Amazon Financial Final P
.docx
keyboard_arrow_up
School
Southern New Hampshire University *
*We aren’t endorsed by this school
Course
CORPORATE
Subject
Finance
Date
Feb 20, 2024
Type
docx
Pages
10
Uploaded by MajorBear878
Amazon Financial statement analysis
Addriann Huie Southern New Hampshire University Dr. Weiss
February 8, 2023
Executive Summary
Amazon has become a dominant force in the e-commerce marketplace and exists in over 50 countries worldwide. There are hundreds of Amazon warehouses in other countries worldwide, with Amazon goods waiting to be shipped. It is estimated that approximately 2.7 billion people shop on Amazon. It is reported that shoppers have largely upped their shopping on Amazon in recent years due to the pandemic.
Amazon is one of the biggest retailers of food, e-Commerce, electronics, and clothing retailers, Home and Garden, and shoes to name a few. In this market of e-commerce division, some of Amazon's competitors are Target, Walmart, Home improvement stores, Clothing retailers, and Grocery stores, as well as many others.
However, recent trends show that Amazon has lost momentum due to more people wanting to shop in-store after being home for so long. Another factor that is starting to affect amazon is inflation. People need more room in their budget for luxury or random purchases as they once did, showing a slower revenue stream than in previous quarters on their financial statements.
As we analyze Amazon's financial statements, we should keep these factors that are taking place in the economy in mind. Because of this, the financial statements are limited in showing these changes in the economy. A financial statement can give the investor or analyst an idea of the past and the present and
can help to project what the company will do in the future. Using these statements can determine if the company has enough liquidity, how efficiently it manages its cash, and what its assets and liabilities are. Amazon has shown that it is a safe stock for investors due to its substantial returns.
Analysis Approach
In starting the analysis of this company, the first breakdown was vertical and horizontal analysis. Horizontal analysis can help you compare a company's current financial status to its past, while vertical analysis can help you compare one company's financial status to another. After this, we looked at the company's ratio, and equity helps to build a better financial picture. Finally, we can look
at the company's liquidity. A company needs to be able to pay any loans that come with dew. Knowing the company's liquidity and ratio will help you project if they can pay these if they come due.
Key Ratios
Evaluating a company's assets can help an individual or company decide. These decisions can be made based on the company's financial data. One would need to look at the company's financial statements for this information. To know how the company is doing, finding specific ratios will help you determine the health of the company. Factoring in components such as debt, liquidity, profitability, and cash flow will help answer several questions for investors. This information will be based on past and present financial statements (balance, cash flow, and income).
A company needs to make a profit to continue running. Having profit ensures they can pay their debt as the debt comes due. Profitability evaluates how a company can generate revenue beyond its expenses. Financial analysts use specific ratios to determine how the company's profits are doing. They use profit margin, return on asset, and return on equity to look at the percentages and determine if the company should make changes or if you should invest. Amazon's profit ratios for the past three years have all been positive and growing. If the trend stays the same, it will continue to rise.
Liquidity shows the company's ability to pay its debt. The higher the ratio, the larger the safety net the company must cover its short-term debt. Under liquidity, you calculate the current ratio and quick ratio. Amazon's current ratio is over a one, but its quick ratio is at 0.91, showing that it may not have enough liquidity to pay off its debt if the short-term liabilities come due.
As of 2021, amazon was 48,744,000 in debt. This is a 52% percent increase from 2020, when they only had 31,816,000 in debt, a 36% increase from the year before. This show that Amazon has more than doubled its debt from 2019, when it sat 23,414,000. Long-term debt equity tells the analyst how much loans finance a company's assets. To calculate, divide long-term by equity, giving Amazon 0.35.
This means that amazons EBIT can cover its payments. Amazon's total equity is also the same. However, Amazon's interest coverage has increased over the years, having a significant range from 6 to 18%. I would change management procedures to slow down the amount of debt the company is taking on.
As amazon operates, it must determine its asset turnover to determine the ratio to how fast the company assets are turning over and how they are distributing its resources. Amazon's asset turnover ratio
is 1.2, which is lower than its previous years on average. But because the ratio is over one, we know the company can bring in revenue. Because Amazon is an e-commerce company, Cathey must follow the demand of what people need. Their inventory turnover rate is right within industry standard guidelines.
Cash flow ratios isolate how cash flow is used to increase or generate income and profit for the company. However, Amazon does not pay out a dividend, so this ratio isn't used for the company. Amazon chooses to use this cash to invest back into the company.
Price book value looks at a company's stock price. Some investors will use this to determine if the
company's stock is accurately valued. If the stock price is in the range, it shows that it is valued in line with the company price. Amazon's book value is above what the industry views as favorable. I would wait
to purchase this stock as the stock price continues to fall. Amazon's price-to-sales ratio is above one, which shows that the industry is willing to pay. However, this ratio doesn't show whether the company has made or will ever profit.
Vertical and Horizontal Analysis
As an analyst, you must review the financial statements of the company. In this deep dive, we will primarily review the balance and income statements. The income statement shows the company, analyst, shareholder, or everyday investor at home what the company has brought and what they spent. By looking at the revenue expenses and the business's profitability, you can break down the profit and
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Related Questions
Typed asap plzzzx
arrow_forward
Analyze and compare Amazon.com, Best Buy, and Wal-Mart
Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Best Buy Co., Inc. (BBY) is a leading retailer of consumer electronics and media products in the United States, while Wal-Mart Stores, Inc. (WMT) is the leading retailer in the United States. Amazon, Best Buy, and Wal-Mart compete in similar markets. Best Buy and Wal-Mart sell through both traditional retail stores and the Internet, while Amazon sells only through the internet. Sales and cash flow information from recent annual reports for all three companies is as follows (in millions):
Amazon
Best Buy
Wal-Mart
Sales
$135,987
$39,403
$485,873
Cash flows from operating activities
16,443
2,545
31,530
Purchases of property, plant, and equipment
(6,737)
(582)
(10,619)
a. Determine the free cash flow for all three companies.
Amazon:
Best Buy:
Wal-Mart:
b. Compute the ratio of free cash flow to sales for all three companies. Round percentages…
arrow_forward
Focus on Technology: Tracking CustomersAccording to Nielsen, more than 50 percent of mobile phone consumers own smartphones. Many ofthem use free Wi-Fi when available for faster connections and to reduce data usage charges. Buteven when they don’t log on to Wi-Fi, the device continues to search, giving information on users’locations. By using the signals emitted by shoppers’ smartphones, retailers can keep tabs onshoppers, knowing where they are and what they are searching for on their phones’ browsers.Retailers can learn on which aisles shoppers are most likely to check online prices at retailers such asAmazon.com and can send an alert to a sales representative. “Heat mapping” identifies trafficpatterns and locations attracting the greatest number of shoppers checking the Internet. This givesretailers an idea of the products most vulnerable to “showrooming”—the practice of shoppersvisiting stores to learn about and try products and later purchasing them for less online.1. What is…
arrow_forward
Chapter 12, Question 3
arrow_forward
6.16 Techstreet.com is a small web design business that provides services for two main types of websites: brochure sites and e-commerce sites. One package involves an up-front payment of $90,000 and monthly payments of 1.4¢ per “hit.” Kathy Cutler has a new eBay franchise and is considering the e-commerce package. She expects to have at least 6000 hits per month, and hopes that 1.5% of the hits will result in a sale. If the average income from sales (after fees and expenses) is $150, what rate of return per month will Kathy realize if she uses the website for 2 years?
arrow_forward
tch Pad
Zynex Co manufactures a range of electronic devices, which it sells to online stores
and retail outlets. It has a risk-seeking attitude and its objective is to maximise profit.
Six months ago it released a new version of its smartphone, the ZV. Zynex Co's main
smartphone competitor has announced that it will launch a new version of its
smartphone in one month's time and Zynex Co is concerned about the effect of the
launch of this rival product on future demand for the ZV.
For each of the previous ten smartphones launched by its competitors, Zynex Co's
marketing team has analysed the impact on Zynex Co's sales performance. This
data was retained specifically for the purpose of forecasting future demand of Zynex
Co's smartphones and is stored in the company's financial database. Based on this
analysis, the marketing team has identified three possible outcomes for the impact
on the demand of the ZV: a small decrease, a medium decrease and a large
decrease.
Production volumes for…
arrow_forward
According to one survey, 92 percent of U.S. companies now claim that social media marketing is important for their businesses. Fashion designer Kenneth Cole took advantage of the trend in 2011 by posting the following tweet: “Millions are in uproar in #Cairo. Rumor is they heard our new spring collection is now available online at http://bit.ly/KCairo -KC.” Kenneth Cole was criticized on social media for capitalizing on the strife of the Egyptian revolution to promote his website. The offensive tweet was deleted, and Cole apologized by tweeting: “Re Egypt tweet: we weren’t intending to make light of a serious situation. We understand the sensitivity of this historic moment -KC.” Most marketers would not make the same mistake twice. However, in September 2013, as the United States deliberated military action in Syria, Cole tweeted the following: “‘Boots on the ground’ or not, let’s not forget about sandals, pumps and loafers. #Footwear.” To justify this action, Cole told Details…
arrow_forward
Many marketing experts predict that e-commerce sales
will only increase as COVID-19 infections soar, social
distancing becomes standard practice, and more people
choose-or are required-to stay home. However, sellers
aren't so optimistic. In fact, 36% of sellers predict their
sales will actually decline due to supply chain issues,
product shortages, shipping delays, and the potential for
demand to drop as the economy fluctuates.
Here's what sellers can expect during this turbulent time,
as well as tips from e-commerce experts on how to
protect your online business and make the most of this
opportunity by connecting with your customers. There
are a lot of unknowns right now: how far the coronavirus
will spread, how the market will respond, and what the
overall impact of the pandemic will be worldwide.
Though no one truly knows what will happen, these
predictions will give sellers an idea of what to expect.
Almost half of retailers expect some economic downturn
due to the pandemic.…
arrow_forward
Case Study
The coronavirus pandemic drastically reduced the number of people flying in the United States. Because of this, every major airline
experienced a drop in stock prices from February 2020 to November 2020. But these drops ranged from 57% for American Airlines to
21% for Southwest Airlines. Why such a difference? Investopedia points out that Southwest has extremely efficient operations, low-cost
pricing, and innovative logistics solutions. In addition, they incorporate customer experience and forward planning into their strategy. All
of these things helped Southwest to weather the pandemic, and they all require that Southwest maintains careful control over its
operations.
One of the other things that helped Southwest during the pandemic was their superior service desk performance. They achieved this
performance, in part, through measuring key factors in customer service, looking at customer service leaders (benchmarking), and
making changes to bring their customer service costs…
arrow_forward
Knowledge Check 01
Match the term and the definition.
1. Adventure Holiday sells thousands of tour packages each month through its various
branches. A branch manager's salary would be a(n).
of selling a tour package.
is a cost that is incurred to support a number of cost objects but cannot be
2 A
traced to them individually
3. Adventure Holiday sells thousands of tour packages each month through its various
branches A branch manager's salary would be a(n)
of the branch
arrow_forward
Apple products have become a household name in America, with the average household owning 2.6 Apple products (CNBC, October 10, 2017). Suppose that in the Midwest, the likelihood of owning an Apple product is 61% for households with kids and 48% for households without kids. Suppose there are 1,200 households in a representative community, of which 820 are with kids and the rest are without kids. Let event A correspond to “Household with kids”, and B to “Household owns an Apple product”. a. Are the events “household with kids” and “household without kids” mutually exclusive and exhaustive? multiple choice
Yes
No
b. What is the probability that a household is without kids? (Round your answer to 4 decimal places.)
c. What is the probability that a household is with kids and owns an Apple product? (Do not round intermediate calculations. Round your answer to 4 decimal places.)
d. What is the probability that a household is without kids and does not own an Apple…
arrow_forward
A1
arrow_forward
Problem 42
Intro
Facebook runs many data warehouses full of servers. Assume that each existing
server is 3 years old and was bought for $1,500. It could be sold for $600 now or for
$300 in 2 years. The annual cost of running the server (for electricity, cooling and
repairs) is $240.
A new server costs $1,400 today and could be sold for $175 in 5 years. The annual
cost of running it is $140.
Both types of servers are usable for 5 years and are linearly depreciated to zero over
5 years.
Facebook's marginal tax rate is 34% and the appropriate cost of capital for this
project is 9%.
Your task is to find out if Facebook should replace each server now or in two years.
Part 1
Attempt 1/5 for 10 pts.
What is the present value of all cash flows if a new server is bought once right now?
0+ decimals
Submit
Part 2
Attempt 1/5 for 10 pts.
What is the present value of all cash flows if the old server is sold now, and the new
server is bought now and then replaced every 5 years at the same terms?
0+…
arrow_forward
[Printer] Assume a large printer manufacturer has 17,000 customers. The company wants to visit
each of their customers twice a month for about 30 minutes per visit. Assume that a sales rep has 60
hours of selling time available each month. Rounding to the nearest whole number, how many
salespeople are needed?
O 3.400
O 85
0 17,000
O 1417
O 283
arrow_forward
Chapter 13, Question 6. Attached is a similar question with answers. Please answer the same four parts for the new question
arrow_forward
Recently, Gardenia Philippines Reported an increase of 35% in bread sales in Quarter 2 of 2020. How has this possible given the pandemic situation we are experiencing? What do you think makes gardenia's brand successful among its rivals despite the pandemic? What unique characteristics have you observed in their operations? Can a well-planned and well-managed operations and supply chain help build a competitive advantage? Explain your answers comprehensively.
arrow_forward
4. Vienna Company produces herbal tea and other slimming products that
are sold throughout the Philippines. While the company is
experiencing a steady growth in sales, it has become noticeable that
collections of accounts receivable from customers are no longer as
fast as they used to be.
Vienna Company's products are sold on payment terms of 2/10, n/30.
In the past, more than 75% of the credit customers have availed of
the discount by paying within the discount period. During the year
ended December 31, 2018, there has been an increase in the number of
customers taking the full 30 days to pay. The company estimates that
less than 60% of the customers are taking advantage of the discount.
Expected credit losses as a percentage of gross credit sales have
increased from the 1.5% provided in the prior years to about 4% in
the current year.
The deterioration of accounts receivable collections has prompted the
company's controller to prepare the following report.
Accounts Receivable…
arrow_forward
SEE MORE QUESTIONS
Recommended textbooks for you
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Fundamentals Of Financial Management, Concise Edi...
Finance
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
Related Questions
- Typed asap plzzzxarrow_forwardAnalyze and compare Amazon.com, Best Buy, and Wal-Mart Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Best Buy Co., Inc. (BBY) is a leading retailer of consumer electronics and media products in the United States, while Wal-Mart Stores, Inc. (WMT) is the leading retailer in the United States. Amazon, Best Buy, and Wal-Mart compete in similar markets. Best Buy and Wal-Mart sell through both traditional retail stores and the Internet, while Amazon sells only through the internet. Sales and cash flow information from recent annual reports for all three companies is as follows (in millions): Amazon Best Buy Wal-Mart Sales $135,987 $39,403 $485,873 Cash flows from operating activities 16,443 2,545 31,530 Purchases of property, plant, and equipment (6,737) (582) (10,619) a. Determine the free cash flow for all three companies. Amazon: Best Buy: Wal-Mart: b. Compute the ratio of free cash flow to sales for all three companies. Round percentages…arrow_forwardFocus on Technology: Tracking CustomersAccording to Nielsen, more than 50 percent of mobile phone consumers own smartphones. Many ofthem use free Wi-Fi when available for faster connections and to reduce data usage charges. Buteven when they don’t log on to Wi-Fi, the device continues to search, giving information on users’locations. By using the signals emitted by shoppers’ smartphones, retailers can keep tabs onshoppers, knowing where they are and what they are searching for on their phones’ browsers.Retailers can learn on which aisles shoppers are most likely to check online prices at retailers such asAmazon.com and can send an alert to a sales representative. “Heat mapping” identifies trafficpatterns and locations attracting the greatest number of shoppers checking the Internet. This givesretailers an idea of the products most vulnerable to “showrooming”—the practice of shoppersvisiting stores to learn about and try products and later purchasing them for less online.1. What is…arrow_forward
- Chapter 12, Question 3arrow_forward6.16 Techstreet.com is a small web design business that provides services for two main types of websites: brochure sites and e-commerce sites. One package involves an up-front payment of $90,000 and monthly payments of 1.4¢ per “hit.” Kathy Cutler has a new eBay franchise and is considering the e-commerce package. She expects to have at least 6000 hits per month, and hopes that 1.5% of the hits will result in a sale. If the average income from sales (after fees and expenses) is $150, what rate of return per month will Kathy realize if she uses the website for 2 years?arrow_forwardtch Pad Zynex Co manufactures a range of electronic devices, which it sells to online stores and retail outlets. It has a risk-seeking attitude and its objective is to maximise profit. Six months ago it released a new version of its smartphone, the ZV. Zynex Co's main smartphone competitor has announced that it will launch a new version of its smartphone in one month's time and Zynex Co is concerned about the effect of the launch of this rival product on future demand for the ZV. For each of the previous ten smartphones launched by its competitors, Zynex Co's marketing team has analysed the impact on Zynex Co's sales performance. This data was retained specifically for the purpose of forecasting future demand of Zynex Co's smartphones and is stored in the company's financial database. Based on this analysis, the marketing team has identified three possible outcomes for the impact on the demand of the ZV: a small decrease, a medium decrease and a large decrease. Production volumes for…arrow_forward
- According to one survey, 92 percent of U.S. companies now claim that social media marketing is important for their businesses. Fashion designer Kenneth Cole took advantage of the trend in 2011 by posting the following tweet: “Millions are in uproar in #Cairo. Rumor is they heard our new spring collection is now available online at http://bit.ly/KCairo -KC.” Kenneth Cole was criticized on social media for capitalizing on the strife of the Egyptian revolution to promote his website. The offensive tweet was deleted, and Cole apologized by tweeting: “Re Egypt tweet: we weren’t intending to make light of a serious situation. We understand the sensitivity of this historic moment -KC.” Most marketers would not make the same mistake twice. However, in September 2013, as the United States deliberated military action in Syria, Cole tweeted the following: “‘Boots on the ground’ or not, let’s not forget about sandals, pumps and loafers. #Footwear.” To justify this action, Cole told Details…arrow_forwardMany marketing experts predict that e-commerce sales will only increase as COVID-19 infections soar, social distancing becomes standard practice, and more people choose-or are required-to stay home. However, sellers aren't so optimistic. In fact, 36% of sellers predict their sales will actually decline due to supply chain issues, product shortages, shipping delays, and the potential for demand to drop as the economy fluctuates. Here's what sellers can expect during this turbulent time, as well as tips from e-commerce experts on how to protect your online business and make the most of this opportunity by connecting with your customers. There are a lot of unknowns right now: how far the coronavirus will spread, how the market will respond, and what the overall impact of the pandemic will be worldwide. Though no one truly knows what will happen, these predictions will give sellers an idea of what to expect. Almost half of retailers expect some economic downturn due to the pandemic.…arrow_forwardCase Study The coronavirus pandemic drastically reduced the number of people flying in the United States. Because of this, every major airline experienced a drop in stock prices from February 2020 to November 2020. But these drops ranged from 57% for American Airlines to 21% for Southwest Airlines. Why such a difference? Investopedia points out that Southwest has extremely efficient operations, low-cost pricing, and innovative logistics solutions. In addition, they incorporate customer experience and forward planning into their strategy. All of these things helped Southwest to weather the pandemic, and they all require that Southwest maintains careful control over its operations. One of the other things that helped Southwest during the pandemic was their superior service desk performance. They achieved this performance, in part, through measuring key factors in customer service, looking at customer service leaders (benchmarking), and making changes to bring their customer service costs…arrow_forward
- Knowledge Check 01 Match the term and the definition. 1. Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n). of selling a tour package. is a cost that is incurred to support a number of cost objects but cannot be 2 A traced to them individually 3. Adventure Holiday sells thousands of tour packages each month through its various branches A branch manager's salary would be a(n) of the brancharrow_forwardApple products have become a household name in America, with the average household owning 2.6 Apple products (CNBC, October 10, 2017). Suppose that in the Midwest, the likelihood of owning an Apple product is 61% for households with kids and 48% for households without kids. Suppose there are 1,200 households in a representative community, of which 820 are with kids and the rest are without kids. Let event A correspond to “Household with kids”, and B to “Household owns an Apple product”. a. Are the events “household with kids” and “household without kids” mutually exclusive and exhaustive? multiple choice Yes No b. What is the probability that a household is without kids? (Round your answer to 4 decimal places.) c. What is the probability that a household is with kids and owns an Apple product? (Do not round intermediate calculations. Round your answer to 4 decimal places.) d. What is the probability that a household is without kids and does not own an Apple…arrow_forwardA1arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTFundamentals Of Financial Management, Concise Edi...FinanceISBN:9781337902571Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Fundamentals Of Financial Management, Concise Edi...
Finance
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub