Analyze the stock of Facebook in the past 3 years (2017-2019). Follow these steps.

Step 1: Industry Analysis. Gauge the level of competition in the industry and come up with an industry outlook.

Step 2: Fundamental Analysis. Examine the common-size financial statements (balance sheet, income statement, cash flow statement from 2017-2019) and the five categories of financial ratios of the firm vis-à-vis its competitors as well as the industry. Compare the ratios from Facebook to it’s competitors for each year end 2017-2019.

5 financial ratios:

1. Liquidity ratios: (current ratio, quick ratio, cash ratio).
2. Long-term Solvency Ratios: (Total Debt ratio, long-term debt ratio, times interest earned ratio).
3. Asset Mgmt/Turnover Ratios: (Inventory turnover ratio, receivables turnover ratio, asset turnover ratio).
4. Profitability Ratios: (Profit margin ratio, return on assets ratio, return on equity ratio).
5. Market Ratios: (Price-earnings ratio, price-sales ratio, Market to Book ratio).