Question

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

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%