Facebook Financial Statements and Financial Ratios

Meta (Facebook) Summary

Meta (Facebook) is a social media giant that experienced impressive stock price growth between February 2019 and January 2020, with an annual growth rate of 22.94%. The company's decision not to pay dividends in recent years may be attributed to its focus on internal growth. However, it is possible that dividends will be considered as the company matures. Details regarding the current executive team and compensation are not provided in the context. For the most accurate and recent information, referring to official sources and news updates is recommended.

Meta (Facebook) Financial Report Sources

“Facebook 2021 Financial Report and 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 2021 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: Meta (Facebook) Income Statement Analyzed

Section 1 of the analysis focuses on the income statement of Meta (formerly Facebook). It begins by comprehensively explaining the income statement and its significance. The author defines and discusses various line items in the income statement, including revenues, gross profits, and more, offering detailed explanations for each. Following this, the author analyzes the notable trends observed in the income statement line items of Facebook, providing insights into their significance.

Importance of Understanding Meta (Facebook) Income Statement for Financial Analysis

Understanding Meta's (formerly Facebook) income statement is crucial for conducting a comprehensive financial analysis. The income statement provides a snapshot of the company's financial performance over a specific fiscal year period. By analyzing the income statement, investors, analysts, and stakeholders can gain valuable insights into the company's revenue generation, profitability, and expense management.

Revenue figures in the income statement reveal the company's ability to attract users and advertisers and monetize its platforms. Gross profit margin indicates Meta's ability to generate profits from its core operations while operating expenses shed light on the company's cost structure and efficiency. Net income reveals the bottom-line profitability after accounting for taxes and other expenses.

Comparing income statements from different periods allows for trend analysis, highlighting growth patterns, cost fluctuations, and potential risks. It also facilitates benchmarking against competitors within the industry. Moreover, analyzing income statement line items in relation to other financial statements, such as the balance sheet and cash flow statement, provides a holistic understanding of Meta's financial health and performance.

A thorough income statement analysis enables informed decision-making regarding investment, valuation, and strategic planning, helping stakeholders evaluate the company's profitability, operational efficiency, and overall financial stability.

Revenue Growth:

Meta’s revenues were $40.6 billion in 2017.  In the next several years, the company increased its revenues to $117.9 billion in 2021.  On average, this is a 30.7% revenue growth annually.  This trend shows that the organization is able to increase its revenues at an above-average pace year-over-year as compared to other industry competitors, based on my experience and research.  An excellent trend for a multinational organization.

Analyst Grade: A

Meta 2023 Summary Income Statement
Column1	2023	2022	2021	2020	2019
Revenues	134,902	116,609	117,929	85,965	70,697
COGS	25,959	25,249	22,649	16,692	12,770
Gross Profit	108,943	91,360	95,280	69,273	57,927
SG&A	11,408	11,816	9,829	6,564	10,465
Depreciation	11,178	8,686	7,967	6,862	5,741
R & D	38,483	35,338	24,655	18,447	13,600
Other
Total Operating Expenses	88,151	87,665	71,176	53,294	46,711
EBIT	46,751	28,944	46,753	32,671	23,986
Other Income					-
Interest Expense	677	(125)	531	509	826
EBT	47,428	28,819	47,284	33,180	24,812
Taxes	8,330	5,619	7,914	4,034	6,327
Net Income	39,098	23,200	39,370	29,146	18,485

Section 2: Meta (Facebook) Balance Sheet Analyzed

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

Importance of Understanding Meta (Facebook) Balance Sheet for Financial Analysis

Understanding Meta's (formerly Facebook) balance sheet is essential for conducting a comprehensive financial analysis. The balance sheet provides a snapshot of the company's financial position at a specific time, showcasing its assets, liabilities, and shareholders' equity. Analyzing the balance sheet allows investors, analysts, and stakeholders to assess Meta's liquidity, solvency, and overall financial stability. It provides insights into the company's asset composition, including cash, investments, property, and intellectual property, which are crucial for evaluating its ability to meet short-term and long-term obligations.

Liabilities outlined in the balance sheet, such as debt and accounts payable, reveal the company's financial obligations and leverage. By assessing the debt-to-equity ratio and other relevant metrics, stakeholders can gauge Meta's risk exposure and evaluate its ability to service its debt. Shareholders' equity represents the residual interest in the company and reflects its net worth. Analyzing shareholder equity changes over time can indicate the company's profitability and ability to generate retained earnings.

Furthermore, understanding the balance sheet allows for a comprehensive analysis of various financial ratios and metrics, such as the current, debt, and return on equity, providing valuable insights into Meta's financial health, efficiency, and profitability. By examining the balance sheet alongside other financial statements, stakeholders can make informed decisions regarding investment, risk assessment, and strategic planning, enabling a holistic understanding of Meta's financial position and performance.

Sample - Cash:   

Meta’s cash holding was $8 billion in 2017.  As compared to the sales, their cash position was 19.9%.  In the next four years, Meta would increase their cash holdings ending 2021 at $16.6 billion or 14.1% of sales.  This trend indicates that the company can hold less cash as compared to the sales year-over-year and is still over current liabilities sufficiently.  This is an excellent trend from an investor’s perspective.

Analyst Grade: A

Meta 2023 Summary Balance Sheet
Column1	2023	2022	2021	2020	2019
Cash	41,862	14,681	16,601	17,576	19,079
Short Term Investment	23,541	26,057	31,397	44,378	35,776
Account Receivable	16,169	13,466	14,039	11,335	9,518
Inventory
Other
Current Assets	85,365	59,549	66,666	75,670	66,225
Net PPE	96,587	79,518	57,809	45,633	35,323
Goodwill	20,654	20,306	19,197	19,050	18,715
Other
Total Assets	229,623	185,727	165,987	159,316	133,376
Accounts Payable	4,849	4,990	4,083	1,331	1,363
Accrued Expense	24,625	19,552	14,312	11,152	11,735
Accrued Taxes					-
Notes Payable					-
LT Debt - Current					-
Other					-
Total Current Liabilities	31,960	27,026	21,135	14,981	15,053
LT Debt	18,385	9,923	-	-	-
Other
Total Liabilities	76,455	60,014	41,108	31,026	32,322
Common Stock	73,253	64,444	55,811	50,018	45,851
Treasury					-
Retained Earnings	82,070	64,799	69,761	77,345	55,692
Other
Total Equity	153,168	125,713	124,879	128,290	101,054
Total Equity & Liability	229,623	185,727	165,987	159,316	133,376

Section 3: Meta (Facebook) Financial Ratios Analyzed

For this section, I have chosen several financial ratios for Meta (Facebook) to review.  In reviewing each of Facebook’s financial ratios, I first start by 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. 

Importance of Understanding Meta (Facebook) Financial Ratios for Financial Analysis

Understanding Meta's (formerly Facebook) balance sheet is essential for conducting a comprehensive financial analysis. The balance sheet provides a snapshot of the company's financial position at a specific time, showcasing its assets, liabilities, and shareholders' equity. Analyzing the balance sheet allows investors, analysts, and stakeholders to assess Meta's liquidity, solvency, and overall financial stability. It provides insights into the company's asset composition, including cash, investments, property, and intellectual property, which are crucial for evaluating its ability to meet short-term and long-term obligations.

Liabilities outlined in the balance sheet, such as debt and accounts payable, reveal the company's financial obligations and leverage. By assessing the debt-to-equity ratio and other relevant metrics, stakeholders can gauge Meta's risk exposure and evaluate its ability to service its debt. Shareholders' equity represents the residual interest in the company and reflects its net worth. Analyzing shareholder equity changes over time can indicate the company's profitability and ability to generate retained earnings.

Furthermore, understanding the balance sheet allows for a comprehensive analysis of various financial ratios and metrics, such as the current, debt, and return on equity, providing valuable insights into Meta's financial health, efficiency, and profitability. By examining the balance sheet alongside other financial statements, stakeholders can make informed decisions regarding investment, risk assessment, and strategic planning, enabling a holistic understanding of Meta's financial position and performance.

Meta (Facebook) Current Ratio

Meta’s current ratio was 12.9 in 2017.  In the next several years, the company reduced its current ratio to 3.1 in 2021.  This trend indicates that the company is taking steps to improve its current asset utilization.  However, a 3.1 current ratio is still excessive as compared to other multinational organizations.  From this, the company still needs to improve its current asset-handling procedures further.  From an investor’s perspective, this is a poor trend.

Analyst Grade: B

Meta (Facebook) Return on Assets

Meta’s return on assets (ROA) was 18.8% in 2017.  In the next several years, the organization’s return on assets will increase to 23.7% in 2021.  This trend indicates that the company is doing a better job year-over-year in aligning assets with generating revenues.  From an investor’s perspective, this is a good trend.

Analyst Grade: A