Financial Statements Project: Amazon
Financial Statements Project: Amazon
AMAZON.COM, INC released its financial reports to the U.S. Securities and Exchange
Commission. The most important one, was the annual report of
...
Financial Statements Project: Amazon
Financial Statements Project: Amazon
AMAZON.COM, INC released its financial reports to the U.S. Securities and Exchange
Commission. The most important one, was the annual report of Amazon. In this paper I will
analyze the "Management Discussions and Analysis of Financial Condition and Results of
Operations" and "Financial Statements and Supplementary Data" sections of Amazon.com, Inc
annual report. This analysis will focus on the following aspects: Liquidity, Effectiveness,
Leverage, and Profitability to give insights on the overall financial strength, efficiency, and
effectiveness of the organization to determine whether the company is favorable.
Liquidity
First, we will look at the current ratio, a liquidity ratio that assesses a company's potential
to repay short-term responsibilities. A company's total current assets divided by its total current
liabilities is how you solve for the current ratio. Amazon.com's current ratio for the quarter in
Dec. 2019 was 1.10. Throughout the previous 13 years, Amazon.com's peak current ratio was
3.09. The lowest was 1.04. The is ranked lower than 69% of the companies in the Retail -
Cyclical industry (gurufocus.com,2020) . This ratio can offer a conscious on the proficiency of a
company's operational cycle or its ability to turn its merchandise into cash. Companies who have
difficulty receiving payments on their receivables or elongated supply turnovers can move into
liquidity conundrums because they are unable to lighten their responsibilities.
Effectiveness
The more developed the current ratio, the more proficient the company is about paying its
obligations. An adequate current ratio may differ from business to business. The ratios are
generally between 1 and 3 for solid, more durable businesses (Melicher, 2017). Since business
operations differ in each industry, it is always more beneficial to compare businesses within
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