Analyze and compare Amazon.com to Best Buy
Amazon.com, Inc. (AMZN) is the largest Internet retailer in the United States. Best Buy, Inc. (BBY) is a leading retailer of technology and media products in the United States. Amazon and Best Buy compete in similar markets; however. Best Buy sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. The current assets and current liabilities from recent balance sheets for both companies are provided as follows (in millions):
Amazon | Best Buy | |
Current assets | $45,781 | $9,886 |
Current liabilities | 43,816 | 6,925 |
a. Compute the working capital for each company.
b. Which company has the largest working capital?
c. Is working capital a good measure of relative liquidity in comparing the two companies? Explain.
d. Compute the current ratio for both companies. Round to one decimal place.
e. Which company has the larger relative liquidity based on the current ratio?
Trending nowThis is a popular solution!
Chapter 4 Solutions
Corporate Financial Accounting
- From the Google Finance site, use the DuPont analysis to determine the total assets turnover ratio for each of the peer companies. (Hint ROA = Profit margin Total assets turnover.) Once youve calculated each peers total assets turnover ratio, then you can use the DuPont analysis to calculate each peers equity multiplier.arrow_forwardSales Cost of goods sold Receivable Inventory Procter & Gamble $65,235 32,973 4,732 4,795 25,568 28,901 117,030 Total current assets Total current liabilities Total assets (Note: All dollar values are in thousands.) Colgate-Palmolive $15,208 6,077 1,415 1,173 4,348 3,291 12,134 Clorox $5,873 3,227 517 500 1,544 2,043 4,579arrow_forwardAnalyze and compare Amazon.com and Wal-Mart Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Wal-Mart (WMT) is the largest retailer in the United States. Amazon and Wal-Mart compete in similar markets; however, Wal-Mart sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Earnings and common stock outstanding information was obtained from recent financial statements for both companies as follows (in millions): Amazon Wal-Mart Net income $2,371 $14,694 Average number of common shares outstanding 474 3,207 a. Determine the earnings per share for each company. Neither company had preferred stock outstanding. Round your answers to two decimal places. Amazon $ Wal-Mart $ b. Which company appears more profitable from an earnings-per-share perspective? c. The market price of Amazon common stock was $750 per share at a time when Wal-Mart’s was $69 per share. How…arrow_forward
- Find online the annual 10-K report for Costco Wholesale Corporation (COST) for fiscal year 2015 (filed in October 2015). a. Compute Costco's net profit margin, total asset turnover, and equity multiplier. b. Verify the DuPont Identity for Costco's ROE. c. If Costco's managers wanted to increase its ROE by 1 percentage point, how much higher would their asset turnover need to be? a. Compute Costco's net profit margin, total asset turnover, and equity multiplier. The net profit margin is %. (Round to two decimal places.) The total asset turnover is (Round to two decimal places.) The equity multiplier is (Round to two decimal places.) b. Verify the DuPont Identity forCostco's ROE. The ROE is %. (Round to two decimal places.) c. If Costco's managers wanted to increase its ROE by 1 percentage point, how much higher would their asset turnover need to be? The total assets turnover should be (Round to two decimal places.) The total asset turnover should be % (Round to two decimal places and…arrow_forwardInterpreting Ratios. In each of the following cases, explain briefly which of the two companies is likely to be characterized by the higher ratio. (O LO3) a. Debt-to-equity ratio: a shipping company or a computer software company b. Payout ratio: Food Producer Inc. or Computer Graphics Inc. c. Ratio of sales to assets: an integrated pulp and paper mill and manufacturer or a paper mill d. Average collection period: Regional Electric Power Company or. Z-Mart Discount Outletsarrow_forwardEvaluating Business Segment Information Hewlett-Packard Company reports that its "organizational structure is based on a number of factors that management uses to evaluate, view and run its business operations." In its disclosures of segment information, there are seven segments-Personal Systems, Printing, Enterprise Group, Enterprise Services, Software, HP Financial Services, and Corporate Investments. The company provides the following information about these business segments: 2014 2013 ($ millions) Total net revenue: Personal Systems Printing Enterprise Group Enterprise Services Software HP Financial Services Corporate Investments Earnings from operations: Personal Systems Printing Enterprise Group Enterprise Services Software HP Financial Services Corporate Investments Total assets: Personal Systems Printing Enterprise Group. Enterprise Services Software HP Financial Services Corporate Investments $34,303 $32,179 22,979 23,896 27,814 28,081 22,398 24,061 3,933 4,021 3,498 3,629…arrow_forward
- Suppose you want to compare Palfinger AG to another heavy equipment manufacture, Caterpillar, Inc. To compare the companies, complete the table below and calculate common-sized numbers. To common-size balance sheet numbers, divide by total assets abd to common-size income statement numbers, divide by net sales. Comment on the trends over time and levels across companies.arrow_forwardCalculate the ratios of Woolworths Group (Australian retail company) for the year 2021: Ratios to calculate: Profitability (ROSF, ROCE, Gross margin, Operating profit margin, Cash flow to Sales*) Efficiency (Inventory turnover period, Average settlement period, Sales revenue to capital employed) Liquidity (Current ratio, Acid test (quick) ratio, Cash flow ratio*). Stability/Capital Structure (Gearing ratio, Interest cover ratio, Debt coverage ratio*) Investment/Market Performance (Earnings per share, Price earnings ratio, Operating cash flow per share*)arrow_forwardAnalyze and compare Bank of America and Wells Fargo Bank of America Corporation (BAC) and Wells Fargo Company (WFC) are two large financial services companies. The following data (in millions) were taken from a recent years financial statements for both companies: a. Compute the earnings per share for both companies. Round to the nearest cent. a. Which company appears to be more profitable on an earnings-per-share basis? b. Which company would you expect to have the larger quoted market price?arrow_forward
- using the table find the folloing for the four firms: Enterprise value to EBITDA Ratio Price-Earnings multiole PEG raio Cpmpany Market Value (OMR million) Net Income (OMR million) Earnings Growth Market Value of Equity (OMR million) Market Value of Debt (OMR million) Cash (OMR million) EBITDA (OMR million) Happy 117.95 22.5 4% 53.07 64.87 41.25 43.85 Smart 112.35 20.25 4.5% 59.53 52. 79 45 44.88 Kind 116.26 21 4.65% 69.76 46.5 63.95 28.20 Cheerful 120 24 5% 42 78 62.4 44.32arrow_forwardThe relationship between financial leverage and profitability Pelican Paper, Inc., and Timberland Forest, Inc., are rivals in the manufacture of craft papers. Some financial statement values for each company follow. Use them in a ratio analysis that compares the firms' financial leverage and profitability. a. Calculate the following debt and coverage ratios for the two companies. Discuss their financial risk and ability to cover the costs in relation to each other. (1) Debt ratio (2) Times interest earned ratio b. Calculate the following profitability ratios for the two companies. Discuss their profitability relative to each other. (1) Operating profit margin (2) Net profit margin (3) Return on total assets (4) Return on common equity c. In what way has the larger debt of Timberland Forest made it more profitable than Pelican Paper? What are the risks that Timberland's investors undertake when they choose to purchase its stock instead of Pelican's? a. The debt ratio for Pelican is %.…arrow_forwardWhich one of the following will decrease the net working capital of a firm? Assume the current ratio is greater than 1.0. A. selling inventory at cost B. collecting payment from a customer C. paying a payment on a long-term debt D. selling a fixed asset for book value E. paying a supplier for the purchase of an inventory itemarrow_forward
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTFundamentals of Financial Management, Concise Edi...FinanceISBN:9781305635937Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning