Ebay Company Analysis

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INTRODUCTION eBay Incorporated, a US company headquartered in San Jose, California, provides online marketplaces for the sale of goods and services, online payments services, and online communication offerings to individuals and business in the United States and internationally. With more than 90 million active users globally, their collective impact on e-commerce is staggering: In 2009, the total worth of goods sold on eBay was $60 billion — $2,000 every second. The business strategy of eBay is exemplified in the company’s mission statement, “eBay’s mission is to provide a global trading platform where practically anyone can trade practically anything”. In the following report, I will analysis eBay’s business including their financial…show more content…
This must be considered a high margin, much bigger than Amazon.com’s. However, unlike a production company, most of eBay’s costs are not variable costs but rather operating expenses. Contrary, Amazon.com’s business model has a high degree of Cost of Sales and achieves a gross margin of only 22.35% in 2010. The majority of costs are captured in the operating margin. eBay’s operating margin is also much higher than that of Amazon.com. The pattern repeats itself in the pre-tax margin. * Return on Invested Capital | eBay | Amazon | | 2007 | 2008 | 2009 | 2010 | 2009 | 2010 | Return on Assets | 2.41 | 11.50 | 14.05 | 8.91 | 8.15 | 7.07 | Return on Equity | 3.08 | 15.62 | 19.21 | 12.38 | 22.75 | 19.01 | Revenue Growth Rate | 28.52 | 11.33 | 2.18 | 4.91 | 27.88 | 39.56 | The return on assets is an important ratio in measuring how effectively management is running the company and their ability to generate profits from the assets. From the above table we can see a relative high rate compared to Amazon.com and expect a continuous growth in revenue next year. The return on Equity states the return from a shareholder perspective.

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