Question

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Financial Statement Analysis: Management’s Perspective (Facebook)
Discuss the Facebook's financial position, as compared to its competitors, with a focus on the firm’s managers. If you were managing this company, how would you view the firm’s current financial performance? What are the firm’s overall financial strengths and weaknesses and how would you weight the interests of different stakeholders? Ultimately, make a recommendation as to which areas you would focus on in order to achieve the financial goals of the company.

Answer 1

Facebook page having a better financial position in comparison to its competitors and industry as there in manageable debt on its overall books of accounts and it is also generating a higher level of profit and the business structure is also providing it with premium because there are still no substitute available.

Current financial performance of this company has been on an upward trajectory because the profits of the company has been continuously increasing and the debt of the company is continuously decreasing so there is enough revenue generating capability of this company as well as the profits of these companies also have high so it can also choose upon various projects not having much cost of capital as it can fund most of it through its reserves and surplus and it has good amount of cash in it's books of accounts

the overall financial strength are the Monopoly it commands and premium it has, in terms of its competitors along with the high cash in its books as well as the low debt to equity ratio..

financial weakness can be attributed that even if there is less debt, but the debt is significantly increasing in its books of accounts and the interest coverage ratio is going down, as it is having less of cash to dispose off its interest because it is going for excessive capex and that can lead to stress on its books of accounts.

I would be focusing on the capital budgeting decisions made by this company as well as I will try to allocate the resources in the best possible way to maximize the returns for share holders