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PRESENTATIONFINANCIAL STATEMENT ANALYSIS FOR INVESTORS

HIMANSU BADHAIPRATIK GUPTASAI KRISHNA KODALI

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• 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

The Basics Facebook

3Investment in Facebook Inc. Final Verdict

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• 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

Final Verdict Comments

5Financial Statements Income StatementFacebook Inc.

CONDENSED MULTISTEP INCOME STATEMENTFISCAL YEAR ENDED DEC-31

($ in millions) Year-End 2,012 2,011 2,010Sales Revenue $ 5,089.00 $ 3,711.00 $ 1,974.00 Cost of goods sold $ 1,364.00 $ 860.00 $ 493.00 Gross Profit $ 3,725.00 $ 2,851.00 $ 1,481.00 Operating Expenses $ 3,187.00 $ 1,095.00 $ 449.00 Operating Income $ 538.00 $ 1,756.00 $ 1,032.00

Non operating revenues and expenses $ (44.00) $ (61.00) $ (24.00)Income before income tax $ 494.00 $ 1,695.00 $ 1,008.00 Minority Interest $ 21.00 $ 332.00 $ 234.00 provision for income tax $ 441.00 $ 695.00 $ 402.00 Income from continuing operations $ 32.00 $ 668.00 $ 372.00 Nonrecurring items $ - $ - $ -

NET INCOME $ 32.00 $ 668.00 $ 372.00 Earnings per share $ 0.01 $0.00 $0.00

6Financial Statements Balance SheetFacebook Inc.

CONDENSED CLASSIFIED BALANCE SHEET

31-Dec

($ in millions) Year-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 $ 162.00 $ 96.00

Other Assets $ 57.00 $ 90.00 $ 74.00

TOTAL ASSETS $ 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 $ 2.00 $ (6.00) $ (6.00)

TOTAL L & SE $ 15,103.00 $ 6,331.00 $ 2,990.00

7Financial Statements Cash Flows

Facebook Inc.

CONDENSED STATEMENT OF CASH FLOWS

FISCAL YEAR ENDED DEC-31

($ in millions) Year-End 2,012 2,011 2,010

Net cash from operating activities $ 1,612.00 $ 1,549.00 $ 698.00

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 $ 1.00 $ 3.00 $ (3.00)

Net changes in cash $ 872.00 $ (273.00) $ 1,152.00

Cash, beginning $ 1,512.00 $ 1,785.00 $ 633.00

Cash, ending $ 2,384.00 $ 1,512.00 $ 1,785.00

8The Mobile Momentum

Facebook’s actual mobile revenues were $720m in FY13 Q2 and $900m in FY13 Q3.

source

9The Mobile Momentum How did Facebook do it?

Newsfeed ads helped drive mobile advertising

10The Mobile Momentum The Bigger Picture

source

11TREND & COMMON SIZE ANALYSIS Income Statement

Operating Expenses Income before income tax NET INCOME0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

Key Takeaways from Common Size Income Statement

2012201120102012 w/o R&D

12TREND & COMMON SIZE ANALYSIS Statement of Cash Flows

Net cash from investing activities Net cash from financing activities Net changes in cash-500.00

-400.00

-300.00

-200.00

-100.00

0.00

100.00

200.00

300.00

400.00

500.00

-435.73

389.76

54.09

Key Takeaways from Common Sized Cash Flow Statement

201220112010

13RATIO ANALYSIS Industry Average CalculationTitle of Ratio Twitter Pandora Average

Profitability Ratios Return on sales (ROS) -0.25052 -0.08931 -0.16992Return on assets (ROA) -0.09548 -0.17433 -0.1349Return on equity (ROE) -0.12717 -0.38538 -0.25627Gross profit margin 0.593706 0.319278 0.456492

Efficiency Ratios 0Account receivable turnover 2.825848 4.130597 3.478222Inventory turnover 0Asset turnover 0.381127 1.951931 1.166529

Liquidity Ratios 0Current ratio 5.046151 1.712633 3.379392

Solvency Ratios 0Debt ratio 0.249173 0.547648 0.398411Financial leverage 1.331864 2.21067 1.771267Times interest earned -31.0068 -70.471 -50.7389Free cash flow ($ in millions) 114.55 22.6 68.575

14RATIO ANALYSIS

Return on sales (

ROS)

Return on assets

(ROA)

Return on equity (R

OE)

Gross profit m

argin

Account r

eceiva

ble turnove

r

Asset t

urnover

Current r

atio

Debt ratio

Financial le

verage

Times i

nterest earned

Free cash

flow ($ in

milli

ons)

-3

-2

-1

0

1

2

3

4

Year wise ratio comparison

2011 2012 2012 w/o R&D expense Industry Averages

15STOCK ANALYSIS

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THANK YOU

QUESTIONS