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Analyze and compare Amazon.com to Netflix Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Netflix, Inc. (NFLX) provides digital streaming and DVD rentals in the United States. Amazon and Netflix compete in streaming and digital services; however, Amazon also sells many other products online. The cash, temporary investments, operating expenses, and depreciation expense from recent financial statements were reported as follows for both companies (in millions): a. Determine the days’ cash on hand for Amazon and Netflix. Round all calculations to one decimal place. b. Interpret the results.

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 7, Problem 1MAD
Textbook Problem
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Analyze and compare Amazon.com to Netflix

Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Netflix, Inc. (NFLX) provides digital streaming and DVD rentals in the United States. Amazon and Netflix compete in streaming and digital services; however, Amazon also sells many other products online. The cash, temporary investments, operating expenses, and depreciation expense from recent financial statements were reported as follows for both companies (in millions):

Chapter 7, Problem 1MAD, Analyze and compare Amazon.com to Netflix Amazon.com, Inc. (AMZN) is one of the largest Internet

  1. a. Determine the days’ cash on hand for Amazon and Netflix. Round all calculations to one decimal place.
  2. b. Interpret the results.

a.

To determine

Compute the day’s cash on hand for Company A and Company N (round all calculations to one decimal place).

Explanation of Solution

Day’s cash on hand: Day’ cash on hand refers to the cash and near cash balances available with a business organization to meet its daily operating expenses. The formula to calculate the day’s cash on hand is:

Days’ Cash on Hand =Cash + Short-Term Investments(Operating Expenses - Depreciation Expense) ÷ 365 Days

Compute the day’s cash on hand for Company A:

Days’ Cash on Hand =Cash + Short-Term Investments(Operating Expenses - Depreciation Expense) ÷ 365 Days$19,334 + $6,647($131,801$8,116) ÷ 365 days$25,981$338.9= 76

b.

To determine

Interpret the results.

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Chapter 7 Solutions

Financial And Managerial Accounting
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