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 todayâ€™s post you can easily calculate the financial ratios for Facebook.

What do you think about Facebookâ€™s performance??