eBay's Financials

Following are some of eBays financial results for the past four years.

Because the online auction market is about connecting people there is no traditional retailing cost structure. From that fact eBay can be expected to have more impressive profit margins than "old economy" companies, which is the case as can be seen in the table here below.

The Cash King Margin (CKM), which is calculated by dividing the difference between Operating cash flow and Capital expenditures by Sales, gives an indication of the company's cash generating power — it gives a clearer indication than net income, since net income is usually "tainted" by interest and other non-operating figures. For eBay, the CKM is 8.8% (given $99 million generated and $60.7 million spent) which compares very favorably to Motley Fools rating of CKM of 10% in mature "Rule Maker" companies.

Income Statement	FY 1997	FY 1998	FY 1999	FY 2000
Sales	$41,370	$86,129	$224,724	$431,424
CoGS	8,404	16,094	57,588	95,453
Gross Profit	32,966	70,035	167,136	335,971
Gross Margin	79.69%	81.31%	74.37%	77.87%
Sales & Marketing	15,618	35,976	96,239	166,767
Product Development	831	4,640	24,847	55,863
General & Administrative	6,534	15,849	43,919	73,027
Operating Income	9,983	12,765	-3,373	34,994
Operating Margin	24.13%	14.82%	-1.50%	8.11%
Net Income	7,061	7,273	9,567	48,294
Diluted Net EPS	$0.08	$0.06	$0.04	$0.17

(all numbers except EPS are in thousands)

Looking at the Balance Sheet and using Motley Fools' Flow Ratio, which is defined as

(Current assets - Cash) / (Current liabilities - Short term debt)

measures the performance of eBay's working capital on a day-to-day basis. The lower the number, the better. A Flow Ratio of below 1.25 is considered to be attractive, but eBay does even better with a Flow Ratio around 0.90 for the first three quarters of 2000 and 0.76 in the fourth quarter.

Balance Sheet	12/31/97	12/31/98	12/31/99	12/31/00
Cash & Equivalents	$3,723	$37,285	$221,801	$201,873
Short-term Investments	0	40,401	181,086	354,166
Receivables	1,024	12,425	36,538	67,163
Total Current Assets	4,967	97,590	465,307	675,464
Long-term Investments	0	0	373,988	218,197
Net Fixed Assets	652	44,062	112,202	125,161
Total Assets	5,619	149,536	969,825	1,182,403
Accounts Payable	252	9,997	32,133	31,725
Total Current Liabilities	1,124	24,656	93,041	137,442
Total Liabilities	1,586	48,998	115,696	168,643
Total Equity	1,105	100,538	852,467	1,013,760

(all numbers are in thousands)

eBay's stock price has suffered along with all other Internet stocks, as can be seen here below although comparatively it has faired better than most other Internet stocks.