preview

Current Ratio Among Industry Peers Essay

Decent Essays

Figure 2 Current Ratio among Industry Peers Source: McGraw-Hill Financial (2015d)

Debt
As shown in Table 4, all social media companies had low levels of long term debt given the companies were all new companies. A measure to utilize is cost of debt. LinkedIn had the second most debt among industry peers, but ranked first in terms of the lowest cost of debt. Facebook had the least amount of long term debt, but the highest cost of debt to obtain additional long term debt. Cost of debt was utilized since it was a comparable measure to use versus debt ratio.
Table 4 Debt Management Items
Company Int Exp LT Debt Cost of Debt
Facebook $7 $113.00 6.19%
LinkedIn $6 $1,092.70 0.55%
Twitter $60 $1,600.80 3.75% Source: Napoli (2015d)

Market Value In terms of market performance, the companies ranked in order are Facebook, LinkedIn, and Twitter as show in Figure 5. Facebook had the largest market capitalization and ranked first in all categories. Despite a second place ranking, LinkedIn had the highest stock price per share. Investors were willing to pay more per share for LinkedIn and had promising prospects for the company. Twitter had ranked third in all categories. Price to earnings ratio would be a consideration as a measure for market valuation, however the measure was not meaningful to mention in the analysis. With the market valuation measures, the companies are ranked and placed in the social media industry in the U.S.
Table 5 Market Valuation Items
Company Market

Get Access