3Qs: Figuring out Facebook's financials

Following much anticipation, Facebook filed for an initial public offering (IPO) after U.S. markets closed on Wednesday. Reports have speculated that the social media giant’s offering — pending approval from the Securities and Exchange Commission (SEC) — could top rival Google Inc.’s 2004 IPO, which holds the record for the largest U.S. Internet IPO, raising $1.9 billion at a valuation of $23 billion. Northeastern University news office asked David Sherman, professor of accounting in the College of Business Administration, to analyze Facebook’s IPO prospectus and explain what it reveals.