Financial Performance Management: Analysis of Amazon and Walmart

FINANCIAL PERFORMANCE
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
QUESTION- 1.................................................................................................................................1
Criteria for the identification of the competitor...........................................................................1
Ratio Analysis..............................................................................................................................1
Interpretation................................................................................................................................5
QUESTION 2...................................................................................................................................6
Kaplan and Norton’s balanced scorecard as strategic management system and critical success
factor for Amazon........................................................................................................................6
QUESTION 3.................................................................................................................................10
Critical evaluation of benefit and challenges of integrated reporting........................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Financial performance management is one of the essential functions of the business
wherein the management of the company shall be analysing the financial results of the business
to identify the financial health and well-being of the organization. This shall be done through the
establishing proper monitoring and control over the targeted and the actual performance that is
generated by the employees in the organization. This is significant to determine the achievement
of the organizational objectives of the business and generate the competencies in the industry.
The current project shall be evaluation the performances that are generated by the two companies
Amazon and Walmart through several techniques used by the businesses. The report shall be
presenting the ratio analysis of the past two years of the companies to identify the comparative
performances that are generated by the competitors in the industry. Apart from that it shall also
reflect the balance scorecard as the tool for the strategic management system. Lastly it shall be
highlighting the benefits and the challenges of adopting the integrated reporting.
MAIN BODY
QUESTION- 1
Criteria for the identification of the competitor
The Company A is Amazon and the company B is Walmart, who are considered as the
closest competitors in the retail industry. They both secure the top positions in their own way of
capitalizing over the market share where Amazon dominates the e-commerce segment and the
Walmart reigns over the brick and mortar systems in the industry (Zolfani and Chatterjee, 2019).
Both the businesses offer the larger array of the products and the services which assists in further
increasing its competencies in the market. They are highly superior in terms of the conduct of the
business in the companies.
Ratio Analysis
The ratio analysis of Amazon company for the past two years of 2019 and 2020
identifying the financial performance that is generated by the company are the following:-
Amazon
S.N
O RATIOS FORMULA CALCULATION
1

LIQUIDITY RATIOS 2019 2020
1 Current Ratio Current Assets/ Current Liabilities
1.0970482
394
1.05022747
95
Current Assets 96334 132733
Current Liabilities 87812 126385
2 Quick Ratio
(Current Assets- Inventory) /
Current Liabilities
0.8636291
167
0.86195355
46
Current Assets 96334 132733
Inventory 20497 23795
Current Liabilities 87812 126385
SOLVENCY RATIOS
3 Debt Equity Ratio
Long term Debt / Shareholder's
Fund
0.3772800
516
0.34062781
04
Long term debt 23414 31816
Shareholder's fund 62060 93404
4
Interest Coverage
Ratio
Earnings before interest and tax /
Interest on long term debt 9.735
15.6800242
866
Earnings before interest
and tax 15576 25825
Interest on long term
debt 1600 1647
PROFITABILITY
RATIOS
5 Gross Profit Ratio
Gross Profit / Net Revenue from
Operations*100 40.99% 39.57%
Gross Profit 114986 152757
Net revenue from 280522 386064
2