Etsy and the LongHaul Consider your assigned role in the sit

Etsy and the Long-Haul

Consider your assigned role in the situation, and let that guide your perspective. Look deeper at the details: facts, problems, organizational goals, objectives, policies, strategies. Next, consider the concepts, theories, tools and research you need to use to address the issues presented. Then, complete any research, analysis, calculations, or graphing to support your decisions and make recommendations.

Scenario
Investigate the areas of corporate finance as you examine basic financial statements for Etsy (ETSY), an online retailing e-commerce platform. Etsy, which was formed in 2005, held its initial public offering in 2015, and we can thus think of Etsy as a new, publicly traded firm. Etsy has experienced rapid growth (Egan, 2015; Securities and Exchange Commission, n.d.). It is also the largest certified socially-responsible company, or B Corporation, to go public in the United States (Schweiger & Marcus, 2015; Sweeney, 2013). Benefit corporations expand the obligations of boards legally, requiring them to consider environmental and social factors, as well as the financial interests of shareholders. This gives directors and officers the legal protection to pursue a mission and consider the impact their business has on society and the environment. An enacting state\'s benefit corporation statutes are placed within existing state incorporation codes so that existing code applies to benefit corporations in every respect, except where explicit provisions unique to the benefit corporation form have been included. Directors are required to balance stockholders\' interests, interests of those materially affected by the corporation\'s conduct, and a specific public benefit(s) identified in the firm’s certificate of incorporation. Prior to engaging in this discussion, please review the Management Discussion and Analysis (MD&A) section of Etsy’s Annual Report to Shareholders, and other research or materials of your choosing to become familiar with Etsy. Etsy’s financial statements are provided, for your convenience. You may also visit Yahoo Finance, and type Esty’s ticker symbol (ETSY) into the search box, to investigate more recent activity, however your answers here should address financial statements that are provided for your use.

Module Outcomes:

Assess differences between accounting value or “book” value, and market value.

Determine a firm’\'s cash flow from its financial statements.

NOTES

A balance sheet needs to balance.

Balance Sheet Identity:

Assets = Liabilities + Shareholders’ equity

Cash flow from assets = Cash flow to creditors + Cash flow to stockholders

The Price/Book ratio is of particular interest for value investors.

Both the basic earning power (BEP) ratio and the return on assets (ROA) ratio are important measures of a firm’s profitability. Both have the same denominator: total assets. The difference is with the numerator. The BEP ratio uses earnings before interest and taxes (EBIT) in the numerator, whereas the ROA ratio uses net income available to common stockholders. Thus, without taking into account a firm’s taxes and interest expense (capital structure decision through debt selection), the BEP ratio provides a return measurement.  

QUESTION:

Does Etsy have sufficient current assets?

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Etsy- Balance Sheet All numbers are quoted in thousands Period Ending Assets Current Assets 31-Dec-15 31-Dec-14 31-Dec-13 Cash And Cash Equivalents Short Term Investments Net Recelvables Inventory Other Curent Assets 271,244 21,620 56,669 69,659 19,184 25.977 36,795 18,075 18,194 9,521 12,241 3,721 Total Current Assets 359,054 127,061 76,785 Long Term Investments Property Plant and Equlpment Goodwill 105,021 75,538 23,107 27,752 30,831 5.346

Solution

From the question i understand that we need to find out that Etsy have sufficient Current assets or Not.

For Sufficient Current Assets, a firm should have its working capital positive i.e.

Working Capital = Current Assets - Current Liability

or

Current Ratio shall be more than 1.

Current Ratio is Current Assets / Current Liabilities

From the given financial Statements we have below table for current assets and liability.

So Current Ratio is as well for each year end:-

We can see that in year ending 2013, current ratio was less than 1 and after that it was more than 1, So begining 2014. Etsy current assets are sufficient.

Thank You!!

Year	15	14	13
Total Current Assets	359054	127061	18194
Total Current Liability	80122	41453	19219