Perform a full analysis of the Financial
Statements for Facebook, Inc. (Balance Sheet, P & L, Statement of Cash Flows) for three years
(2020, 2019, 2018), using the 10Ks (including financial data,
footnotes, and MD&A (Manager’s Discussion & Analysis)) and a variety of
other credible resources to research your companies. Resources include but are not limited
to: 10Ks filed with the SEC
(www.sec.gov), Corporate Websites, Annual Reports and investor presentations
(usually found on the websites under Investor Relations) and earnings
conference call transcripts.
1. Facebook News–Search for and report on at
least two major events that have affected each company’s performance
over the past year.
2. Stock Market Activity–Describe the companies’
market activity over the past three years.
Resources include, but are not limited to: http://money.msn.com,
http://finance.yahoo.com, http://google.com/finance.
3. Financial Statement
Analysis–Prepare & analyze a) condensed, b) trend, and c) common-size
financial statements for all companies for a three-year span (current year, and
two prior years).
Note: Gather the financial information from each company’s 10Ks (www.sec.gov).
a) condensed balance sheet,
condensed income statement, & condensed statement of cash flows.
b) trend analysis balance sheet,
trend analysis income statement, & trend analysis cash flows. Create the trend financial statements using
Excel formulas that reference the condensed financial statements.
c) common-size balance sheet, common-size income
statement, and common-size statement of cash flows.
Note: Create the common-size financial statements using excel formulas
that reference the condensed financial statements.
Comment on the trends in the
growth of assets, liabilities, and stockholders’ equity and overall financial
risk.
Comment on the trends in the
growth of revenue, cost of goods sold, expenses, and overall profitability.
Comment on the trends in the
growth of operating, investing, and financing activities, and the overall cash
position.
4. Ratio Analysis–Compute financial statement
ratios for both companies for a three-year span (current year, and two prior
years), AND compare to industry norms (Time Series (Trend) Analysis &
Cross-Sectional Analysis). Show all
formulas used to calculate the following ratios:
Profitability:
Gross Profit Margin
EBITDA Margin
Net Profit Margin
Return on Assets
Return on Equity
DuPont Analysis of ROE
Earnings Per Share (EPS)
Efficiency:
Asset Turnover
Accounts Receivable Turnover
Accounts Receivable in Days
Inventory Turnover
Inventory Days
Liquidity:
Current Ratio
Quick Ratio
Cash Flow Liquidity
Solvency:
Debt/EBITDA
Debt Ratio
Times-Interest-Earned
(EBITDA-Capex)/Interest Expense
Free Cash Flow
Cash Flow Adequacy
Future financing needs: Debt maturities,
capital spending
Capital Structure
Types of debt, equity
Valuation:
Trailing and forward Price Earnings (P/E)
Dividend Rate per share / Dividend yield
EV/EBITDA
FCF Yield
Compare the three years of ratio
information for each company. What do
these ratios say about profitability, efficiency, liquidity, solvency, and
investment? Indicate which ratio is stronger/weaker, quicker/slower, more/less
liquid, or more/less risk.
Note: Industry norms (average) info can be found at money.msn.com, finance.yahoo.com,
csimarket.com.
What does your analysis of these
ratios say about profitability, efficiency, liquidity, solvency, and investment
as compared to their competitors?
5. Research Summary- would you advise that
others invest in one and/or both of these companies both from an equity and a
credit point of view? Prepare a written
summary of your analysis and investment recommendation and provide a minimum of
five significant points based on research, analysis, & sound reasoning.
General Info:
Include excel spreadsheets,
graphs, charts, and other items to your paper to enhance the overall project.
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