Weighted average cost of capital 9%
Revenues $900 million