Question

Directions: Ratio Calculation, use formulas to calculate the following financial indicators for each year of data:...

Directions: Ratio Calculation, use formulas to calculate the following financial indicators for each year of data:

o Current ratio

o Debt/equity ratio

o Free cash flow

o Earnings per share

o Price/earnings ratio

o Return on equity

o Net profit margin

o Describe how and why each of the ratios has changed over the three-year period. For example, did the current ratio increase or decrease? Why? Describe how three of the ratios you calculated for your company compare to the general industry. Find general industry data by entering your specific company’s ticker symbol here. Be sure to watch the Mergent Online video (written instructions can be found here), as it will help you find the industry data

Below is Amazons balance heet for 2017

Amazon.com Inc (NMS: AMZN)

Exchange rate used is that of the Year End reported date
As Reported Annual Balance Sheet
Report Date 12/31/2017
Currency USD
Audit Status Not Qualified
Consolidated Yes
Scale Thousands
Cash & cash equivalents 20522000
Marketable securities 10464000
Inventories 16047000
Accounts receivable, net & other current assets, gross -
Less: Allowance for doubtful accounts receivable -
Accounts receivable, net & other current assets, net 13164000
Total current assets 60197000
Land & buildings 23718000
Equipment & internal-use software 38387000
Other corporate assets 2390000
Construction in progress 4078000
Gross property & equipment 68573000
Less accumulated depreciation 19707000
Property & equipment, net 48866000
Goodwill 13350000
Other assets 8897000
Total assets 131310000
Accounts payable 34616000
Accrued expenses & other current liabilities 18170000
Unearned revenue 5097000
Total current liabilities 57883000
Long-term debt 24743000
Long-term capital lease obligations 8438000
Long-term financing lease obligations 4745000
Construction liability 1350000
Tax contingencies 1004000
Long-term deferred tax liabilities 990000
Other long-term liabilities 4448000
Other long-term liabilities 20975000
Common stock 5000
Treasury stock, at cost 1837000
Additional paid-in capital 21389000
Foreign currency translation adjustments, net of tax -468000
Unrealized gains (loss) on available-for-sale securities, net of tax -16000
Accumulated other comprehensive income (loss) -484000
Retained earnings (accumulated deficit) 8636000
Total stockholders' equity (deficit) 27709000

Below is Amazons income statment for 2017

Amazon.com Inc (NMS: AMZN)
Exchange rate used is that of the Year End reported date
As Reported Annual Income Statement
Report Date 12/31/2017
Currency USD
Audit Status Not Qualified
Consolidated Yes
Scale Thousands
Net product sales 118573000
Net services sales 59293000
Total net sales 177866000
Cost of sales 111934000
Fulfillment expenses 25249000
Marketing expenses 10069000
Technology & content expenses 22620000
General & administrative expenses 3674000
Other operating expense (income), net 214000
Total operating expenses & costs 173760000
Income from operations 4106000
Interest income 202000
Interest expense 848000
Other income (expense), net 346000
Total non-operating income (expenses) -300000
Income (loss) bef income taxes- United States 5630000
Income (loss) before income taxes - International -1824000
Income (loss) before income taxes 3806000
Current income taxes - U.S. federal -137000
Current income taxes - U.S. state 211000
Current income taxes - international 724000
Total current income taxes 798000
Deferred income taxes - U.S. federal -202000
Deferred income taxes - U.S. state -26000
Deferred income taxes - international 199000
Total deferred income taxes -29000
Provision (benefit) for income taxes 769000
Equity-method investment activity, net of tax -4000
Net income (loss) 3033000
Weighted average shares outstanding-basic 480000
Weighted average shares outstanding-diluted 493000
Year end shares outstanding 484000
Net income (loss) per share-basic 6.32
Net income (loss) per share-diluted 6.15
Total number of employees 566000
Number of common stockholders 2357
Foreign currency translation adjustments 533000

Below is Amazons Cash Flow for 2017

Amazon.com Inc (NMS: AMZN)
Exchange rate used is that of the Year End reported date
As Reported Annual Cash Flow
Report Date 12/31/2017
Currency USD
Audit Status Not Qualified
Consolidated Yes
Scale Thousands
Cash & cash equivalents, beginning of period 19334000
Net income (loss) 3033000
Depreciation of property & equipment, including internal-use software & website development, & other amortization 11478000
Stock-based compensation 4215000
Other operating expense (income), net 202000
Losses (gains) on sales of marketable securities, net -
Other expense (income), net -292000
Deferred income taxes -29000
Excess tax benefits from stock-based compensation -
Inventories -3583000
Accounts receivable, net & other current assets -4786000
Accounts payable 7175000
Accrued expenses & other liabilities 283000
Additions to unearned revenue 738000
Amortization of previously unearned revenue -
Net cash flows from operating activities 18434000
Purchases of property & equipment, including internal-use software & website development -11955000
Proceeds from property & equipment incentives 1897000
Acquisitions, net of cash acquired, & other investing activities -13972000
Sales & maturities of marketable securities 9988000
Sales & maturities of marketable securities & other investments -
Purchases of marketable securities -13777000
Purchases of marketable securities & other investments -
Net cash flows from investing activities -27819000
Excess tax benefits from stock-based compensation -
Proceeds from long-term debt & other financing activities 16231000
Repayment of long-term debt -
Repayments of long-term debt & other financing activities -1372000
Principal repayments of capital lease obligations -4799000
Principal repayments of finance lease obligations -200000
Net cash flows from financing activities 9860000
Foreign-currency effect on cash & cash equivs 713000
Net increase (decrease) in cash & cash equivalents 1188000
Cash & cash equivalents, end of year 20522000
Cash paid for interest -
Cash paid for interest on long-term debt 328000
Cash paid for interest on capital & finance lease obligations 319000
Cash paid for income taxes 957000

2017

Ratio Calculations Equations
Current ratio / = #DIV/0! current assets / current liabilities
Debt/equity ratio / = #DIV/0! total liabilities / total equity
Free cash flow - = $                         -   total operating cash flow - capital expenditures
Earnings per share / = #DIV/0! net income / common shares outstanding
Price/earnings ratio / = #DIV/0! stock price / earnings per share
Return on equity / = #DIV/0! net income / total equity
Net profit margin / = #DIV/0! net income / total revenue

Homework Answers

Answer #1

1

current ratio

current assets/current liabilities

60197000/57883000

1.039977195

2

debt equity ratio

total of liabilities/total shareholders equity

103601000/27709000

3.7388935

total of liabilities

57883000+24743000+8438000+4745000+1350000+1004000+990000+4448000

103601000

total of shareholders equity

27709000

3

free cash flow

cash flow from operating activities-cash flow from investing activities

18434000-27819000

-9385000

4

EPS

net income/no of shares

3033000/480000

6.31875

5

price earning ratio

market price/EPS

market price/6.318

market price is not given

6

return on equity

net income/total of equity

3033000/27709000

10.95%

7

net profit margin

net income/total net sales

3030000/177866000

1.70%

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