case study
Facebook IPO
After reading the case, will need you to provide the answers to the following and clearly explain what each answer means to Facebook.
Please show how you got your answers.
1. Comparative (Horizontal) Analysis
Evaluate consecutive financial statements.
Time-series performance of the firm (e.g., quarterly, semiannual,
and annual).
2. Common Size (Vertical) Analysis
Evaluate financial performance across firms (e.g., cross-sectional
comparison with comparable firms, competitors, and
industry averages).
3. Ratio Analysis
Variables computed from mathematical (economic)
relationships between financial variables
Evaluate performance and understand future prospect, yet
ratios only provide the basis for interpretation and analysis.
4. Cash Flow Analysis
Valuation of the firm (FCF) – determine intrinsic (true) value of
the firm.
5. Leverage Ratios: long-term/debt financing decision and risk of
financial distress.
6. Liquidity Ratios: corporate liquidity, financial distress, and
financing-investment interactions.
7. Efficiency Ratios: operating efficiency, operation decision,
expansion, shut-down, etc.
8. Profitability Ratios: a firm’s profitability and operating performance.
9. Market Valuation Measures: market valuation, risk, growth
opportunities, etc.
Again, please provide clear explanations to what the answers indicate.