Income Statements

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The 2012 income statements for Google and Apple are built according to the following assumptions. For each company, the revenue will increase at the average rate for the past two years. The dynamics for each company have changed significantly in the past two years, as each in that time span has grown from being a relatively small player in mobile to being the two world leaders. Apple in particular has only had the iPad for a couple of years, so prior growth rates are not applicable. For Google, the short time frame reflects what should be maturity in the online advertising market, resulting in growth rates that are slower than the company has enjoyed on average in the past 10 years. The expense categories are going to be assumed as equal to their average of the past three years, which allows for the expenses to be understood in terms of the mobile era for each of these companies. No unusual expenses are expected; they are unusual in nature therefore are probably not going to be budgeted. Taxation will be budgeted at the average rate for the past three years. It is also assumed that there is no "low, average and high" estimates for revenues. As software companies, employees are the most significant operating cost other than COGS. These companies can adjust hiring easily should revenues lag, hiring can be adjusted within a month or quarter. This negates the usefulness of the low estimate, which would be more valuable to firms that have a more difficult time adjusting their
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