Essay Example on Amazon's Financial Trend

Published: 2023-01-13
Essay Example on Amazon's Financial Trend
Type of paper:  Essay
Categories: Finance Amazon Financial analysis Financial management
Pages: 2
Wordcount: 501 words
5 min read
143 views

Introduction

To be a public company in the United States today is by having stock of shares to be dispersed for ownership among members of the general public. There are legal procedures to be followed in order to become a public traded company of which are different in different states around the country and also for it to be a publicly traded company it has to bear a 'limited liability company' status. For today's paper we will be looking at a leading tech company, 'Amazon' which mainly deals with selling things on a virtual platform and delivering them to their clients. We are going to specifically talk about their different performance trend from its initiation to current time by looking at its financial statements.

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For the financial statements of Amazon, we can clearly say that Amazon is in the lead for making Apple (as a market leader) a run for its money. But that won't be too easy as Apple is in the lead with its 833 billion dollars' market cap ahead of its numerous competitors. Back in April 2018, there was witnessed a 7 percent upsurge on Amazon's stock, and this was the company's first-quarter earnings estimates which the company's smashed. That was according to studies done by FactSet, which reported Amazon was selling 3.27 dollars per share but where analysts from FactSet were not expecting. Their expectations fell in a category that was 1.24 dollars per share maximum and was shocked to find more than double that at the stock market.

The analyst's predictions fell short because of different factors they didn't account for, the likes of Amazon's subscription fees of its streaming service provider, "Amazon Prime" and others and also, their physical store sales which were very high than expected. Thus, making a sales total of 51 billion dollars to the utter shock of these analysts who were expecting 49.9 billion dollars in sales a 2 percent rise of the expectations.

Amazon's financial ratios

The historical and recent current ratios for Amazon for the past three months was seen to be 1.09. the current debt to equity ratio for the past three months was 0.48 ending on March 31st, 2019. Current inventory turnover ratio for the tech company can be seen to be 2.06 as of March 31st, 2019. The return on equity for Amazon, which is simply the profits generated by a company of which money invested by the shareholders and the ROE for Amazon is 28.91 percent ending March 31st, 2019. Next, we look at the return on assets for Amazon and in the past three months it can be seen to values at 7.76 percent, this is, therefore, dividing company's total assets by operating earnings of the company. Earnings Before Interests and Taxes (EBIT) Margin, it is a measure of a corporation's profits on earnings over a precise period. For Amazon, we learn that for the past 13 years there has been an increase and decrease of EBIT and for now it lies at 5.3335.

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