FINANCIAL ACCOUNTING

Financial Reporting, Analysis & Markets Competency

Financial Accounting

Company Profile

EBay is a very famous company in USA which was established in September 1995 by the Iranian computer programmer Pierre Omidyar. Initially, he made his own personal website and gave it the name of Auction Web. All these developments took place when the Internet and the concept of World Wide Web were relatively new. It was then after 1996, the number of Internet users increased rapidly from 50,000 to 1 million people. At that time, people started taking an interest in the Internet and participated in Internet shopping. Although during those days, there was no reliable payment system which would keep both the buyer and seller secure (Cohen, 2002). The concept of Encrypted websites was not there at that time but it got developed after few years.

Company Logo

Type

public company

Listing

NASDAQ: EBAY

Year of foundation

1995

Founders

Pieere Omidyar

Location\

San Jose, Unite States Of America

Key figure

John Donahue (CEO and President)

Branch

Auctions

Production

Online auctions, electronic commerce, shopping center, and PayPal

Operating Income

US$ 2.053 billion (2010)

Net Income

US$ 1.801 billion (2010)

Number of employees

177010 (2010)

Slogan

Whatever it is you can get it on eBay.”

Site

www.ebay.com

Ratio Analysis for the Years 1999 And 2000

Full Ratio Analysis:

 

 

 

Ratio Analysis:

2000

 

1999

Ratio:

 

 

 

Measuring Profitability:

 

 

 

Rate of Return on Net Sales

18.07%

 

8.07%

 

 

 

 

Rate of Return on Total Assets

4.49%

 

 

 

 

 

 

Return on Stockholders' Equity

5.16%

 

 

 

 

 

 

Liquidity measures:

 

 

 

Working Capital

$4.91

 

$5.00

 

 

 

 

Current ratio

4.91

 

5.18

 

 

 

 

Acid-Test ratio

4.53

 

4.72

 

 

 

 

Accounts Receivable Turnover

8.30

 

 

 

 

 

 

Days Sales in Receivables

287.00

 

 

 

 

 

 

Ability to Pay Long Term Debt

 

 

 

Debt ratio

0.01%

 

0.02%

 

 

 

 

Times Interest Earned

27.06

 

7.91

The financial analysis of the financial statements occurs on the basis of ratio analysis. Ratios using which one can form a quantitative image on a number of aspects of the financial status of an enterprise. These ratio analysis are use to estimate the financial performance of the company. There importance increases when the investment decisions are needed to be made. These ratios are also studied by the bank, when company asks for loan. The ratios provide information that can make the right decisions to those interested in the company, whether their owners, bankers, consultants, trainers, and government. The ratio analysis of the company is done by calculating ratios for two different years (1999 and 2000). Ratio analysis is an important component of financial statement analysis, but average investors often miss it.

Many people buy interest in companies based on a simple suggestion from their brokers or based on what their family or friends invest in. While technical analysis can be predicative of the future price, fundamental analysis can help investors spot problems in the way the company is managed and operated; review profitability history and learn how leveraged the company is. When conducting the ratio analysis investors should start by analyzing the organization's liquidity and debt-paying ability. The next step is to analyze profitability, financial structure and dividend history. Depending on the organization's industry, business structure and the nature of the product, the importance of different ratios will vary. Financial ratio analysis is an important building block for value investing.

Profitability Ratios

Profitability Ratios

12/31/2000

12/31/1999

ROA % (Net)

4.49

2.05

ROE % (Net)

5.16

2.31

ROI % (Operating)

3.63

(0.24)

EBITDA Margin %

8.44

(0.01)

The profitability ratios of the company for the year 1999 and 2000 shows ...