Facebook Financial evaluation

Facebook Financial evaluation Essay example
Finance & Accounting
Pages 4 (1004 words)
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Facebook Financial Evaluation Name: Course: Professor: Institution: City and State: Date: Facebook Financial Evaluation Introduction Facebook, Inc. is a social networking site that eases the way people share information with friends in a safe and trusted environment.


It is today headquartered in Palo Alto, California. In the year 2011, Facebook recorded revenues of $1.5 billion and was considered the largest for a venture capital raised by private equities (Annual Report, 2012). This remarkable return was attributed to engaging in partnership, advertising and analytics business. In addition, the company had been experimenting video streaming rentals and daily coupons and deals that have also proved potential areas for growth. This essay evaluates Facebook financial statements by reviewing the following financial ratios: a) current ratio, b) inventory ratio, c) debt to equity ratio, d) net profit margin, e) return on equity, and f) price earnings ratio to determine its performance between year 2010 and 2012. Current ratio This ratio determines firm’s ability to take care of short-term obligations. The higher the ratio, the more capable the company is to off-set its obligations and the lower the ratio the lower chances to meet short-term financial obligations (Brigham & Houston, 2001). Current ratio= current assets/ current liabilities Details 2012 2011 2010 Current Assets 11,267 4,604 2,762 Current Liabilities 1,052 899 978 Current Ratio 10.71 5.12 2.82 The ratio has been on the increase from year 2010 at 2.82 to 10.71 in year 2012. ...
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