current ratio 2016 = current assests / current liabilities= 34401/2875=1179

current ratio 2017 = current assests / current liabilities= 48563/33760=12.92

current ratio 2018 = current assests / current liabilities= 50480/7017%=7.19

Debt Ratio =Total Liablities/ Total Equity

for 2016 =5767/59194=10%
for 2017=10177/74347=14%
for 2018=13207/84127=16%

P/E for 2016= share price / EPS=131.32/3.57=36.52

2017 =176.64/5.49=32.13
2018= 131.09/7.56=17.13

ROE for 2016=Netincome / Shareholder Equity=17.26%

ROE for 2017 =15933/74347=21.43%
ROE 2018 = 22113/84127=26.29%

EV=MarketCapitalization+Total Debt- Cash

for 2016=3355012+5767-8903=351867
for 2017=359724+10177-8079=361822
for 2018 =358360+13207-10019=361548

for 2016 EV/EBITDA=351867/14870=23.66

for 2017 =361822/23625=15.32
for 2018 = 361548/29685=12.18
EV/EBITDA interpretation
EV/EBITDA is a ratio that compares a company’s Enterprise Value (EV) to its Earnings Before
Interest, Taxes, Depreciation & Amortization (EBITDA).in 2016 was the highest EV/EBITDA
multiple which could be because of the highest growth rate, or considered the lowest risk,
and has the best management team.
Facebook Income Statement Dec-16 Dec-17 Dec-18
(Dollars in millions, except per share data) 2016 2017 2018
Revenue 27,638 40,653 55,838
Cost of revenue 3,789 5,455 9,355
Gross Profit 23,849 35,198 46,483
Operating expenses:
Total operating expenses 11,422 14,996 21,570
Total operating income/(loss) 12,427 20,202 24,913
Interest and other income (expense) 91 392 448
Income/(loss) before income tax 12,518 20,594 25,361
Provisions for income tax (2,301) (4,661) (3,248)
Net income 10,217 15,933 22,113
Net income available to participating securities 25 14 1
Net income attributable to common share 10,192 15,919 22,112
Basic shares outstanding 2,863 2,901 2,890
Diluted shares outstanding 2,925 2,956 2,921
Basic EPS 3.57 5.49 7.65
Diluted EPS 3.49 5.39 7.57

Growth in Revenues For the Industry

Cost of revenue % of Revenue 14% 13% 17%
Operating expenses % of Revenue 41% 37% 39%
Interest and other income (expense) % of Revnue 0% 1% 1%
Tax rate % of avergae tax 18% 23% 13%

Facebook Balance Sheet Dec-16 Dec-17 Dec-18

(Dollars in millions, except per share data) 2016 2017 2018
Assets
Cash and equivalents 8,903 8,079 10,019
Marketable securities 20,546 33,632 31,095
Accounts receivable 3,993 5,832 7,587
Prepaid expenses and other current assets 959 1,020 1,779
Total Current Assets 34,401 48,563 50,480
Property and equipment, net 8,591 13,721 24,683
Intangible assets, net 2,535 1,884 1,294
Goodwill 18,122 18,221 18,301
Other non-current assets 1,312 2,135 2,576
Total Non Current Assets 30,560 35,961 46,854
Total Assets 64,961 84,524 97,334
Liabilities 2016 2017 2018
Accounts payable 302 380 820
Partners payable 280 390 541
Accrued expenses and other current 2,203 2,892 5,509
Deferred revenue and deposits 90 98 147
 Total Current liabilities 2,875 3,760 7,017
Other non-current liabilities 2,892 6,417 6,190
Total liabilities 5,767 10,177 13,207
Equity 2016 2017 2018
Common stock - - -
Additional paid-in capital 38,227 40,584 42,906
Accumulated other comprehensive loss (703) (227) (760)
Retained earnings 21,670 33,990 41,981
Total shareholders' equity 59,194 74,347 84,127
Total liabilities and equity 64,961 84,524 97,334

AR % of Revenue 14% 14% 14%

Deferred Revenue: % to revenue. 0.33% 0.24% 0.26%
Accounts Payable, % to Cost of Revenue 8% 7% 9%
Accrued Expenses, % to OpExp 19% 19% 26%
Prepaid Expenses % to OpExp 8% 7% 8%
Other non curent assets % of revenue 4.7% 5.3% 4.6%
Other non-current liabilities % of income 10.5% 15.8% 11.1%

External funding required

- - -

Ratio Analysis

Liquidity Ratios: 2016 2017 2018

Current Ratio 11.97 12.92 7.19

Debt Management Ratios:

Debt Ratio 10% 14% 16%

Profitability Ratios:
P/E ratio 36.52 32.13 17.13
share price ( historical data from yahoo finance) 130.32 176.46 131.09

Return on Assets (ROE) 17.26% 21.43% 26.29%

cash conversion cycle

2016 2017 2018

Inventory Days 0 0 0
Accounts Receivable Days 43 44 44
Accounts Payable Days 23 23 23
2016 2017 2018
CCC 20 21 20

A company spends cash to buy inventory it then sells to create a revenue stream. The greater the
quantity of inventory the company purchases, the less cash it has on hand to pay bills. Consequently, as
we see from the table and chart we can see that FB has CCC is stable over the last three years and
around 20, this means that FB takes 20 days from paying to recive cash from its sales . The more days a
company’s money is tied up in inventory, the longer the cash conversion cycle and the greater the
number of days creditors must wait for their money. Consequently, the company will be less likely to
obtain credit when needed and less likely to continue operations. Therefore, it’s better for the company
to have a short rather than a long cash conversion cycle.

comapring to other companies in the industry over time CCC average industry is 22.1

CAPITAL STRUCTURE
Equity only 50% Equity/50% Debt
# of shares 15698 7849
Price / Share 189 189
Equity 86779 43389

NET INCOME IN THE "NORMAL" STATE

EBIT 24213 24213
Intrest rate @10% 0 4339
Net Income (assuming no tax) 24213 19874
RETURN TO THE SHAREHOLDERS

Net income divided by 24213 19874

equity 86779 43389

ROE 28% 46%

EPS 2 3

after doing pro-forma the company FB needs more cash as shown in External fundin
in 2020 $16612 and in 2010 $15698 .
Leverage Ratio detoriated to 16%, above company's average Leverage Ratio. Within
Media industry in the forth quarter 2018, Google Inc have achieved lower Leverage
While Twiter Inct get 22 % .
According to the forcating of finacial postion for FB company for 2019, the comapny
capital structure analysis with two scenarios 50/50 debt and equity finance, we reco
scenario which leads that shareholders will get a higher return (46% ROE & EPS of 3
funding all the investments, they get (only 28 % ROE and EPS of $2)

final Rcomondation :facebook will adobt libra currency in the next year 2020 so,FB n
curreny .by doing this will increase revenue because of increasing sales and advirtisi
be higher and and leads the invesitors to invesit in FB stocks.
 Dec-19 Dec-20 Dec-21
2019E 2020E 2021E
62,617 70,218 78,743
9,159.09 10,485.83 ###
53,458 59,733 66,587

### 26,791.97 ###

29,070 32,941 36,209
437.45 577.01 609.64
29,507 33,518 36,819
5,293.70 6,013.22 6,605.50
24,213 27,504 30,213 Historical price
13 9 8 shares outstanding
24,200 27,495 30,206 FB market capitalization
2,885 2,892 2,889
2,934 2,937 2,937
8.39 9.51 10.46
8.25 9.36 10.29

12.14% 12.14% 12.14%

15% 15% 15%
39% 38% 39%
1% 1% 1%
18% 18% 18%

Dec-19 Dec-20 Dec-21

2019E 2020E 2021EDec-16Dec-17 Dec-18
2016 2017 2018
10,019 6,670 5,610 14% 10% 10%
31,095 31,095 31,095 32% 40% 32%
8,846 9,920 11,124 6% 7% 8%
24,388 26,792 30,377 1% 1% 2%
74,348 74,477 78,206 53% 57% 52%
24,683 24,683 24,683 13% 16% 25%
1,294 1,294 1,294 4% 2% 1%
18,301 18,301 18,301 28% 22% 19%
3,050 3,449 3,779 2% 3% 3%
47,328 47,727 48,057 47% 43% 48%
121,676 122,204 126,262 100% 100% 100%
Dec-19 2020E 2021E
724 826 995 0% 0% 1%
501 501 501 0% 0% 1%
5,212 5,912 6,984 3% 3% 6%
173 194 218 0% 0% 0%
 6,609 7,433 8,697 4% 4% 7%
7,792.51 8,738.52 9,799.37 4% 8% 6%
14,402 16,171 18,497 9% 12% 14%
Dec-19 2020E 2021E
- - - 0% 0% 0%
### 47,956.16 ### 59% 48% 44%
(563) (517) (613) -1% 0% -1%
41,981 41,981 41,981 33% 40% 43%
86,779 89,420 92,068 91% 88% 86%
101,180 105,592 110,564 100% 100% 100%

14.13% 14.13% 14.13%

0.28% 0.28% 0.28%
8% 8% 8%
21% 22% 23%
8% 8% 8%
4.9% 4.9% 4.8%
12.4% 12.4% 12.4%

20495 16612 15698

industry ratio it seems that current ratio decreaed within last three years due to the increase in Current Liabilitiessi

3.38
.

Current and historical debt to equity ratio values for Facebook (FB) over the last 3 years. The debt/equi
be defined as a measure of a company's financial leverage calculated by dividing its long-term debt by
equity. Facebook debt/equity for the three years ending dec 31 2018 was 7% was the average industry
low and equal to .04
microsoft was 0% and twiter was .01 %

8%
Facebook Inc P/E ratio in 2018 was 17.13 % , the industry average was in 2018 30.7 % and it was highe
Facebook . there is no red flages since 2015.
P/E was decreased due to inceasing in EPS compare to previous years.
Facebook Inc's current Price to earnings ratio has increased due to shareprice growth of 14.98 %, from
I. Quarter in 2019 and due to eps contraction of -49.7 %, to Pe of 28.33, from average Price to earning
2018 of 17.13. microsoft has P/E of 30.26 and twiter was 26.1%
30.70

27.51 Facebook Inc returned in 2018 was 26.29 % on shareholder's equity, and it was higher than Facebook
return on equity. in dec 31 2018 the industry average was 27.51% very close to FB ROE
there is no red flages since 2015.
ROE increased compare to previous years, due to increasing of net income .
comparing to twiter and Microsoft soft, FB ROE is between thses two companies, twiter has 20..61 %
microsoft get 36.28%
 return on equity. in dec 31 2018 the industry average was 27.51% very close to FB ROE
there is no red flages since 2015.
ROE increased compare to previous years, due to increasing of net income .
comparing to twiter and Microsoft soft, FB ROE is between thses two companies, twiter has 20..61 %
microsoft get 36.28%

2015
Account recivables 2559
Account payable 196

Chart Title
21
21
21
ater the
nsequently, as 21
ears and 21
e more days a 20
ater the
20
ess likely to
r the company 20
20
2016 2017 2018
CCC

pro forma shows that in 2019 FB needs $15698 external funds required . now we will
suppose tow scenarios, the first one is to fund this priciple from equity only and the second
is to $15698 of shares with debt .
In the 50/50 scenario, shareholders get a higher return since they obtain $19874 (net
income) from an investment of $15698 (46% ROE & EPS of 3), whereas in the case that they
are funding all the investments, they get $24213 out of $ 86779(only 28 % ROE and EPS of
$2)
• Leverage has thus created a higher return for the shareholders
 $2)
• Leverage has thus created a higher return for the shareholders

n in External funding required in 2019 it needs $20495 ,

erage Ratio. Within Internet Services & Social

ved lower Leverage Ratio than Facebook Inc. it has 1%
2019, the comapny needs $20495 , and according to
ity finance, we recomnede that FB show choose debt
46% ROE & EPS of 3), whereas in the case that they are
$2)

xt year 2020 so,FB needs more cash to finace this

g sales and advirtising. this will leads FB Market value to
2016 2017 2018
124 124 124
2863 2901 2890
355012 359724 358360
130.32 176.46 131.09

0.2250699 0.2392916

3.4689565172
 se in Current Liabilitiessi

ast 3 years. The debt/equity ratio can

ing its long-term debt by stockholders'
was the average industry eas very

8 30.7 % and it was higher than

e growth of 14.98 %, from beginning of

m average Price to earnings ratio in

was higher than Facebook Inc average

se to FB ROE

anies, twiter has 20..61 % of ROE while

se to FB ROE

anies, twiter has 20..61 % of ROE while

2018

d . now we will
only and the second

in $19874 (net
in the case that they
8 % ROE and EPS of
Pro Forma Cash Budget, June to October 2013 (thousands of dollars)
Brian Johnke
2019 2020
Beginning Cash Balance 10,019 6,670

Cash Receipts
Collections of accounts receivable 7,587 8,846

Interest income 448 437

Bank loan 0 0
Total cash inflow 8,035 9,283

Cash Disbursements
Partners payable 501 501
Accrued expenses and other current 5,509 5,214
Deferred revenue and deposits 147 173
Payments of accounts payable 820 (724)
Operating expenses 21,570 24,388
Capital expenditure (13,915) (13,915)
Tax payments (3,248) (5,294)
Total cash outflow 11,384 10,344

Net cash inflow (outflow) (3,349) (1,060)

Ending Cash Balance 6,670 5,610
2021
5,610

9,920

577
0
10,497

501
5,916
194
826
26,792
(13,915)
(6,013)
14,301

(3,804)
1,805
after doing pro-forma the company FB needs more cash as shown in External funding required in 2019 it needs $2049
, in 2020 $16612 and in 2010 $15698 .
Leverage Ratio detoriated to 16%, above company's average Leverage Ratio. Within Internet Services & Social
Media industry in the forth quarter 2018, Google Inc have achieved lower Leverage Ratio than Facebook Inc. it has 1%
While Twitr Inct get 22 % .
According to the forcating of finacial postion for FB company for 2019, the comapny needs $20495 , and
according to capital structure analysis with two scenarios 50/50 debt and equity finance, we recomnede that FB
show choose debt scenario which leads that shareholders will get a higher return (46% ROE & EPS of 3), whereas in
the case that they are funding all the investments, they get (only 28 % ROE and EPS of $2)
red in 2019 it needs $20495

et Services & Social

han Facebook Inc. it has 1%

y needs $20495 , and

ance, we recomnede that FB
ROE & EPS of 3), whereas in