Facebook Financial Statements and Financial Ratios Analyzed from 2015 to 2019

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Hey All,

Thanks for visiting my Facebook Financial Report page. On this page, you will be able to find preliminary information about Facebook's current financial performance as well as some historical track records and trends. 

For a more detailed examination of Facebook financial performance, please check out the "Financial Report".  In this report, written by myself, Paul Borosky, MBA., Doctoral Candidate, and published author, you will find:

  • Summarized income statement for the last 5 years.
  • Summarized balance sheet for the last 5 years.
  • Summary analysis by myself of important income statement, balance sheet, and financial ratio trends and other happenings.
  • Five year’s worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
  • Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
  • Professional financial analysis tips provided in each section to help YOU conduct your OWN financial analysis!
  • Each section includes an “in other words” segment.  This is were I use plain English to explain concepts.

Enjoy the preliminary information and for a more detailed analysis, buy the financial report!

Sincerely,

Paul Borosky, MBA.

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Facebook Financial Report by Paul Borosky, MBA.
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Sample Financial Report

Sample Financial Report by Paul Borosky, MBA.
Financial Report Sample 2

Facebook: Brief Summary

Facebook stock price started in February of 2019 at $171.20.  It ended January of 2020, with a stock price of $210.47.  This is a growth rate annually of 22.94%.  From an investor’s perspective, this growth rate well exceeds overall market returns.

Facebook has not paid out dividends in the last five years.  The zero dividend payment policy may be due to the company’s need for internal growth.  However, over the next several years, investors should expect some type of dividends to be paid once the organization reaches the mature phase of their business cycle.

The current executive team and compensation are as follows.

Executive Team
Executives Title Pay Amount
Mark Zuckerberg CEO 22.5 Million
David Wehner CFO 1.26 Million
Sheryl Sandberg COO 5.3 Million
Michael Schroepfer CTO 1.33 Million
Susan Taylor CAO N/A

Facebook Financial Report Sources

“Facebook 2019 Company Analysis: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA. and owner of Quality Business Plan.  In this book, the author selected Facebook's 2019 10k, 2017 10k annual report, 2016 10k annual report, 2015 10k annual report, and Facebook's 2019 10k annual report as the basis for information gathering. 

 

Section 1: Facebook Income Statement Analyzed 2015 to 2019

In this section, I walk through a broad definition as to what an income statement is and why it is important.  From this, I then discuss and define income statement line items, such as revenues, gross profits, etc. in detail.  After each line item is defined and discussed, I finally offer a summary analysis of Facebook’s important income statement line item trends from 2015 to 2019, in most cases.

Revenue Growth:  Facebook’s revenues started 2016 at approximately $18 billion.  In the next four years, revenues exploded to over $70.7 billion.  Annually, this is about a 41% growth rate.  This shows that the firm is in an expansion business cycle.  In these cycles, companies often forgo paying out dividends and reinvest net profits back into the company to sustain the cycle.  However, once revenue growth starts to moderate, the firm should consider paying out dividends to supplement modest stock-price growth.

Cost of goods sold:  Facebook’s cost of goods sold may include advertising costs as well as server maintenance.  Currently, the company has a cost of goods sold, as compared to revenues, at about 18%.  The average growth rate of this line item is approximately 46%.  This well exceeds revenue growth.  Unfortunately, when the cost of goods sold growth exceeds revenue growth, the business model is unsustainable.  From this, the executive team needs to take action and lower the cost of goods sold costs as compared to revenues.

Facebook's Summary Income Statement 2019

Column1

2019

2018 2017 2016

2015

Revenues

                   70,697                    55,838                    40,653                    27,638                      17,928
COGS                    12,770                      9,355                      5,454                      3,789                        2,867
Gross Profit                    57,927                    46,483                    35,199                    23,849                      15,061
 
SG&A

                   10,465

                     3,451                      2,517                      1,731

                       1,295

Depreciation

                     5,741

                     4,315                      3,723                      2,342

                       1,945

R & D                    13,600                    10,273                      7,754                      5,919                        4,816
Other
Operating Expenses

                   46,711

                   30,925                    20,450                    15,211

                     11,703

EBIT

                   23,986

                   24,913                    20,203                    12,427

                       6,225

Other Income                            -                            -                            -                            -
Interest Expense                        (826)                        (448)                        (391)                          (91)                             31

EBT

                   24,812                    25,361                    20,594                    12,518

                       6,194

Taxes

                     6,327

                     3,249                      4,660                      2,301

                       2,506

Net Income                   18,485                   22,112                   15,934                   10,217

                     3,688

Section 2: Facebook Balance Sheet Analyzed from 2015 to 2019

For Facebook's balance sheet, I again go through each important line item from the balance sheet.  In reviewing each line item, I will define Facebook’s balance sheet line item, such as cash, property, plant and equipment, and liabilities between 2015 to 2019.  Next, I then offer a summary analysis of Facebook’s important balance sheet line items.

Cash:    Facebook’s cash position has jumped from $4.9 billion in 2015 to $19 billion in 2019.  As a percentage of sales, this rate has not changed.  However, such a huge stockpile of cash shows that the firm is not fully exploiting short-term investment opportunities.  By keeping less money in cash and more funds in short-term investments, the organization may earn interest on invested funds.  As a result, this would lead to better utilization of the firm’s total assets available.

Short-term investments:  Facebook has been using short-term investments to assist with optimizing cash usage.  In 2015, their short-term investments were approximately $13.5 billion.  As of 2019, their short-term investments grew to $35.7 billion.  This shows that the company is continuing to move cash from operations to short-term investments.  A better strategy may be to divest some of the short-term investments to shareholders in the form of dividend payments.

Summary of Facebook's Balance Sheet 2019

Column1 2019 2018 2017 2016 2015
Cash                      19,079                  10,019                    8,079                    8,903                    4,907
Short Term Investment                      35,776                  31,095                  33,632                  20,546                  13,527
Account Receivable                        9,518                    7,587                    5,832                    3,993                    2,559
Inventory
Other
Current Assets                    66,225                50,480                48,563                34,401                21,652
Net PPE                      35,323                  24,683                  13,721                    8,591                    5,687
Goodwill                      18,715                  18,301                  18,221                  18,122                  18,026
Other
Total Assets                  133,376                97,334                84,524                64,961                49,407
Accounts Payable                        1,363                       820                       380                       302                       196
Accrued Expense                      11,735                    5,509                    2,892                    2,203                    1,449
Accrued Taxes                              -
Notes Payable                              -
LT Debt - Current                              -
Other                              -
Total Current Liabilities                      15,053                    7,017                    3,760                    2,875                    1,925
LT Debt
Other
Total Liabilities                    32,322                13,207                10,177                  5,767                  5,189
Common Stock                      45,851                  42,906                  40,584                  38,227                  34,886
Treasury                              -
Retained Earnings                      55,692                  41,981                  33,990                  21,670                    9,787
Other
Total Equity                  101,054                84,127                74,347                59,194                44,218
Total Equity & Liability                  133,376                97,334                84,524                64,961                49,407

Section 3: Facebook Financial Ratios Analyzed from 2015 to 2019

For this section, I have chosen several different financial ratios to review for Facebook from 2015 to 2019.  In reviewing each of Facebook’s financial ratios, I first start with defining the financial ratio.  Next, I supply the financial formula for calculating the specific ratio.  Finally, I offer a brief analysis of Facebook’s Important Financial ratios. 

Facebook Current Ratio

Facebook’s current ratio ended 2015 at 11.25.  In 2019, the current ratio dropped to 4.40.  This shows that the firm may be deviating some current assets to long-term assets for optimal asset exploitation.  Also, such a high current ratio shows that the firm will be solvents for the short term.  However, excess current assets often lead to underutilizing total assets.

Facebook Total Asset Turnover

The total asset turnover for Facebook was .36 in 2015.  The organization has continually improved its asset utilization to the point where total asset turnover is now .53.  As compared to mature industries, their asset utilization is quite low.  In other words, the company is not using its assets as efficiently as it should to generate revenues.

Facebook Return on Assets

Facebook’s return on asset ended 2015 at 7.5%.  In the next five years, the company’s return on assets would grow to approximately 13.9%.  This shows that the firm is generating more revenues continuously as compared to total assets.  As technological advances continue, the firm should be able to significantly increase this ratio.

Facebook Debt to Equity Ratio

Again, the organization has no debt that we could find in our research.  From this, the debt to equity ratio would again be zero.

Facebook Liquidity Ratios 2019

Ratios 2019 2018 2017 2016 2015
Current Ratio                           4.40                    7.19
Cash Ratio                           1.27                    1.43
Quick Ratio                           4.40                    7.19
Net Working Capital                       15,499                11,277

Facebook Asset Utilization 2019

Ratios 2019 2018 2017 2016 2015
Total Asset Turnover                           0.53                    0.57
Fixed Asset Turnover                           2.00                    2.26
Days Sales Outstanding                         49.14                  49.59
Inventory Turnover #DIV/0! #DIV/0!
Accounts Receivable Turnover                           7.43                    7.36
Working Capital Turnover                           4.56                    4.95
AP Turnover                         51.87                  68.10
Average Days Inventory #DIV/0! #DIV/0!
Average Days Payable                           0.14                    0.19

Facebook Profitability Ratios 2019

Ratios 2019 2018 2017 2016 2015
Return on Assets 13.86% 22.72%
Return on Equity 18.29% 26.28%
Net Profit Margin 26.15% 39.60%
Gross Profit Margin 81.94% 83.25%
Operating Profit Margin 33.93% 44.62%
Basic Earning Power 17.98% 25.60%
ROCE 20.27% 27.58%
Capital Employed                     118,323                90,317
ROIC 35.16% 60.40%

Facebook Long-term Debt 2019

Ratios 2019 2018 2017 2016 2015
Debt Ratio 0.00% 0.00%
Debt/Equity 0.00% 0.00%
Times Interest Earned                       (29.04)                (55.61)