Now that we have the future projected Financial statements in place, we enter into the Performance Measurement part of the model. We need to Performing Ratio Analysis for Facebook to see what has happened and what could happen in future! This is like looking at the crystal ball and trying to Performing Ratio Analysis for Facebook.
This exercise is on modeling ratio analysis taking into account both the historical and future financial statements of Facebook
I have for you a simple template to measure the performance of Facebook.
Go ahead and find the past as well as expected future performance of Facebook!!!
In the next step, we will provide you hints on performing ratio analysis for Facebook. Till then go on and measure the future of social networking by performing ratio analysis for Facebook valuation.
In the last tutorial we had started discussing regarding the ratio analysis for the Facebook model. We had released a simple template for Ratio Analysis Formula for Facebook.
I give you a simple hint on performing Ratio Analysis Formula for Facebook, and you should try to build the financial ratios of Facebook on your own.
Ratio Analysis Formula for Facebook is performed by calculating pure and mixed ratios. Pure P/L ratios are calculated using only P/L line items and pure B/S ratios are calculated using only B/S line items. The mixed ratios are calculated using both the P/L and B/S line items.
Profitability Ratios (Pure P/L Ratios)
Gross Profit Margins = Gross Profit / Revenue (sales)
EBITDA Margins = EBITDA / Revenue (sales)
EBIT Margins = EBIT / Revenue (sales)
EBT Margins = EBT / Revenue (sales)
Net Profit Margin = Net Profit / Revenue (sales)
Return on Investment Ratios (Mix Ratios)
Return on Assets (ROA) = Net Profit / Average Assets
Return on Stockholder's Equity (ROE) = Net Profit / average Equity
Liquidity Ratios (Pure B/S Ratios)
Current Ratio = Current Assets / Current Liabilities
Quick Ratio = Current Liquid Assets / Current Liabilities
Defensive Interval Ratio = Current Liquid Assets / Daily Operating Expense - (Mix Ratio)
I am sure after looking at this post you can easily calculate the financial ratios for Facebook.
What do you think about Facebook’s performance??
Share your thoughts!!
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