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Facebook Group Presentation

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Katharina Brendel

on 16 October 2014

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Transcript of Facebook Group Presentation

Portfolio Results
Founded in 2004, Facebook’s mission is to give people the power to share and make the world more open and connected.

People use Facebook to stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them.
Facebook Company Presentation
Free cash flow
Group Introduction & Portfolio
Facebook Group Presentation
Katharina Brendel, Darlina Farinto, Nicholas Heffernan, Nana Opoku-Agyekum, Sagar Popat, Guoliang Yang
Cash flow statement
Cash flow statement analysis
Cash flow statement analysis
Net cash flow
Cash flow statement analysis
Katharina Brendel
Darlina Farinto
Nicholas Heffernan
Nana Opoku-Agyekum
Sagar Popat
Guoliang Yang
Group members
As of the first quarter 2014, Facebook had monthly active users.

1.28 billion
Cash flow statement analysis
Free cash flow of Facebook
Cash flow statement analysis
Price to free cash flow ratio Formula
NASDAQ 2014

NASDAQ 2014

NASDAQ 2014

Cash flow statement analysis
Price to free cash flow ratio Facebook
NASDAQ 2014

Why Choose Facebook?
The old mantra: Invest in what you know!
Intriguing recent additions
Unpredictable to a certain degree
the company can live and die by their latest acquisitions
public perception/ Competition can shift quickly (in both directions)
A Brief History Of Facebook…
Feb 2004 - Mark Zuckerberg creates ‘thefacebook.com’

May-Oct 2005 - Expands to 800 Colleges, high schools and international networks

Apr 2006 - recieves $27.5 million from Venture Capitalists

Sept 2006 - Opens to the public and introduces third-party investors.

Oct 2007 - Introduces mobile platform

June 2009 - Surpasses MySpace as leading online social network.

June 2010 - German girl forgets to set event to private; 1500 guests attend her 16th birthday party.

May 2012 – Prices IPO at $34 to $38 per share; valuing the company at around $100 billion

Present 2014 – Facebook Inc. is worth $73.11

Who Runs It?
Latest Acquisitions
FriendFeed – 2009

DizzyShot – 2010

Instagram – 2012

WhatsApp – 2014
Balance sheet
ROA and ROE
Return on assets (ROA) is considered to be a profitability ratio as an indicator of asset performance.

Return on equity (ROE) measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested
ROA and ROE
Current and Quick Ratio
Current ratio – The ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables)
Financial Rational on Investing in Facebook
Cash flow
Measurement for evaluating a company
Focuses on actual operations
Eliminates one-time expenses and non-cash charges

Income statement
Valuing securities and getting a feel for the creditworthiness of a company. 

Balance sheet
Liquidity –ability to pay short term bills
Leverage – use of debt to finance operations
Inventory – raw materials and assets -
Fb has very good liquidity as we pointed out through its ability to purchase companies, pay debts and dividends and still have cash remaining

Financial Rational on Investing in Facebook
Facebook trades at a high Price/Earnings ratio of 104.
In the first quarter, Facebook’s EPS sprouted an amazing 182% to 29 cents a fully-diluted share

Analysts do expect the earning per share to grow.
On that basis we have a stock with a modest price\earning growth ratio of roughly 0.5.
It could potentially reach a ratio of 1.5 – 2.0

Profitability ratio
Gross profit margin
September 2013 – 75%
December 2013 – 81%
March 2014 – 82%
June 2014 – 84%



Over the last 4 quarters Gross profit margin has improved from 75% to 84%
Gross profit/revenue

Grown 1/4 on ¼ (Compare to Twitter)
Profitability ratio
Gross profit margin VS net profit margin
Net profit margin
September 2013 – 21%
December 2013 – 20%
March 2014 – 26%
June 2014 – 27%
Net profit/revenue




Grown ¼ on ¼ year % (Compare to Twitter)
Control of expenses (Economies of Scale)
The cost of production – Total revenue
Reasoning (Season, Trends, Fashion)
New release by the season causes a spike in sales and demand for products
Compare Profit margin VS net profit margin

The quick ratio - Also called the "acid-test" ratio and is one of the best measures of liquidity. Very similar to the current ratio however, it excludes inventories, therefore really concentrates on the liquid assets: facebook they have no inventory since they arent a company that sells stocks – Microsoft does.
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