The Internet has become an extremely popular place for small businesses and firms to advertise and sell their products. Although this is a very easy and popular way to sell, it all depends on how well the company uses its resources and marketing ideas. One company that is widely known across the country and famous for having grown so fast since its online creation is Amazon.com. It opened a whole new market for competitive business in the specialty industries on the computer and has proven to be a successful company on the Net. Amazon.com is one of the famous public companies that investors love to invest into. How can Amazon.com meet its goal of achieving profitability to please its investors? What information do investors need to have to …show more content…
Utilizing the last in, last out approach encourages the company to financially succeed.
As far as the adjustments that Amazon.com has made using the LIFO approach, the company experienced a net gain in profit from 2000 to 2004. According to the financial report, in 2000 the company was at an income loss of $1,411,273 while in 2004 they experienced a positive income of $588,451 (p. 25). As per any company, there will be times of losses and gains primarily because of how well companies respond to consumers needs and wants. Since Amazon.com is internet-based and technology driven, they can easily make adjustments in their goods and services, where inventory is a concern.
Another important factor for the company's adjustment was the "diluted earnings per share made prior to the cumulative effect of change in accounting principles" (p.25). The year 2000's per share earnings were at a loss of $4.02 whereas in 2004, it was at a gain of $1.39. Over the span of 4 years, Amazon.com has seen significant growth in its company because of well they responded to internal and external changes and it shows in their overall numbers.
The impact of the adjustment on the firm's current ratio
Amazon reports its revenues through three business divisions: media (73.7% of total revenues during fiscal 2004), electronics and other general merchandise (24.4%), and other (1.9%). (Amazon.com
In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial
As of January 2010, Amazon.com has three times the Internet sales revenue of the runner up, Staples. By offering a large amount of varied categories through its website and other international ones (Amazon.co.uk, Amazon.co.fr, and so on), it has managed to grow to a customer based company with over 30 million people. In addition, the online retail format enables the company to reduce costs of managing inventory (Amazon.com; online bookstore, 2008).
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2009). Accounting: Tools for business decision
Edmonds, T., Tsay, B., & Olds, P. (2011). Fundamental Managerial Accounting Concepts (6th ed.). New York, NY: McGraw-Hill/Irwin.
According to Bezos, the company tries to solve a very hard problem by understanding how can they serve the consumer better and thus try to convert the problem into straight forward problem. When Bezos started his business, there were different reviews about this business like they say that they don’t have their own products but they sell other companies products, so they are a hindrance to innovation for other companies. There were many negative reviews about the company being posted on their website but Benzos wasn’t concerned about those comments. Acc to Bezos, amazon.com doesn’t make money when they sell, but they make money when they help customers in choosing the product they want to buy.
Amazon.com spends a substantial amount on Web advertising and marketing. The firm spent over $340,000 for the first half of the 1996 and ranked 34th in Web ad spending. Since then, however, these expenses have gone up significantly. Also, the firm invested much on their warehouse and state-of-the-art distribution center in New Castle, Delaware. Amazon.com turned its inventory 150 times a year. This make the firm have a lower cost structure than physical stores. Their marketing and operation cost kept the firm a deficit. By August 1996, sales were growing at 34 percent a month. The firm posted revenues of $147.8 million for 1997, an 838 percent increase over the previous year. However, the net loss for fiscal 1997 was 27.6 million, compared to a net loss in fiscal 1996 of $5.6 million. The firm claims to have exceeded expectations and has made its business plan more aggressive.
Amazon was originally incorporated in Washington in 1994 and later reincorporated in the state of Delaware in 1996. Amazon.com (Amazon), like Overstock is an online retailer that sells all sorts of different products and merchandise on its website. According to Mergent Online, the products on Amazon’s website “primarily include merchandise and content purchased for resale from vendors and those provided by party sellers, and it also manufactures and sells the Kindle e-reader” and they also provide “services such as Amazon Web Services (AWS), fulfillment, miscellaneous marketing and promotional agreements, such as online advertising and co-branded credit cards. Amazon consists of two separate business segments, North America and International. North America consists of “amounts earned from retail sales of consumer products (including from sellers) and subscriptions through North America-focused websites such as www.amazon.com and www.amazon.ca and include amounts earned from AWS” and includes the export sales from the above mentioned websites (Mergent Online, 2011). The International business segment consists of “amounts earned from retail sales of consumer products (including from sellers) and subscriptions
Amazon.com and Overstock.com are the two companies that will be researched in detail. Their financials will be comb through and synopsis of their financial status will be developed. These two companies are within the same industry of selling discounted products online. This is a tough industry to do well in and competition is tough. The e-commerce marketplace is intensely and savagely competitive. Their financials tell the story and show how lean and mean these companies must run. This paper is going to touch on briefly on each company, what they do, where they are financially, ratios between the two and their industry, and look at their cashflow.
The next segment of this look at the financial condition of Amazon.com involves a horizontal and vertical analysis of Amazon’s income statement and balance sheet. Since both of these statements involve many segments, we will address key and noteworthy figures to gain a broad understanding of Amazon’s progress in the last three years.
Furthermore, the Accounts Receivable Turnover is 499.57, 1566.67, 603.72, and 1227.34 respectably, this can be interpreted as the company operates on a cash basis, which I stated earlier, also indicate that the company’s collection of accounts receivable is efficient. Equally important, is the Inventory. They are growing their inventory, which can be interpreted as they are increasing sales, which is shown on the income statement. Additionally, the Inventory Turnover is lighting fast, 4.84, 3.66, 3.92, 4.10 days respectably. To put that in perspective, Amazon’s inventory turnover has been 7.70 7.00 7.56 7.31 days they last four years. However, I question the differences in the accounting methods. Moreover, Prepaid Expenses is something I ignore. The Fixed Assets is trending in the right direction, which can be interpreted as the company is growing; they are purchasing land, and buying buildings, which indicate growth. However, PP&E is illiquid and when is too much for a fashion company? The Accounts Payables is trending in the wrong direction; however the Interest Expense is decreasing on the income statement, which can be problematic. Equally important, is that Return on Assets and Return on Equity
Jeffrey Bezos, formerly a senior vice president for D. E. Shaw & Company, founded Amazon.com in 1994. D. E. Shaw is a Wall Street-based investment bank, and Mr. Bezos was assigned to find good Internet companies in which to invest. During the summer of 1994, he stumbled across a
Just in 2016 alone amazon earned a little over $90 billion just off online sales. The
Amazon took intense measures to extend their revenue and adscititious new merchandise on their website totaling one product each six weeks. Amazon additionally entered into strategic alliances with many firms to extend the vary of merchandise accessible on their website. Amazon tightened their client fulfillment network by getting
Amazon’s growth is a relative measure. Here are several comparisons that will surprise you. In the first 5 years of their existence, these are revenue
With the proliferation of communication and information technology, particularly the Internet, most business organizations have been at the forefront to join the e-commerce platform. Amazon is considered as one of the existing and largest e-business platform in the world. This report outlines Amazon’s strategic intent and key resources and capabilities. In addition, the report will also include an analysis of the company 's assets and capabilities that have provided it a sustainable competitive edge as well as, the recommended future strategy of the giant online organization. Amazon defines its line of business operations based on product and service sales, fulfillment, digital content subscriptions, publishing, and co-branded cards. The company 's line of business is defined as an online store, Internet service provision, and the Kindle ecosystem. This project will explore the truth that has made the online company to be considered as the top online retailer, which mainly focuses on strategy. This report also outlines how inventories play a fundamental role in the organization 's business or corporate strategy. The other issues covered in the report include the approach used by the online company deal with the supply chain and the reason behind fast shipping fast. The paper will outline the finance statute of the company and whether the finance effect will bar the organization from developing in future. In order to achieve the answer to the questions