Analyzing Amazon

timer Asked: Jun 4th, 2018
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Resources: Analyzing Amazon document.

Write a 700- to 1,050-word paper.

The incredible growth of has put fear into the hearts of traditional retailers. Amazon's stock price has soared to amazing levels. However, it is often pointed out in the financial press that it took the company several years to report its first profit.

Calculate free cash flow for Amazon for the current and prior years.

Evaluate its ability to finance expansion from internally generated cash.

Thus far, Amazon has avoided purchasing large warehouses. Instead, it has used those of others. It is possible, however, that in order to increase customer satisfaction, the company may have to build its own warehouses. If this happens:

  • Describe how your impression of its ability to finance expansion change.
  • Project any potential implications of the change in Amazon's cash provided by operations from the prior year to the current year.

Analyzing Amazon ACC/421 Version 12 Analyzing Amazon Financial Information $ in Millions Current Year Prior Year Current assets $31,327 $24, 625 Total assets 54,505 40,159 Current liabilities 28,089 22,980 Total liabilities 43,764 30,413 Cash provided by operations 6,842 5,475 Capital expeditures 4,893 3,444 Dividends paid -- -- Net income (loss) (241) 274 Sales 88,988 74,452 References Kieso, D.E., Weygandt, J.J., Warfield, T.D.(2016). Intermediate Accounting. (16th ed.). John Wiley & Sons. p. 256 1

Tutor Answer

School: UC Berkeley




Analyzing Amazon
Student’s name



Amazon is the largest Internet-based retailer based on revenue and market capitalization.
Founded and headquartered in Seattle, Washington, the company, over the past years embarked
on international expansion around the globe. Due to the huge cost associated with such a move,
the company had to rely on other companies’ warehouse rather than purchasing its own. With
increased customer demand and the need to increase satisfaction, the company may consider
investing in its warehouses. In this paper, we shall analyze the company’s free cash flow for the
current and prior years using the provided data, and the ability of the company to finance
expansion from internally generated funds.
Amazon’s Free Cash Flow for the Current and Prior Years
According to Ketz (2016), free cash flow is defined as the cash that a business generates
after undertaking required investments to maintain or expand its assets. Accord...

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