Continuing Company Analysis—Amazon and Walmart: Earnings per share Amazon.com, Inc. is one of the largest Internet retailers in the world. Walmart is the largest retailer in the United States. Amazon and Walmart compete in similar markets; however, Walmart sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Earnings and common stock outstanding information was obtained from recent financial statements for both companies as follows (in millions): Amazon Walmart Net income (loss) $(241) $16,363 Average number of common shares outstanding 462 3,230 A. Determine the earnings per share for each company. Neither company had preferred stock outstanding. (Round to the nearest cent.) B. Which company appears more profitable from an earnings-per-share perspective? C. The market price of Amazon common stock was $437 per share at a time when Walmart’s was 572 per share. How would you explain this difference in market price given the earnings per share computed in (A) for both companies?

BuyFind

Corporate Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305653535
BuyFind

Corporate Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305653535

Solutions

Chapter
Section
Chapter 12, Problem 12.1ADM
Textbook Problem

Continuing Company Analysis—Amazon and Walmart: Earnings per share

Amazon.com, Inc. is one of the largest Internet retailers in the world. Walmart is the largest retailer in the United States. Amazon and Walmart compete in similar markets; however, Walmart sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Earnings and common stock outstanding information was obtained from recent financial statements for both companies as follows (in millions):

Amazon Walmart
Net income (loss) $(241) $16,363
Average number of common shares outstanding 462 3,230

A. Determine the earnings per share for each company. Neither company had preferred stock outstanding. (Round to the nearest cent.)

B. Which company appears more profitable from an earnings-per-share perspective?

C. The market price of Amazon common stock was $437 per share at a time when Walmart’s was 572 per share. How would you explain this difference in market price given the earnings per share computed in (A) for both companies?

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Chapter 12 Solutions

Corporate Financial Accounting
Ch. 12 - Dividends per share Zero Calories Company has...Ch. 12 - Entries for issuing stock On January 22, Zentric...Ch. 12 - Entries for cash dividends The declaration,...Ch. 12 - Entries for stock dividends Alpine Energy...Ch. 12 - Entries for treasury stock On May 27, Hydro...Ch. 12 - Reporting stockholders equity Using the following...Ch. 12 - Retained earnings statement Noric Cruises Inc....Ch. 12 - Dividends per share Seventy-Two Inc., a developer...Ch. 12 - Dividends per share Lightfoot Inc., a software...Ch. 12 - Entries for issuing par stock On January 22,...Ch. 12 - Entries for issuing no-par stock On May 15, Helena...Ch. 12 - Issuing stock for assets other than cash On...Ch. 12 - Selected stock transactions Alpha Sounds Corp., an...Ch. 12 - Issuing stock Willow Creek Nursery, with an...Ch. 12 - Issuing stock Professional Products Inc., a...Ch. 12 - Entries for cash dividends The declaration,...Ch. 12 - Entries for stock dividends Healthy Life Co. is an...Ch. 12 - Effect of stock split Willeys Grill Restaurant...Ch. 12 - Effect of cash dividend and stock split Indicate...Ch. 12 - Selected dividend transactions, stock split...Ch. 12 - Treasury stock transactions Mystic Lake Inc....Ch. 12 - Treasury stock transactions SprayCo Inc. develops...Ch. 12 - Treasury stock transactions Biscayne Bay Water...Ch. 12 - Reporting paid-in capital The following accounts...Ch. 12 - Stockholders Equity section of balance sheet The...Ch. 12 - Stockholders Equity section of balance sheet...Ch. 12 - Retained earnings statement Sumter Pumps...Ch. 12 - Stockholders Equity section of balance sheet List...Ch. 12 - Statement of stockholders equity The stockholders...Ch. 12 - Dividends on preferred and common stock Pecan...Ch. 12 - Stock transactions for corporate expansion On...Ch. 12 - Stock transactions for corporate expansion On...Ch. 12 - Entries for selected corporate transactions Morrow...Ch. 12 - Entries for selected corporate transactions...Ch. 12 - Dividends on preferred and common stock Yosemite...Ch. 12 - Stock transaction for corporate expansion Pulsar...Ch. 12 - Selected stock transactions Diamondback Welding ...Ch. 12 - Entries for selected corporate transactions Nav-Go...Ch. 12 - Entries for selected corporate transactions West...Ch. 12 - Selected transactions completed by Equinox...Ch. 12 - Continuing Company AnalysisAmazon and Walmart:...Ch. 12 - Pacific Gas and Electric: Earnings per share...Ch. 12 - Caterpillar: Earnings per share Caterpillar Inc....Ch. 12 - BBT and Regions Financial: Earnings per share BBT...Ch. 12 - Ethics In Action Tommy Gunn is a division manager...Ch. 12 - Communication Motion Designs Inc. has paid...

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