Financial Performance of Amazon

Running head: FINANCIAL PERFORMANCE OF AMAZON
Financial Performance of Amazon
Name of the Student:
Name of the University:
Author Note:

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FINANCIAL PERFORMANCE OF AMAZON
Table of Contents
I. Executive Summary:....................................................................................................................2
Principal findings:........................................................................................................................2
Projections:..................................................................................................................................2
Recommendations:......................................................................................................................2
II. Financial performance and health:..............................................................................................2
A. Organisational context:...........................................................................................................3
1. Key products and services:......................................................................................................3
2. Management and organisation of Amazon:.............................................................................4
B. Recent financial performance:................................................................................................5
C. Current financial health:..............................................................................................................6
1. Capitalisation and financial health of Amazon:.......................................................................6
2. Amount of cash and resources:....................................................................................................6
3. Assessment of financial value:................................................................................................6
III. Success factors:..........................................................................................................................7
IV. Projections:..............................................................................................................................10
V. Business opportunities:.............................................................................................................10
Conclusion:....................................................................................................................................16
References:....................................................................................................................................17

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I. Executive Summary:
Principal findings:
The report uncovers several findings worthy of discussion. First, Amazon is an American
company which market IT products and artificial intelligence. The second finding is that
Amazon is listed on the NYSE but its capital base is weakening. Thirdly, the revenue base of the
company is expanding but its expenditure is also increasing.
Projections:
The first projection which can be made in the light of the present financial performance is that
the company shows signs of weakening in the capital market. The second projection is that the
company should seek to increase its current assets to support its current liabilities.
Recommendations:
It can be recommended in the light of the above discussion that the company should form
strategies to reduce its expenditure. Similarly, it can also be recommended that the company
should increase direct presence in more host countries to reduce its third party distribution costs.
Intended audience:
The intended audience for the business performance of Amazon would be stakeholders. The
stakeholders in this case would investors, both present and prospective. This is because the
financial performance parameters like revenue generation would enable the investors the returns
which they can expect to generate from their investments in Amazon shares. Similarly, the
prospective investors would be encouraged to invest in the shares of Amazon seeing the high

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dividends which the ecommerce giant gives back to the investors. The second stakeholder group
who would depend on the available financial figures reported in the financial statements to form
strategies.
II. Financial performance and health:
An analysis of the recent financial performances and present financial health of Amazon
shows that the American ecommerce company is performing highly in the global market. The
following sections would provide a strong evidence to testify the strong financial performance
based on the adduced statements namely, Annual Report of the company for the year ended
December 31, 2017.
A. Organisational context:
1. Key products and services:
The main products of Amazon.com consist of cloud computing, ecommerce services,
artificial intelligence and hardware items. The company has immense number of product line
under each of its product segments.
Amazon offers cloud computing services under the division Amazon Web Services. The
cloud computing platform is a platform which enables companies to acquire, share, manage and
apply a huge number of data which pertains to different business areas like procurement,
marketing and finance. Thus, Amazon using its cloud computing services serve multinational
companies from different industries to integrate the business functions to ensure high level of
interdepartmental works which in turn boosts the efficiency of the businesses (Aws.amazon.com.
2019). The main competitors of Amazon in its cloud computing segment are American IT giants
like Google and IBM. Thus, considering the net income of $ 3033 million in 2017 compared to $

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$2371 million and $ 591 million in 2015, it can be established the company is performing
strongly in the global market.
The second product which Amazon offers is ecommerce services which allow buying and
selling of goods using the digital platform of the company. The company offers both industrial
goods as well as consumer goods on the portal. The company in the ecommerce market serves as
third party digital marketing partners to global companies as well as local and regional
companies.
The third product which Amazon offers its customers is artificial intelligence and
decision making systems. The consumers of Amazon in this case are multinational companies
which use artificial intelligence to make business strategies.
The fourth segment of Amazon consist of hardware like Amazon Alexa and payment
gateways like Amazon pay.
It is evident from the discussion that Amazon provides these key products and services
for both its customer segments, namely end consumers and business companies. The company
markets these services throughout the world. The company uses third party ecommerce
companies to offer products to its consumers in markets where it as no direct presence in the
form of subsidiaries. Amazon provides these products to ensure that its customers, including
business firms and consumers are able to gain access to a large variety of products at affordable
prices. This enables the company to earn a huge profit from its businesses as shown in the
financial statements.
These features of Amazon which pertains to products, customers and locations help the
management of the company set boundaries of business decisions. The company forms its global

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strategies taking into account the macroeconomic conditions of the different host countries. For
example, the company before forming the product strategy of a particular country, takes into
account factors like customer preferences and purchase power. This ensures that the marketing
mixes of different countries are aligned with the market requirements of the countries. This
enable the company to generate immense revenue by ensuring high level of customer
satisfaction. Thus, it is evident that the products, customers and locations enable the apex
management of Amazon take market specific decisions.
B. Recent Financial Performance:
Part 1.
The consolidated income statement of Amazon shows that company is experiencing
increase in revenue. The graphs below shows that income of Amazon increased by 298 percent
in 2016 and by 28 percent in 2017. However, as shown in operations expenses graph, the same
increased by 26 percent in 2016 and 2017 it increased by a whopping 32 percent. Thus, it can
inferred that the company should try to minimise its expenses. The provision for taxation fell in
2016 by doubled in the year 2017 to $ 769. This means that company also requires to minimise
its taxation expenses.