Ratio Analysis

• Current: 1.08 & Acid-Test: .77 - low liquidity
• Debt to Equity: 3.89 & LT Debt to Equity: 1.36 - heavily debt leveraged
• Low profit margins - typical of retail industry
• P/E of 529.04 in 2015 - strong market presence

Unrecorded Asset Analysis

• Research and Development, Employee Workforce, & Vision Statement
• Innovative projects: Amazon Prime Air & AmazonFresh
• Vision Statement: “To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online”

Operating Activities Analysis

• Core & Permanent Income: Product Sales & Service Sales
• Core & Permanent Expenses: Cost of Sales, Marketing, & Fulfillment
• Comprehensive & Transitory Income/Expenses: Foreign currency translation adjustments, reclassification adjustments, & equity-method investment activity

Earnings Quality

• Net Income vs. Operating Cash Flows
• Sales Increase vs. A/R Increase
• Consistent treasury stock
• Effective in projecting future earnings

Cash Flow Analysis

• Major sources of cash: operating cash flows, sales and maturities of marketable securities, & proceeds from LT investments
• Major uses of cash: purchases of property and equipment, purchases of marketable securities, & repayment of leases

Organizational Strategy

• Increase in inventory is related to Amazon's vision statement
• Increase in property & equipment is related to management's objective to "take advantage of continued advances in technology"

Free Cash Flow

• FCF through 2013-2015: $2 billion, $1.9 billion, & $7.3 billion
• Increasing FCF means more flexibility to invest in development or financial opportunities

Comparative Analysis

• Major Competitors: Ebay, Walmart, Netflix
• Liquidity ratios are comparable to competitors
• Debt ratios far surpass Ebay & Walmart
• Amazon has a similar debt structure to Netflix, with a higher times interest earned ratio
• Low operating and net profit margins due to high operating expenses

Conclusion & Evaluation

• Growing company with strong future projections
• Stregnths: strong sales, increased inventory selection, R&D projects, and dedicated investors
• Areas of improvement: heavy reliance on debt financing & low profit margins due to operating expenses

References

Amazon.com, Inc. (2014). Form 10-K 2014. Retrieved from SEC EDGAR website http://www.sec.gov/edgar.shtml

Earth’s biggest selection. (n.d.). Retrieved from https://www.amazon.jobs/team-category/retail?base_query=&loc_query=&job_count=10&result_limit=10&sort=relevant&business_category%5B%5D=retail&cache