Financial Reporting and Analysis of Amazon and Alibaba

Running head: FINANCIAL REPORTNG AND ANALYSIS
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FINANCIAL REPORTNG AND ANALYSIS

Running head: FINANCIAL REPORTNG AND ANALYSIS
Table of Contents
General Overview............................................................................................................................3
Main competitors.........................................................................................................................3
Business segment.........................................................................................................................3
Ratio Analysis..................................................................................................................................4
Profitability..................................................................................................................................4
Asset efficiency............................................................................................................................5
Short term liquidity......................................................................................................................6
Capital structure and solvency.....................................................................................................7
Calculation of Equity value.............................................................................................................7
Business environment......................................................................................................................8
Future growth...................................................................................................................................9
MEMORANDUM.........................................................................................................................10
References......................................................................................................................................13

Running head: FINANCIAL REPORTNG AND ANALYSIS
General Overview
Formerly the company was known as Cadabra and it was founded in the year 5th July 1994. The
company is serving the customers worldwide with the team of 647500 employees to serve.
Currently Jeff Bezos is the chairman, president as well as CEO of the company whereas Alibaba
Group holding limited is a Chinese multinational conglomerate holding organization specializing
in retail, e-commerce, technology, and retail. It will enable the organizations to transform the
way how it sell, operate and market its efficiencies. The company had highest amount of IPO
(initial public offering) at $25 billion (Amazon, 2018). In 2014, Alibaba`s market capital was
valued at US$ 231 billion and it increased to 352.28 billion dollars (Alibaba, 2018). The
company is among the biggest organizations in world. The valuation was marked as second
largest Asian company to break the record of US $500 billion (Krana shares, 2018).
Main competitors
The main competitors of the company are Ebay, Alibaba and Microsoft cloud services. The
detailed analysis of the competitors along with the figures will be provided in the table below.
Business segment
Amazon offers a wide range of the products as well as the services which is successfully
exploring more than one segment at the same time. In this segment a detail understanding of
what kinds of the business the company deals with. How much earnings the companies have
from the different categories. The business segment will be compared with that of the competitor
as well. The business segment of Alibaba includes Taobao.com established in 2003 as the free
platform for both buyers and sellers while discovering the products and establish a low cost
presence. In 2004, the company started to address the issues related to buyers and sellers

Running head: FINANCIAL REPORTNG AND ANALYSIS
(PayPal-like service). Its core business is inclusive of Aliwangwang & Alimama that has
launched personal computer based messenger, which facilitates audio, video and text
communication between the buyers and the sellers at the Taobao Marketplace, Tmall as the core
business (Premium Goods Online Market) where Chinese consumers created demand for the
branded products and the premium online experience (Chang & Allen, 2016).
Ratio Analysis
The ratio analysis techniques will be followed in this section where the ratios of the Amazon as
well as that of the competitor such as Alibaba. The ratio analyses are undertaken on the basis of
the different categories and parameters such as profitability, Asset efficiency, capital structure
and the short term liquidity as well. Each ratio will be explained along with the figures and the
graphs of what exactly is the position of the Amazon with respect to the Alibaba (Liang, 2010).
Profitability
Profitability is the ratio which determines the overall ability of the company to perform among
the competitors. The profitability includes the net profit, the return on equity and the operating
margin of the company. The investors are interested in the overall profit margin of the company.
The profitability ratios are calculated on the basis of the different parameters and the business is
generally governed by the profitability only. From the table below it can be analyzed that the net
profit margin of the company is 3% in case of Alibaba and it sounds slow enough for the
business to cover the costs and deliver the huge services to the customers after retaining the
enough profit that can be delivered to the shareholders. The net profit ratio of the Amazon is 5%
whereas the overall industry is operating at 12%. The overall position of both the companies is