Description
The purpose of this assignment is to evaluate the inventory section of two companies using basic comparative analysis, and to interpret the data to gain insight about the company's inventory management.
Assignment Steps
Resources: Appendices D and E located in Financial Accounting: Tools for Business Decision Making
Note: While the data are not from the same year, inferences can be drawn regarding inventory management of the two companies.
Write a 1,050-word comparative analysis using the financial statements of Amazon.com, Inc. presented in Appendix D, and the financial statements for Wal-Mart Stores, Inc., presented in Appendix E, including the following:
- Compute the 2014 values for Amazon.com and the 2015 values for Wal-Mart based on the information in the financial statements:
- Inventory turnover (Use cost of sales and inventories)
- Days of inventory
- Conclusions concerning the management of the inventory can you draw from this data.
Show work on Excel® spreadsheet and submit with analysis.
https://phoenix.vitalsource.com/books/978111922830...
https://phoenix.vitalsource.com/books/978111922830...
E Specimen Financial Statements: Wal‐Mart Stores, Inc. The following are Wal‐Mart Stores, Inc.'s financial statements as presented in the company's 2015 annual report. To access Wal‐Mart's complete annual report, including notes to the financial statements, follow these steps: Go to http://corporate.walmart.com. Select Financial Information and then Annual Reports & Proxies under the Investors tab. Select the 2015 Annual Report (Wal‐Mart's fiscal year ends January 31). The Notes to Consolidated Financial Statements begin on page 40.
D Specimen Financial Statements: Amazon.com, Inc. Amazon.com, Inc. is the world's largest online retailer. It also produces consumer electronics—notably the Kindle e‐book reader and the Kindle Fire Tablet computer—and is a major provider of cloud computing services. The following are Amazon's financial statements as presented in the company's 2014 annual report. To access Amazon's complete annual report, including notes to the financial statements, follow these steps: Go to www.amazon.com. Select the Investor Relations link at the bottom of the page and then select the 2014 Annual Report under Annual Reports and Proxies. The Notes to Consolidated Financial Statements begin on page 43.
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Explanation & Answer
Attached.
Comparative Analysis Problem: Amazon.com, Inc. vs. Wal-Mart Stores, Inc.
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Amazon.com, Inc. vs. Wal-Mart Stores, Inc
Wal-Mart and Amazon are both retail shops. Both companies struggle to gain significant
market share and attract more investors. Amazon and Wal-Mart are providing businesses with
opportunities to market and sell their products. At the end of the year 2014, Amazon Inc. had
total assets of $54,505 million and liabilities of $ 15,675 million which show the company is
financially stable. Amazon in the year 2014 recorded net sales of 88,988 million. The company
strives to minimize variable costs per unit and leverage fixed costs. The company uses a model
that enables it to turn their inventory quickly and maintain cash generating operation cycle. The
lists consist goods available for sale are accounted using the First-in-First-Out (FIFO) method
and valued at the lower cost or market value.
Wal-Mart in the year 2015 had an increase in net sales, recording net sales of $ 482,229
million. Additionally, the company has total assets at $203,706 million. Wal-Mart’s operating
income $27,147 million, however for that fiscal year the company did not meet its objective to
increase its operating income, the revenue grew by 1% whereas net sales increased by 1.9 %.
The ROI rate was at 16.9%, and ROA is 8.2%. Similar to Amazon, Wal-Mart values inventories
at lower cost or market ...
