Financial Statement Analysis - Amazon Inc

Running head: FINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSIS
Name of Student
Name of University
Author’s Note

FINANCIAL STATEMENT ANALYSIS1
Table of Contents
BACKGROUND OF THE COMPANY:............................................................................3
ROLE OF AMAZON INC. IN INTERNATIONAL MARKETPLACE:...........................3
MARKET COMPETITOR:.................................................................................................3
SWOT ANALYSIS:............................................................................................................4
Strength:...........................................................................................................................5
Weakness:........................................................................................................................5
Opportunity:.....................................................................................................................5
Threat:..............................................................................................................................5
FINANCIAL STATEMENT ANALYSIS:.........................................................................5
Liquidity Ratio:................................................................................................................6
Current Ratio:..............................................................................................................6
Quick Ratio:.................................................................................................................7
Cash Ratio:...................................................................................................................8
Solvency Ratio:................................................................................................................9
Debt Equity Ratio:.......................................................................................................9
Total Debt Ratio:.......................................................................................................10
Equity Multiplier:......................................................................................................11
Activity Ratio:...............................................................................................................12
Inventory Turnover Ratio:.........................................................................................12

FINANCIAL STATEMENT ANALYSIS2
Receivables Turnover:...............................................................................................13
Payables Turnover:....................................................................................................14
Total Asset Turnover:................................................................................................15
Profitability Ratio:.........................................................................................................16
Net Profit Margin Ratio:............................................................................................16
Return on Asset:........................................................................................................17
Return on Equity:.......................................................................................................18
Return on Capital Employed:........................................................................................18
Market Value Ratios:.....................................................................................................19
Price Earnings Ratio:.................................................................................................19
Gearing Ratio:................................................................................................................20
CONCLUSIONS:..............................................................................................................21
RECOMMENDATION:....................................................................................................21
REFERENCES:.................................................................................................................23
APPENDIXES:..................................................................................................................24

FINANCIAL STATEMENT ANALYSIS3
BACKGROUND OF THE COMPANY:
Amazon Inc. is an American multinational company. The organization is considered as
the biggest e-commerce giant in the world. The company also includes cloud computing, digital
streaming and artificial intelligence. Amazon Inc. is counted among top four tech companies. In
terms of revenue, Amazon is considered as the largest e-commerce company. Amazon Inc. is the
most valuable company in the world. Amazon was founded by Jeff Bezos in July 1994. Amazon
has a long list of products, which includes audiobooks and Amazon Prime. The company has
also Web series, production house and even the publishing house.
ROLE OF AMAZON INC. IN INTERNATIONAL MARKETPLACE:
Amazon has launched considerable amount of retail operations in many international
markets. In this way the company expands their global footprint. As per the report provided by
RBC Capital Markets, five countries will provide more than $25 billion at the end of 2023. The
retail growth of Amazon will exceed even North America within five years. The same analysis
also stated that Amazon’s total revenue will increase from $5 billion to $406 billion within 5
years. Thus, it can be stated that the company’s financial performance expected to rise by
considerable percentage within 5 years.
MARKET COMPETITOR:
As per the recent data available the company’s annual revenue is $280.5 billion. The
company provides employment to 640,000+ employees around the world. The company’s main
competitors are Wal-Mart, eBay, Alibaba Group, Google, Microsoft, Oracle, Apple, Sony and
Flipkart. In recent period the company acquired considerable amount of business, which includes
Health Navigator LLC, INLT Inc., Canvas Technology, Inc., and eero LLC. The other

FINANCIAL STATEMENT ANALYSIS4
competitor of Amazon includes all physical stores present in various parts of the world. The
proper managing of funds and proper decision making assists the company to gain considerable
amount of revenue, which increases the financial health of the company. As per the market
analysis Amazon holds 78%, eBay holds 10%, Apple holds 6%, Wal-Mart holds 6% in e-
commerce market.
MARKET ANALYSIS OF E-COMMERCE
INDUSTRY (2018)
SWOT ANALYSIS:
STRENGTH
1. Strong Brand
2. High business diversification
3. Capability to develop themselves
OPPURTUNITY
1. Expansions in developing markets
2. New partnerships with other firms

FINANCIAL STATEMENT ANALYSIS5
according to the trend
WEAKNESS
1. Limited business model
2. Limited penetration in markets
THREAT
1. Aggressive competition in industry
2. Increase the rate of cybercrime
3. World recession
Strength:
It can be observed that the net profit ratio of the company is at par, which on the other
hand, increases the financial health of the company. The better financial performance of the
company increases the brand value of the company and high diversification of the company.
Weakness:
Due to the high percentage of debt the company faces some serious problems, Due to this
the company have limited penetration in the market.
Opportunity:
As per the analysis it can be determined that the company have high asset turnover ratio,
which will actually assists the company to develop more and can enter into new agreement.
Threat:
Due to the high competition in the market the company losses considerable amount of
customers that may affect the company’s financial health in future.
FINANCIAL STATEMENT ANALYSIS:
The financial position of Amazon Inc. is considered after determining the annual report
of 2018, 2017, 2016, 2015 and 2014. The ratio analysis is being used to determine and