Analyze and compare Amazon.com and Wal-Mart Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in (lie world. Wal-Mart Stores, Inc. (WMT) is the largest retailer in the United States. Amazon and Wal-Mart compete in similar markets; however, Wal-Mart sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Interest expense and income before income tax expense from the financial statements of both companies for two recent years follow (in millions): a. Compute the times interest earned ratio for both companies for the two years. Round to one decimal place. b. Interpret Amazon’s interest coverage from Year 1 to Year 2. c. Does a times interest earned ratio less than 1.0 mean that creditors will not get paid interest? d. Interpret Wal-Mart’s interest coverage from Year 1 to Year 2. e. Which company appears to have the greater protection for creditors?

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Corporate Financial Accounting

15th Edition
Carl Warren + 1 other
Publisher: Cengage Learning
ISBN: 9781337398169
BuyFind

Corporate Financial Accounting

15th Edition
Carl Warren + 1 other
Publisher: Cengage Learning
ISBN: 9781337398169

Solutions

Chapter
Section
Chapter 11, Problem 11.1MAD
Textbook Problem

Analyze and compare Amazon.com and Wal-Mart

 Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in (lie world. Wal-Mart Stores, Inc. (WMT) is the largest retailer in the United States. Amazon and Wal-Mart compete in similar markets; however, Wal-Mart sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Interest expense and income before income tax expense from the financial statements of both companies for two recent years follow (in millions):

Chapter 11, Problem 11.1MAD, Analyze and compare Amazon.com and Wal-Mart Amazon.com, Inc. (AMZN) is one of the largest Internet , example  1

  a.    Compute the times interest earned ratio for both companies for the two years. Round to one decimal place.

  b.    Chapter 11, Problem 11.1MAD, Analyze and compare Amazon.com and Wal-Mart Amazon.com, Inc. (AMZN) is one of the largest Internet , example  2 Interpret Amazon’s interest coverage from Year 1 to Year 2.

  c.    Chapter 11, Problem 11.1MAD, Analyze and compare Amazon.com and Wal-Mart Amazon.com, Inc. (AMZN) is one of the largest Internet , example  3 Does a times interest earned ratio less than 1.0 mean that creditors will not get paid interest?

  d.    Chapter 11, Problem 11.1MAD, Analyze and compare Amazon.com and Wal-Mart Amazon.com, Inc. (AMZN) is one of the largest Internet , example  4 Interpret Wal-Mart’s interest coverage from Year 1 to Year 2.

  e.    Chapter 11, Problem 11.1MAD, Analyze and compare Amazon.com and Wal-Mart Amazon.com, Inc. (AMZN) is one of the largest Internet , example  5 Which company appears to have the greater protection for creditors?

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Chapter 11 Solutions

Corporate Financial Accounting
Ch. 11 - Issuing bonds at a discount On the first day of...Ch. 11 - Discount amortization Using the bond from Basic...Ch. 11 - Issuing bonds at a premium On the first day of the...Ch. 11 - Premium amortization Using the bond from Basic...Ch. 11 - Redemption of bonds payable An 800,000 bond issue...Ch. 11 - Times interest earned Averill Products Inc....Ch. 11 - Bond price United States Steel Corporations (X)...Ch. 11 - Entries for issuing bonds Thomson Co. produces and...Ch. 11 - Entries for issuing bonds and amortizing discount...Ch. 11 - Entries for issuing bonds and amortizing premium...Ch. 11 - Entries for issuing and calling bonds; loss Hoover...Ch. 11 - Entries for issuing and calling bonds; gain Mia...Ch. 11 - Reporting bonds At the beginning of the current...Ch. 11 - Present value of amounts due Assume that you are...Ch. 11 - Present value of an annuity Determine the present...Ch. 11 - Present value of an annuity On January 1 you win...Ch. 11 - Present value of an annuity Assume the same data...Ch. 11 - Present value of bonds payable; discount Pinder...Ch. 11 - Present value of bonds payable; premium Moss Co....Ch. 11 - Amortize discount by interest method On the first...Ch. 11 - Amortize premium by interest method Shunda...Ch. 11 - Compute bond proceeds, amortizing premium by...Ch. 11 - Compute bond proceeds, amortizing discount by...Ch. 11 - Bond discount, entries for bonds payable...Ch. 11 - Bond premium, entries for bonds payable...Ch. 11 - Entries for bonds payable, including bond...Ch. 11 - Bond discount, entries for bonds payable...Ch. 11 - Bond premium, entries for bonds payable...Ch. 11 - Bond discount, entries for bonds payable...Ch. 11 - Bond premium, entries for bonds payable...Ch. 11 - Entries for bonds payable, including bond...Ch. 11 - Bond discount, entries for bonds payable...Ch. 11 - Bond premium, entries for bonds payable...Ch. 11 - Analyze and compare Amazon.com and Wal-Mart...Ch. 11 - Analyze and compare Clorox and Procter Gamble The...Ch. 11 - Analyze Aeropostale Aeropostale, Inc. (ARO) is a...Ch. 11 - Analyze and compare Hilton and Marriott Hilton...Ch. 11 - Ethics in Action CLG Capital Inc. is a large...Ch. 11 - Communication Nordbock Inc. reports the following...Ch. 11 - Present values Alex Kelton recently won the...

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