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Financial Analysis of Facebook

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Financial Analysis of Facebook
Executive Summary
The paper is meant to reveal the intricate workings of Facebook as a social network giant
and as a business entity. The analysis of Facebook as a user friendly networking platform can
only be done by evaluating the number of Daily Active Users (DAUs) and Monthly Active Users
(MAUs). The two user tracking records are then analyzed to assess the percentage of all internet
users that Facebook attracts. As a business entity, the effectiveness of Facebook can be assessed
through the use of financial ratios and SWOT analysis. Facebook has realized continuous
revenue growth throughout its existence, however net income can only be discerned by
monitoring expenses, investment, loans and number of shareholders affiliated with Facebook
over the years (Watch, 2014).
Introduction
Facebook is a social networking site that pioneered the global rush for connectivity and
eased internet communication. Facebook was created by Mark Zuckerberg who borrowed the
idea from the Harvard University Student Directory. Some of the features found on the Student
Directory paved the way for Facebook. Facebook started off as a social platform for university
students to communicate and connect. Later this platform was expanded to incorporate high

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school goers. Facebook realized global recognition upon its restructuring to facilitate global
users. The user was allowed to devise his/he own account by submitting a verified email account.
Mark Zuckerbergs vision for Facebook was to create a global network that would allow user to
interact and share without being restricted by inhibitive costs and surcharges.
Background
Facebook was incorporated as a company back in 2005 under the management of CEO
Mark Zuckerberg. Facebook eventually developed to a multilevel global icon that demanded
business literate individuals to manage its assets and safeguard the interests of shareholders. Due
to increasing criticism from shareholders, journals and financial executives, Mark was compelled
to hire more business literate individuals to help him manage the establishment. In 2008 Mark
hired a Chief Operating Officer (COO) by the name of Sheryl Sandberg, a business vast
individual who graduated from Harvard with an MBA. She was the ideal person to monitor
shareholder interests, better the company’s market reach and maximize on profits. Later in 2009
Facebook recruited David Ebersman as their Chief Financial Officer (CFO). He was sort because
of his financial prowess and his fifteen year experience working with a public company.
Problem Definition
The issue is to analyze whether Facebook, as a company, can generate sufficient returns
on investments to compete with other companies that major in stock exchange. The idea is to
increase Facebook’s financial gain by maintaining user satisfaction and impressive shareholder
dividends. Most companies in Wall Street deal with legal or energy firms because they indicate
hard profits and substantial shareholder dividends. Therefore, the challenge is in developing

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Name: Professor: Course: Date: Financial Analysis of Facebook Executive Summary The paper is meant to reveal the intricate workings of Facebook as a social network giant and as a business entity. The analysis of Facebook as a user friendly networking platform can only be done by evaluating the number of Daily Active Users (DAUs) and Monthly Active Users (MAUs). The two user tracking records are then analyzed to assess the percentage of all internet users that Facebook attracts. As a business entity, the effectiveness of Facebook can be assessed through the use of financial ratios and SWOT analysis. Facebook has realized continuous revenue growth throughout its existence, however net income can only be discerned by monitoring expenses, investment, loans and number of shareholders affiliated with Facebook over the years (Watch, 2014). Introduction Facebook is a social networking site that pioneered the global rush for connectivity and eased internet communication. Facebook was created by Mark Zuckerberg who borrowed the idea from the Harvard University Student Directory. Some of the features found on the Student Directory paved the way for Facebook. Facebook started off as a social platform for university students to communicate and connect. Later this platform was expanded to incorporate high school goers. Facebook realized global recognition upon its restructuring to facilitate global users. The user was allowed to devise his/he own account by submitting a verified ...
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