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Running head: EVALUATION OF FINANCIAL STATEMENTS OF AMAZON
EVALUATION OF FINANCIAL STATEMENTS OF AMAZON
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EVALUATION OF FINANCIAL STATEMENTS OF AMAZON
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EVALUATION OF FINANCIAL STATEMENTS OF AMAZON
Amazon Inc. is one of the most publicly traded U.S. companies. From income statement,
the net income of Amazon for the year ending Dec 31, 2017 is $3.033 billion. The net income for
the prior year was $2.371 billion. This is much higher than that of the prior year by $0.662
billion, indicating an income of 27.92% in net income.
The changes in net income are very important to the investors because it indicates
whether the revenue being realized by the company is either increasing or decreasing. The trend
of the net income depicts the profitability of the company because the investors always want to
invest in a company whose profitability is increasing. For example, in this case, the net income
of Amazon has increased significantly throughout one year. This indicates that the investors will
realize increasing returns in the form of dividends of they invest in the company. Thus, a
company whose net income is declining over the years is not suitable for investment.
The ending balance of Amazon for the year ending December 31, 2017, is 27.71 billion.
The value of the ending balance helps the organizations like labor unions to evaluate the future
benefits and salaries that Amazon's employees should enjoy. The labor unions can make accurate
projections in collaboration with the company's management to ensure there is fairness regarding
payment ("Amazon.com Inc Shareholders Equity (Quarterly) (AMZN)", 2018).
From the Balance Sheet, total assets for the year ending December 31, 2017, is $131.310
billion. The total assets indicates the capability of the company to settle its short-term & longterm debts. When the assets’ value is more than that of liabilities, then the creditors would have a
surety that the company is capable of paying them (Rotan, 2005). This would attract many
potential creditors to lend money to the company. The risk of default in the payment of the loans
by the company is very low. For example, the total assets of Amazon exceeds its total liabilities
by $27.709 billion. This indicates that Amazon can pay its creditors because it can easily convert
EVALUATION OF FINANCIAL STATEMENTS OF AMAZON
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