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Ratio Analysis for Facebook Introduction The financial position of a company offers great insight on the performance of the company on short-term and long-term basis. This work argues that Facebook Inc. is a company with a subjective investment portfolio. The purpose of this paper is to use ratio analysis to determine the position of the Facebook as an investment destination. The first section explores two ratios and their implications to a potential investor. The second part evaluates whether Facebook is bankrupt. The succeeding section offers advice to potential investors. The work culminates by highlighting key points and making necessary recommendations. Ratio Analysis Information on the financial statement can offer an overview of a company’s performance over the past fiscal year. However, gaining crucial investment insights requires financial manipulation that yields financial ratios. The first ration to consider is the Debt to Equity Ratio. The Debt to Equity ratio is DE ratio= (Total Debt)/(Shareholders^' Equity) (D’Amato, 2010). Facebook’s DE ratio is 4.4× (Bloomberg Businessweek [BB]. 2013). This shows that Facebook Inc. is heavily reliant on borrowing or debt rather than relying on shareholder capital when seeking asset and activity funds. However, Adelman and Marks (2010) argue that some industries require higher DE ration so that they can invest more heavily in fixed assets. This ratio shows that Facebook’s financial health is good when gauged against industrial average. Nevertheless, overreliance on fixed asset as the most outstanding investment portfolio for Facebook is misguided. Recent events that led to the 2007/ 2008 global financial crisis were attributed to overpriced fixed assets and unsecured subprime mort... ... middle of paper ... ...Lessons Learnt I have leant that ratio analysis offers better insight of a company’s financial position on the short-term and long-term basis. However, I would recommend that investor advice should be based on ratio analysis that considers ratios from several years. This will ensure that the investor is making an informed decision based on the company’s financial ratio performance trend. Works Cited Adelman, P. J., & Marks, A. M. (2010). Entrepreneurial finance. (5 ed.). Bedford, Texas: Prentice Hall. Bloomberg Businessweek [BB]. (2013). Facebook Inc. – A (FB: Consolidated issue listed on NASDAQ global select). Retrieved from http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=FB D’Amato, E. (2010). Australian Shareholders’ Association: Standing Up for shareholders – The top 15 financial ratios. Australia: Lincoln Indicators Pty Ltd.