Financial Management of Amazon
Added on 2021-05-31
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Running head: FINANCIAL MANAGEMENTFinancial ManagementName of the Student:Name of the University:Author’s Note:Course ID:
1FINANCIAL MANAGEMENTExecutive Summary:The recent report focused on carrying out financial analysis with the help of certainratios. Accordingly, the critical success or failure factors in the context of Amazon have beendiscussed in the report. Based on the provided case study, it has been observed that the mainbusiness line of Amazon is on online retail selling of various kinds of industrialproducts.Based on the evaluated financial performance and position of Amazon, it hadbecome necessary for the management of the organization to formulate corrective actions inorder to assure business survival. Thus, need for a new business model had aroused in orderto fulfill the requirements of Amazon. The company must also focuses on decreasing theamount of loan taken by the organizations for financing the activities of the company.
2FINANCIAL MANAGEMENTTable of Contents1. Introduction:...........................................................................................................................32. Analysis of the financial statements of Amazon:...................................................................33. Key ratios and their implications for Amazon:..................................................................44. Critical success or failure factors for Amazon:......................................................................85. Impact of political competitive environment on Amazon:....................................................96. Ethical considerations during insolvency:.............................................................................97. External factors under consideration and the likelihood of a merger or acquisition:..........108. Recommendation to the investors:.......................................................................................119. Conclusion:..........................................................................................................................12References:...............................................................................................................................13
3FINANCIAL MANAGEMENT1. Introduction:The current report aims to evaluate the financial statements of Amazon for the years1999 and 2000, which include the income statement, balance sheet statement and cash flowstatement. From the provided case study, it has been observed that Amazon had enjoyedvarious years of massive growth characterized by global commerce. The organization hadinvested heavily for formulating best in-class retailing, customer service capabilities andfulfillments for supporting its rapidly increasing and complex business. It had incurred above$429 million for developing state-of-the-art digital business operations and infrastructure forlinking six customer service centers and nine distribution centers located throughout Asia, USand Europe. Hence, the current report sheds light on the overall business performance ofAmazon along with providing recommendations to the investors whether to invest in theshares of the organization.2. Analysis of the financial statements of Amazon:Income statement analysis:The net revenue of Amazon, as could be identified from the case study, has increasedfrom $1,639,839 in 1999 to $2,761,983 in 2000. The primary reason identified behind suchincrease in sales was the adoption of significant steps for redesigning the business model ofthe organization. With the rise in sales, increased trends could be observed in gross income aswell, since it was $655,777 in 2000 (1999: $290,645). This denotes the stability of theorganization in the operating market (Barth, 2015). However, the overhead costs of Amazonhad increased massively in 2000 to $1,519,657 and as a result; it had experienced operatingloss around $1,106,677. The operating loss suffered had lead to net loss of $1,411,273 in
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