Paper on Financial Analysis of Facebook

Added on - 18 Sep 2019

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Running Head: FACEBOOK ANALYSISAssignment TitleStudent NameStudent NumberCourse NameInstructor NameDate1
FACEBOOK ANALYSISTable of ContentsIntroduction......................................................................................................................................3Financial Performance Analysis......................................................................................................3Liquidity Analysis.......................................................................................................................4Profitability..................................................................................................................................5Efficiency.....................................................................................................................................7Capital Structure..........................................................................................................................9Stock Market Performance........................................................................................................10Problems or Limitation..................................................................................................................11Recommendation...........................................................................................................................12Conclusion.....................................................................................................................................13Reference.......................................................................................................................................142
FACEBOOK ANALYSISIntroductionFacebook Inc., is a company that falls under the Internet information providing industrywas incorporated on 29, July 2004 (Yahoo Finance, n.d.). Facebook focuses on building productsthat would make people connect with each other using a computer, mobile or any other devices(Reuters, n.d.). The Company provides a safe and secured platform to share their personal andprofessional information with others across the world and provides all world information tothem. The product of the company includes Facebook, WhatsApp, Instagram, Oculus, andMessengers. They provide platforms that are extensively used by various companies formarketing their products, and they generate revenue by selling advertisement placements tomarketers. Facebook is popular around the world and is used by millions of people across theglobe. In this paper, there is a detailed financial analysis performed to know about the financialperformed of Facebook and recommendations are provided for improving them.Financial Performance AnalysisIt is essential to make a comparative financial analysis using the historical financialinformation of the company. In this case, the five-year financial ratio is taken into considerationfor making an analysis of the financial performance and position of the company. There areindustrial data available for the company that is used for making a comparative analysis so anappropriate evaluation of the financial performance of Facebook can be performed. In thissection, there is a detailed analysis of liquidity, profitability, efficiency, capital structure andstock performance of the company over the past five years.3
FACEBOOK ANALYSISLiquidity AnalysisThe five-year liquidity ratios of the Facebook are as follows:20122013201420152016IndustryCurrent Ratio10.7111.889.611.2511.972.41Quick Ratio10.2611.469.0410.9111.631.33Data Source: Reuters, n.d. and Morningstar, n.d.Current ratio and quick ratio indicates the liquidity position of the company. The currentratio of the company is disclosing a fluctuating trend. It increased during 2013 and decreasedduring 2014. But the current ratio of the company is consistently increased from 2015. Whencompared to the industrial ratio the current ratio of Facebook is considerably higher. A quickratio of the company is disclosing a fluctuating trend. It increased during 2013 and decreasedduring 2014. But the quick ratio of the company is consistently increased from 2015. Whencompared to the industrial ratio the quick ratio of Facebook is considerably higher. Thus, theoverall liquidity position of the company is significantly higher when compared to the industry.It indicates that Facebook has better working capital management and has strong liquidityposition that will enable them to have better business operation management.ProfitabilityThe five-year profitability ratio and percentage change on Year on Year basis for all the ratios:4
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