Analyze the financial position of the company Amazon.
The overall project is all about understanding the financial status and valuation of the company’s portfolio. The project report is prepared to analyze the financial position of the company Amazon. Inc which is an NASDAQ listed United State based company in online retail business activities. Here we are about to calculating the valuation of the firm and analyzing the financial statement of the company to understand the actual strength, weaknesses, opportunity, and threats of the business activities of the company.
The project is about to understand the financial statement analysis of the organization which is mainly based on the certain financial performance of the organization and market valuation of the company in the market (Amazon.in, 2015). There are various types of evaluations are done by the organization for proper understanding of market scenarios of the company Amazon Inc. The project is all about understanding the financial valuation of a company which is through analysis of the financial statement of the company. The annual financial statement of the company is mainly based on the market analysis of the company. As per the market analysis of the Amazon is mainly based on the stock performance of the organization within particular period of financial year.
Amazon.com is one of the e-commerce companies in the country United State. The company is mainly deal with the selling and distribution of the products and services with the support of the online portal of the organization. The company is having several vendors and merchant of the company (Amazon.in, 2015). There are WebPages and websites which are used by the company to sell their products ranges which are mainly belongs to different segment of the products which is operates in United States and another one is in international marketing. The international segment of the Amazon is mainly focusing on the all the operational activities of the international websites.
According to the competitive strategies are important in terms for the customers and clients of the company. As the company realized that reducing the delivery time for the organization is mainly depends upon the successful strategies of the extensive distribution system of the company (NASDAQ.com, 2015). The several strategies are related to the warehousing and the inventory management of the company Amazon which are required because the organization required serving their clients within a given period of time. The company is Amazon is follows the aggressive strategy for warehousing facilities which is mainly support to improve the distribution activities of the company Amazon.
The ratio analysis of an organization like Amazon Inc.which is depends upon the annual report of the company within a provided time span of the company. As per the financial statement analysis of the company ratio analysis is mainly used for the analyzing the financial and non-financial status of the company (Patel, 2013).
Profitability ratio is generally analysis the capabilities of the company to analyze the earning capabilities of the company which is mainly depends upon the financial sourcing and applications of the company Amazon.com (Amazon.in, 2015).
|
Particulars |
Amazon Inc. |
|
|
2013 |
2014 |
|
|
TOTAL REVENUE |
$ 60,903.00 |
$ 70,080.00 |
|
GROSS PROFIT |
$ 20,271.00 |
$ 26,236.00 |
|
Gross Profit Margin |
0.332840747 |
0.374372146 |
|
The gross margin of an organization is mainly based on the operational capabilities of the company to generate the money from the business activities. As per the overall analysis the gross profit margin for the company Amazon.com is for financial year 2013 and 2014 are 0.332 and 0.374. According to the overall analysis of the company it is come to know that Amazon company is having better earning situation in the financial year 2014 rather than 2013 with the support of their better business strategies. |
|
Particulars |
Amazon Inc. |
|
|
2013 |
2014 |
|
|
TOTAL REVENUE |
$ 60,903.00 |
$ 70,080.00 |
|
NET PROFIT |
$ 8,084.00 |
$ 8,658.00 |
|
Net Profit Margin |
0.132735662 |
0.123544521 |
The net margin of an organization is mainly based on the operational capabilities of the company to generate the money from the business activities. As per the overall analysis the net profit margin for the company Amazon.com is for financial year 2013 and 2014 are 0.132 and 0.123. According to the overall analysis of the company it is come to know that Amazon company is having better earning situation in the financial year 2014 rather than 2013 with the support of their better business strategies.
|
Particulars |
Amazon Inc. |
|
|
2013 |
2014 |
|
|
NET PROFIT |
$ 8,084.00 |
$ 8,658.00 |
|
TOTAL ASSET |
$ 40,159.00 |
54,505 |
|
Return On Assets |
0.170793543 |
0.317695624 |
Return on assets is mainly incurred by the organization which is based on the capabilities of the organization mainly required for the revenue earning capabilities of the company Amazon. As per the analysis the returns of assets of the company is 0.170 in the financial year 2013 and 0.317 in 2014 which is showing that company has been generated more returns from their acquired assets in the financial year 2014 rather than financial year 2013
Liquidity ratio are mainly describing the liquidity status of the organization which is shows that whether company is available to pay their short term obligations within a given period of time (Zuba, D & Sekuła, 2012).
|
Particulars |
Amazon Inc. |
|
|
2013 |
2014 |
|
|
current assets |
$ 24,625.00 |
$ 31,327.00 |
|
current liabilities |
$ 22,980.00 |
$ 28,089.00 |
|
Current ratio |
1.071583986 |
1.115276443 |
|
Current ratio of an organization is mainly describing the capabilities of the company to pay their financial obligations within a given period of time of 2013 and 2014.As per the analysis the current ratio proportion of the company Amazon .com is mainly 1.071 and 1.115 in the given period of time. according to the financial analysis of the company increases in their current ratio proportion which is showing better liquidity position in the financial year 2014 rather than financial year 2013. Company is more capable to compensate their short term obligations of the organization. |
|
Particulars |
Amazon Inc. |
|
|
2013 |
2014 |
|
|
current assets |
$ 24,625.00 |
$ 31,327.00 |
|
current liabilities |
$ 22,980.00 |
$ 28,089.00 |
|
Inventory |
$ 7,411.00 |
$ 8,299.00 |
|
Quick ratio |
0.749086162 |
0.819822706 |
|
Quick ratio of an organization is mainly describing the capabilities of the company to pay their financial obligations within a given short period of time. As per the analysis the quick ratio proportion of the company Amazon .com is mainly 1.749 and 0.819 in the given period of time. According to the financial analysis of the company increases in their current ratio proportion which is showing better liquidity position in the financial year 2014 rather than financial year 2013. Company is more capable to compensate their short term obligations of the organization. |
|
Particulars |
Amazon Inc. |
|
|
2013 |
2014 |
|
|
TOTAL DEBT |
$ 3,191.00 |
$ 8,265.00 |
|
TOTAL EQUITY |
$ 9,746.00 |
$ 10,741.00 |
|
Debt-Equity Ratio |
0.327416376 |
0.769481426 |
|
Debt and equity ratio of an organization is mainly describing the financial statements of the company which is showing that how much company invested in their owned and loaned capital in the business activities. There are after all analysis is debt equity ratio 0.327 and 0.769 in the financial year 2013 and 2014. And it is showing that company is having much better capability to proportionate their owned and loaned capital within financial year 2014 with the support of their successful business strategies. |
The stock valuation of the company Amazon.com is mainly describing the market performance of the company which is based on the company’s stock performance over the exchange of NASDAQ. As per the analysis the risk free rate of the United States is 1.62 and the equity risk premium of the company is 1.304 which is showing that risk of the portfolio is equal to the exchange portfolio. The current dividend amount of the company Amazon is $1.80 with the growth rate of 0.6% and the current stock price of the company is $440.10. As per the overall analysis the Capital pricing model return of the company is 2.92 and also the overall portfolio is showing overvalued in the stock market (NASDAQ.com, 2015).
|
Risk-free rate |
1.62 |
|
Equity risk premium |
1.30452679 |
|
Beta |
1.00 |
|
Current dividend |
$1.80 |
|
Dividend growth rate |
0.6% |
|
Current Stock Price |
$440.10 |
|
CAPM Required Return and Stock Valuation |
|
|
CAPM Required Return |
2.92 |
|
Stock Value |
$0.62 |
|
Valuation |
Overvalued |
|
Implied Growth Rate |
|
|
Implied dividend growth rate |
2.90854094 |
|
Deriving an Implied Required Return |
|
|
Dividend Yield |
0.41% |
|
Capital gain (dividend growth rate) |
0.60% |
|
Total implied required return |
1.01% |
|
Preferred Stock Valuation |
|
|
Stock Value if Preferred |
$0.62 |
|
EPS |
$440.10 |
|
DPS |
$1.80 |
|
PAYOUT RATIO |
0.00409 |
|
P0 |
5.699714 |
|
P0/EPS |
$0.01 |
The implied dividend growth rate of the company is mainly 2.90 and dividend yield of the company is 0.41% (Subramanyam, 2012). The capital gain of the Amazon Company is mainly based on the growth rate of 0.60% which prefers the stock valuation of the company by $0.62 at the implied required return of 1.01%.
As per the recent market performance of the company Amazon is having earning per share of $440.10 and dividend per share is equal to $1.80 which is considering the payout ratio of 0.00409 and the payout amount of the company is showing $0.01 for the Amazon.com within a financial year 2014.
As per the stock analysis of the company Amazon.com is mainly based on the market performance of the company. According to the overall analysis of the company the average monthly return of the organization is 0.0262 and the annual return of the organization is 0.3154 (NASDAQ.com, 2015). The variation in the stocks of the company is fluctuating in the market on the monthly basis by 0.0766 and annual variation in the stocks of the organization is 0.2656. As per the calculations in the stock exchange NASDAQ which is mainly depends upon the certain coordination of the company based on the performance of the company. The correlation within the market stock and the Amazon stock in the market is mainly equal correlation and give impact on each other’s performance (Hubbard, 2012). If the market falls it will directly give impact on the company’s financial and non- financial performance and the market risk of the company is equally related to the market stock performance.
|
AMAZON.COM |
|
|
Average Monthly Return |
0.026289434 |
|
Annualized Return |
0.315473207 |
|
Monthly Standard Deviation |
0.076678384 |
|
Annualized Standard Deviation |
0.265621715 |
|
NASDAQ |
|
|
Average Monthly Return |
0.02629 |
|
Annualized Return |
0.31547 |
|
Monthly Standard Deviation |
0.07668 |
|
Annualized Standard Deviation |
0.26562 |
|
Correlation Between Stock Returns |
1.00000 |
|
BETA |
1 |
According to the overall analysis of the internal and external environment of the company Amazon.com is mainly based on the financial statement analysis and stock valuation of the company within a given period of time. The overall project report is mainly describing the financial status of the Amazon within financial year 2013 and 2014. The overall SWOT analysis of the company described the actual performance of the company within given period of time with considering the investment risk bear by the company. The company Amazon is mainly survives in the organization which is mainly based on the various functionality criteria of the company.
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