Amazon Incorporation Harvard Case Solution & Analysis

GENERAL INFORMATION

1. The name of the corporation is Amazon Incorporation
2. The corporate headquarters is located in Seattle, WA, United States of America.
3. The fiscal year end of Amazon is December 31.
4. The primary products of Amazon are many which include: Books, calendars, cameras, phones, TVs, CD players, Car electronics, CDs, Cassettes, furniture printers, calculators, personal computers, video games and video game consoles etc.
5. Refer to excel.
6. The trend of the stock price over the previous two years was downward.
7. The stock had traded with a narrow price range.

INTERNET INFORMATION

1. www.amazon.com
2. The information appearing in the investor relations part relates to: Annual reports and proxies, press releases, SEC filings, corporate governance, social media and other messages, presentations and quarterly results.
3. Other purposes of this website are to describe the corporation, advertise corporate products and services, provide customer service information, promote the industry corporation it is in and facilitate the sale of the products of the company.

SEC EDGAR DATABASE

1. Date of the latest form 10-k is December 31, 2013.
2. Primary industrial classification of Amazon is Standard.
3. The central index key of Amazon is 0001018724.

THE PRIMARY FINANCIAL STATEMENTS

INCOME STATEMENT

1. Refer to excel.
2. Refer to excel
3. The revenue of the company had increased over the previous years. One of the reasons for this was that the changes in the exchange rates favored the company and increased its net sales. Another reason was the continued effort to reduce the prices of the products of the company.
4. Refer to excel.

COMMON SIZE ANALYIS

1. The product cost to sales had decreased by 2% from the previous year. The cost of sales increased in dollar terms but since the revenue has grown by a larger percentage therefore, it suggests that the new products of the company are generating adequate revenues.
2. The operating costs did not change in comparison to the previous year. This shows tight cost control by the management.
3. The interest expense over revenue had increased very slightly and this might be due to additional debt. However, the difference is very minute.
4. The provision for taxes over sales has decreased as compared to the previous year. The company includes penalties and interest related to tax contingencies in the tax. This might be the reason for the reduction in the tax provision from last year.
5. The net income as a percentage of revenue has increased by only 0.3% which is a slight increase. This is due to lower increase in cost of sales and operating expenses. \
6. There are no extraordinary or discontinued items shown in the income statement.

BALANCE SHEET

1. Refer to excel
2. The assets have grown by 23%. This has increased by the further investment in property and equipment, inventories, cash and marketable securities.

COMMON SIZE ANALYSIS

1. In the assets side, the total current assets and property and equipment changed the most. This is explained by the increased investment in inventories, marketable securities and property and equipment. The total current liabilities also increased for the company due to the increase in accounts payables and also other long term liabilities increased due to the increase in financing lease obligations, tax contingencies and deferred tax liabilities.

CASH FLOW STATEMENT

1. Refer to excel.
2. The three significant sources of cash were sale and maturity of investments, issuance of long term debt and other sources.
3. The three significant uses of cash were purchase of fixed assets, reduction of debt and purchase of investments.
4. Refer to excel.
5. Based on the differences between net income and cash flow from operations, depreciation, amortization, deferred taxes and changes in working capital caused the differences.

STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY

SHARES OUTSTANDING

The number of common shares remained same for two years but then they increased in 2013. The reason is that further shares were issued to the general public.

NOTES & SUPPORTING SCHEDULES TO THE FINANCIAL STATEMENTS

RECEIVABLES TURNOVER RATIO

The receivables turnover ratio has slightly increased as compared to 2012. The reason for this maybe that the company has improved its receivable collection procedures and it is managing its working capital perfectly......................................

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