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Ratio Analysis Formula for Facebook

March 3, 2012
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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.

Today 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.

How to perform ratio analysis?

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 today’s post you can easily calculate the financial ratios for Facebook.

What do you think about Facebook’s performance??

Share your thoughts!!

Next Steps

2moro we will provide you the filled ratio analysis layout. Till then try to use the given formulae to perform the Ratio Analysis Formula for Facebook!

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About the Author

Pankaj Baheti is a CFA Level III Candidate currently working with Pristine. Prior to Pristine, he was working with Achi Group. He has done his Post Graduate Diploma in Management and loves trekking in the hills of Arunachal.


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