Company Financing, Capital Budgeting and Personal Reflection on Amazon Inc.

Running head: AMAZON CASE STUDY 0
FINANCE
SEPTEMBER 9, 2019
STUDENT DETAILS:

AMAZON CASE STUDY 1
Contents
Part A: Company Financing........................................................................................ 2
Part B: Capital Budgeting........................................................................................... 5
Part C: Personal Reflection......................................................................................... 9
References............................................................................................................... 10

AMAZON CASE STUDY 2
Part A: Company Financing
Answer 1:
The cash conversion cycle determines the gap between when organisation
has to pay suppliers and when it got payments by customers. The cash
conversion cycle was negative 56.45 days at Apple Inc. (Annual report,
2014a). The cash conversion cycle was negative 77.99 days at Macy’s Inc
(Annual report, 2014c). Cash conversion cycle was negative 24.44 days at
Amazon in 2014. The negative 24.44 days states the average, which
company attained in cash from customers in 24.44 days prior to payment to
suppliers (Annual report, 2014b). The negative CCC symbolises that entity is
getting payment by customers long before they ever provided suppliers. The
negative CCC is avoided part of international dominion plan of Amazon.
Answer 2:
At the time of increasing sale, negative CCC can support the entity for
financing investment for the generation of future revenues development. In
constructive feedback area, the requirements of Amazon are growing
continuously. Therefore, the negative CCC is unnoticed element of entity’s
international plan. As long as the revenue continues to expand, there is no
problem of liquidity, in a different way from other entities that pursue faster
expansion system.
Answer 3:

AMAZON CASE STUDY 3
If Amazon cannot use cash to finance the new projects, in that case it can
use other financing options as well. The financing options include equity
capital along with retained-earning. The retained-earning is one of the
fundamental sources of to finance the organisation. The retained-earning is
helpful to reward stakeholder in a form of dividend or in a form of buy-back
shares (Cho, 2019). In addition, Amazon may produce cash by selling the
part in shares form to investors. It is called equity funding. The equity
financing allows the entity to make use of incoming cash flows for the
development of business.
Answer 4:
The CCC at Amazon was -24.44 days in 2014. Thus, it received payment from
customers 24.44 days prior to paying to supplier. It ensures the claim’s
validity. The cash conversion cycle of company has become less negative
over the last periods. It reduced from -24.44 days range to -19.24 days
range, as well as is now minimum negative cash cycle above previous ten
years. Notwithstanding the CCC becoming less negative, the inventories
have continued to be assembled (Ives, Cossick and Adams, 2019).
Answer 5:
The strength of higher margin of entity cloud along with Ad business can be
useful for e-trading sustain evaluation of one trillion dollars; though there is
risk to continue expansion. The main risk is associated with regulation. As
well, the competition is another risk. Amazon has some issues form last five