Twitter is one of the largest social media tools in the technology industry,. It is a platform in which people can create, share, or exchange ideas with unlimited freedom, but limited message size. Twitter is not just a platform to communicate with friends, but also it is a social network to learn more about the world. Twitter changed the way people gretceive news by providing updates on events and issues beyond one’s friends or family. Twitter Inc. is a nearlmosty ten years old, global company with rapid initial growth. Jack Dorsey, Eva Williams, and Biz Stone launched the idea of tweets in 2006, and the company was created in 2007, in Delaware. Today, the cCompany’s headquarters is in San Francisco, and the company serves with more than forty different languages all around the world. In 2013, Twitter went public, and the first shares were traded in New York Stock Exchange market. According to Bloomberg Technology (2016), Twitter has 310 million users with 44% active monthly users each day based on the 2016 third quarter data.
Solvency and liquidity are both terms referring to a company’s financial health, and numbers of financial ratios are compared with the industry averages to measure Twitter Inc.’s liquidity and solvency. Starting point is current ratio, which is the ability to pay off current liabilities. In 2015, the technology industry had 5.40%, but Twitter had 9.75% in current ratio, which is almost double than the industry average (Microsoft Service Network [MSN] Money, 2016). When the ratio is higher, the better the company’s liquid position, and. Twitter’s higher current ratio shows that the company is able to meet its short-term obligations with its mostly liquid assets. Twitter’s current ratio points to adequate liquidity with in $9.75 of current assets for every $1 of current liability. Twitter’s financial leverage based on debt- to -equity and leverage ratios appears higher than the industry average ratios. On December 2015, Twitter had 0.34%, but the technology industry had 0.02% of debt-to- equity ratio, which proves that the industry generally usinges less debt to finance its assets than the Twitter (MSN Money, 2016). That same year, Twitter had 1.45% leverage ratio, which is 0.21% more than the industry average (MSN Money, 2016). Twitter is using more debt and other liabilities to finance its assets, which might be more risky than a company with lower leverage ratio in the same industry.