Question

Is Dropbox profitable as of June 2010? Are you optimistic about its chances? How does your estimation of Dropbox’s current profitableness influence your rating of the venture’s chances?

Answer 1

Answer: yes and am optimistic about its chances.

Explanation: in the first place this question is incomplete, i saw the full question online.

Let me say that Dropbox will be profitable as of June 2010 and I’m optimistic about its chances because Houston had invented a good merchandise and selling scheme. he was able to concentrate on the growth of Dropbox and utilize the turning market to his advantage. As IDC projected an one-year growing of 28 % for this market to $ 2. 5 billion Dollar in 2014 I assume that this market has a large turning possible and Dropbox will be profitable in the coming old ages due to this growing rate.

Answer 2

Answer:

it is profitable, but it is not satisfactory. It's chances of surviving in the long run are slim. I would not buy Dropbox shares if I plan to keep them long term.

Explanation:

To determine profitability, one would have to look at the following indicators on the annual report or financial statements belonging to Dropbox:

• Operating profit

• EBITDA

• Net profit

• Cash flow

• Return on Equity

• Return on Assets

• Return on Invested Capital

To determine if the indicators are growing or declining and whether it is satisfactory or not, one has to compare it with the statements of 2009 (since the year required is 2010) and the budgets for 2011.  

To determine long run profitability, one has to look at financial statements from 2010 to see the pattern. Since 2010 data is not available, we will use data from 2015 to 2019. As per the Dropbox, Inc website, the following can be noted:

• Operating profit – there has been a general increase over the 5 years

• EBITDA – there has been a general decline over the 5years  

• Net profit – there has been a general decline over the 5 years

• Cash flow – there has been steady growth over the 5 years

• Return on Equity – there has been little but steady growth over the 5 years

• Return on Assets – there has been a general decline over the 5 years

• Return on Invested Capital – there has been a general decline over the 5 years .

Dropbox has shown a general decline in their performance. This is not satisfactory. They need to implement mitigation strategies in order to change the situation and grow their returns and profitability indicators.

N.B Figures are not given on the website, hence information is taken from the graphs on the Dropbox website. [https://www.wsj.com/market-data/quotes/DBX/financials]