The firm’s current ratio was 5.1 in 2020, compared to 4.4 in 2019. The company has a wide and growing global Facebook community across the world: 1.8 billion of daily active users (+11% YoY in 2020) and 2.8 billion monthly active users (+12% YoY) In general, Facebook has strong liquidity and it specifically improved in 2020. Its large and monetizable database offers large amounts of highly valuable information about users, their social connections, and their Internet activities to advertisers and developers.
MICROSOFT CASHFLOWS 10K SOFTWARE
Software developers and makers of hardware are main suppliers.įacebook’s sources of competitive advantage are its monetizable database, increasing Facebook community, strong liquidity, and revenue growth, despite its business model is threatened by lawsuits for illegal monopolization.⁵ The data that Facebook controls and owns builds its competitive advantage. With regards to Microsoft’s strategy, the main business of the software publisher lies in the software market.⁴ Key buyers in the industry are individual consumers and business end-users. Key suppliers are computer manufacturers, information technology and real estate providers. The industry’s main buyers are advertising companies, advertising agencies and national governments. Regarding its strategy, the social media network Facebook mainly operates in the global digital advertising market.³ Its competitors are search engines, e-commerce websites and other online platforms.
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The More Personal Computing segment comprises products and services that put customers at the center of the experience: Windows, Windows Commercial, Windows cloud services, etc. In the Intelligent Cloud segment are the firm’s public, private, and hybrid server products and cloud services: server products and cloud services such as Azure and Enterprise Services such as Premier Support Services. The Productivity and Business Processes segment comprises products and services across productivity, communication, and information services such as Office 365 subscriptions. The firm’s products are divided into three segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The firm also designs, manufactures, and sells hardware devices such as personal computers, tablets, gaming consoles, and IoT devices. Microsoft’s products are OS, productivity, server, and business solution applications, desktop and server management and software development tools, and video games. Facebook Reality Labs develops augmented and VR products (Oculus) that help people feel connected. WhatsApp is a messaging application to communicate privately. The Messenger is a messaging application to connect with people across platforms and devices. Instagram allows people to share photos, videos, and private messages. The product Facebook platform is an enabler to “connect, share, discover, and communicate” with users on mobile phones or computers. Furthermore, the firm offers digital advertising globally.įacebook’s products are Facebook platform, Instagram, Messenger, WhatsApp, and Facebook Reality Labs. Microsoft’s business model is to develop, license, and support a portfolio of global software products and services.² It also designs, manufactures, and sells devices that integrate with its cloud-based solutions. Advertisers buy ads to be advertised across multiple products: Facebook, Instagram, Messenger, third-party apps and websites. Though personalised ads advertisers can reach people based on behavioural factors. The firm’s business model relies on selling advertising placements to advertisers. It “enable(s) people to connect and share” and “helps people discover and learn”.¹ The company’s main applications are Facebook platform, WhatsApp, Instagram, Messenger, and Oculus. Company overview and strategy analysis 2.1 Company overviewįacebook’s business model is to provide social networking applications for stories, shops, groups, news feed, marketplace, watch, immersive video, reels, messaging, live, and news. In the following I will assess and compare the companies’ strategy, key accounting items, profitability, liquidity, and risk. I will specifically analyse the complex and ambiguous revenue recognition and the impact of M&A on the companies’ financial statements. The project goal is to evaluate risks, performance, financial health, and future prospects of the two firms. In this article I will analysis the financial statements of the social media network Facebook and the software publisher Microsoft in the Internet industry. Evaluating risks, performance, financial health, and future prospects of Facebook and Microsoft 1.
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