We would like our companies to have at least as much cash as they do debt. Thus, the following equation is not applicable. Flow Ratio Yahoo's Flow Ratio is phenomenal, coming in at a low .20, well below our 1.25 criterion. Their revenues, however, are still increasing. The decline in value has mostly been attributed to uncertainty within this fledgling industry.
Growth is said to be slowing, at least in the near term.
As I stated, Yahoo depends heavily on advertising dollars for its revenue. It has been estimated that the majority of their advertisers are from other internet companies. Yahoo contends that as more and more old-economy companies embrace the internet, these companies will pick up the slack in ad revenue. This will take time. They expect advertising dollars to increasingly flow to the internet over the next five to ten years.