(a) Analyze Facebook's financial statements and excerpts from the company's 2013 Form 10-K. Your analysis should include the preparation of common-size financial statements, key financial ratios, and an evaluation of short-term solvency, operating efficiency, capital structure and long term solvency, profitability, and market measures. (The financial statement analysis template can be accessed and used at www.pearsonhighered.com/fraser.)

(b) Using your analysis, list reasons for and against investment in Facebook's common stock.

The following excerpts are from the 2013 Form 10-K of Facebook, Inc.

Item 1. Business
Overview
Our mission is to give people the power to share and make the world more open and connected. We build technology to enable faster, easier and richer communication. Hundreds of millions of people use Facebook's websites and mobile applications every day to stay connected with their friends and family, to discover and learn what is going on in the world around them, and to share and express what matters to them to the people they care about.
Our business focuses on creating value for users, marketers, and developers.

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FACEBOOK, INC. CONSOLIDATED BALANCE SHEETS (In millions, except for number of shares and par value) December 31, 2013 Assets Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net of allowances for doubtful accounts of $38 and $22 as of December 31, 2013 and December 31, 2012, respectively Income tax refundable Prepaid expenses and other current assets $3,323 8,126 $2,384 7,242 719 451 471 11,267 2,391 1,388 57 $17 895 $15,103 1,109 51 461 13,070 2,882 1,722 221 Total current assets Property and equipment, net Goodwill and intangible assets, net Other assets Total assets Liabilities and stockholders' equity Current liabilities: $ 87 181 $ 65 169 Accounts payable Developer partners payable Accrued expense Deferred revenue and deposit:s Current portion of capital lease obligations s and other current liabilities 38 239 1,100 237 30 365 1,052 491 1,500 305 3,348 Total current liabilities Capital lease obligations, less current portion Long-term debt Other liabilities 1,088 2,425 Total liabilities 2012 Stockholders equity: Common stock, $0.000006 par value; 5,000 million Class A shares authorized, 1,970 million and 1,671 million shares issued and outstanding, including 6 million and 2 million outstanding shares subject to repurchase as of December 31, 2013 and December 31, 2012, respectively; 4,141 million Class B shares authorized, 577 million and 701 million shares issued and outstanding, including 6 million and 11 million outstanding shares subject to repurchase as of December 31, 2013 and December 31, 2012, respectively Additional paid-in capital Accumulated other comprehensive income Retained earnings 10,094 12,297 14 3,159 15,470 $17895 1,659 11,755 Total stockholders' equity Total liabilities and stockholders' equity