1. 1
PRESENTATION
FINANCIAL STATEMENT ANALYSIS FOR
INVESTORS
HIMANSU BADHAI
PRATIK GUPTA
SAI KRISHNA KODALI

2. The Basics Facebook
• Largest Online Social Network: 1.3 Billion Users
• Potential Conglomerate
• Founded: Mark Zuckerberg , 2004
• IPO: May 17, 2012
• First in Domain
• Current Value: $104 Billion
• Largest Acquisition: Instagram, August 2012
2

3. Investment in Facebook Inc. Final Verdict
3

4. Final Verdict Comments
• Free Cash Flow:
• Equity from Public Trading
• Long Term Profits
• Debt:
• Equity Multiplied Liquid Assets
• Reduced Debt Ratio
• Revenue and Gross Profit:
• 30% mark up on Gross Profit
• Focus on Growth:
• Investment in R&D and Expansion
• Potential:
• Monthly Active Users Steadily Increasing
• New Revenue Streams
4

5. Financial Statements Income Statement
5
Facebook Inc.
CONDENSED MULTISTEP INCOME STATEMENT
FISCAL YEAR ENDED DEC-31
($ in millions)
YearEnd
2,012
2,011
Sales Revenue
$ 5,089.00 $ 3,711.00
Cost of goods sold
$ 1,364.00 $
860.00
Gross Profit
$ 3,725.00 $ 2,851.00
Operating Expenses
$ 3,187.00 $ 1,095.00
Operating Income
$
538.00 $ 1,756.00
$
$
$
$
$
Non operating revenues and expenses
Income before income tax
Minority Interest
provision for income tax
Income from continuing operations
Nonrecurring items
NET INCOME
Earnings per share
$
(24.00)
$ 1,008.00
$
234.00
$
402.00
$
372.00
$
$
372.00
$0.00
$
$
$
$
$
$
$
$
(44.00)
494.00
21.00
441.00
32.00
32.00
0.01
$
$
$
$
$
$
$
(61.00)
1,695.00
332.00
695.00
668.00
668.00
$0.00
2,010
1,974.00
493.00
1,481.00
449.00
1,032.00

6. Financial Statements Balance Sheet
6
Facebook Inc.
CONDENSED CLASSIFIED BALANCE SHEET
31-Dec
Year-
($ in millions)
End
2,012
2,011
2,010
Current Assets
$ 11,267.00 $ 4,604.00
$ 2,246.00
PPE, net
$ 2,391.00 $ 1,475.00
$
574.00
Goodwill and Intangibles
$ 1,388.00 $
$
96.00
Other Assets
$
90.00 $
74.00
TOTAL ASSETS
57.00 $
162.00
$ 15,103.00 $ 6,331.00
$ 2,990.00
Current Liabilities
$ 1,052.00 $
899.00
$
389.00
Noncurrent Liabilities
$ 2,296.00 $
533.00
$
439.00
Contributed Capital
$ 10,094.00 $ 3,299.00
$ 1,562.00
Retained Earnings
$ 1,659.00 $ 1,606.00
$
606.00
Treasury stock and other SE
$
(6.00) $
(6.00)
TOTAL L & SE
2.00 $
$ 15,103.00 $ 6,331.00
$ 2,990.00

7. Financial Statements Cash Flows
7
Facebook Inc.
CONDENSED STATEMENT OF CASH FLOWS
FISCAL YEAR ENDED DEC-31
($ in millions)
End
Year2,012
2,011
Net cash from operating activities
$ 1,612.00
Net cash from investing activities
$ (7,024.00) $ (3,023.00)
$ (324.00)
Net cash from financing activities
$ 6,283.00
$ 1,198.00
$
781.00
Effect of exchange rate on cash
$
$
3.00 $
(3.00)
Net changes in cash
$
Cash, beginning
$ 1,512.00
$ 1,785.00
$
Cash, ending
$ 2,384.00
$ 1,512.00
$ 1,785.00
1.00
$ 1,549.00
2,010
872.00 $
$
698.00
(273.00) $ 1,152.00
633.00

8. The Mobile Momentum
8
source
Facebook’s actual mobile revenues were $720m in FY13 Q2
and $900m in FY13 Q3.

9. The Mobile Momentum How did Facebook do it?
Newsfeed ads helped drive mobile advertising
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10. The Mobile Momentum The Bigger Picture
source
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11. TREND & COMMON SIZE ANALYSIS Income Statement
Key Takeaways from Common Size Income Statement
70.00
60.00
50.00
2012
40.00
2011
30.00
2010
20.00
2012 w/o R&D
10.00
0.00
Operating Expenses
Income before income tax
NET INCOME
11

12. TREND & COMMON SIZE ANALYSIS
Statement of Cash Flows
12
Key Takeaways from Common Sized Cash Flow Statement
500.00
389.76
400.00
300.00
200.00
54.09
100.00
2012
0.00
2011
-100.00
2010
-200.00
-300.00
-400.00
-500.00
-435.73
Net cash from investing activities
Net cash from financing activities
Net changes in cash

13. RATIO ANALYSIS Industry Average Calculation
Title of Ratio
Profitability Ratios
Return on sales (ROS)
Return on assets (ROA)
Return on equity (ROE)
Gross profit margin
Efficiency Ratios
Account receivable turnover
Inventory turnover
Asset turnover
Liquidity Ratios
Current ratio
Solvency Ratios
Debt ratio
Financial leverage
Times interest earned
Free cash flow ($ in millions)
Twitter
Pandora
-0.25052
-0.09548
-0.12717
0.593706
-0.08931
-0.17433
-0.38538
0.319278
2.825848
4.130597
0.381127
1.951931
5.046151
1.712633
0.249173
1.331864
-31.0068
114.55
0.547648
2.21067
-70.471
22.6
Average
-0.16992
-0.1349
-0.25627
0.456492
0
3.478222
0
1.166529
0
3.379392
0
0.398411
1.771267
-50.7389
68.575
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14. RATIO ANALYSIS
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Year wise ratio comparison
4
3
2
1
0
Return on
sales (ROS)
Return on
assets (ROA)
Return on
equity (ROE)
Gross profit
margin
Account
receivable
turnover
Asset turnover Current ratio
Debt ratio
-1
-2
-3
2011
2012
2012 w/o R&D expense
Industry Averages
Financial
leverage
Times interest Free cash flow
earned
($ in millions)

15. STOCK ANALYSIS
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16. 16
THANK YOU
QUESTIONS