Amazon Financial Statement Analysis

Amazon Financial Statement Analysis

Amazon is an international online company that sells its products and services worldwide. Due to its competitive nature, its financial statement creates interest not only for the management of the firm but also for the benefits of other stakeholders such as investors and creditors. The financial statement of the company provides status and monitoring of the progress of the company’s financial growth in terms of failures and success and thus yielding the reason for proper analysis of the financial statement by different stakeholders. In this case, we shall be concerned more about the interpretation of financial statements for the year ended in 2018 in comparison to prior years and other competitive companies in the market.

Prior analysis has been proven to play a significant role in the company. For instance, it has experienced growth following a close examination of the cash flow statement, which has enabled the management to monitor the inflow and outflows. Most of the companies begin their financial statements with income statements, but for amazon, it starts with its financial account with an annual report that encompasses the whole year activities that have been performed. Such a piece of rich information provides enough information to oversee and monitor the progress of the company carefully. Besides, it gives the investor a bit of evaluation before thinki9ng of investing with the company. For the renters, they better placed to understand the company’s reliability to pay their debts by just looking at the company’s financial statements. For instance, looking at the prior financial statement,ents I can be observed the company has been exp[erienciong growth following its net profit increment that is associated with an increase in sales and decline in total cost incurred by the company. Its financial statement also provides some information, action of the investing activities that are of great interest to the investors.

From the Amazon report for the financial year 2018, it can be observed that the company surpassed the results of previous with an excellent performance worldwide and, more specifically, in North America. Among the areas that evidenced growth is product sales and advertising, as well as its total operating expenses, which are anticipated to go high in the upcoming years due to changes in government regulations. Generally, the company’s super performance did impress not only the management but also the investors and creditors. There was an improvement in the interest earned ratio and even the debt to equity ratio

Following differences in terms of performance as in the financial statements for year-end on 31^St December 2018, Amazon Company seems to have done well in some areas and awful in others. For instance, the company has registered an increase in total sales of $232,887 in the year 2018 in comparison to the 2017 financial year, which had only $177, 866. Generally, net sales had an improvement of 31% compared to 2017. the increase in sales has been accompanied by an increase in net profits for the company in comparison to previous years. The income also is reported to have increased to 10.1 billion. This is an indication that the company has been growly in terms of profit yearly, more so in the 2018 financial year. Such growth has been contributed by its ability to cut the company’s total operating expenses. For instance, it registered a drop of its total operating cost to 94.67% which was lower in comparison to 2017 financial year where it had a recorded a total operating cost of 97.69%.besides, the growth in advertising which had led to hiking of marketing expenses contributed significantly in boosting the sales of the company.

However, despite the company’s impressive internal performances, the company had a lower debt-equity ratio in comparison to ORCL. This an indication that Amazon was in a better solvency position as compared to ORCL. In that specific year could not face difficulty in paying their debt compared to their competitor in the market. It seems the company following it is a higher debt ratio in the previous financial years had learned on how to maintain the right amount of debt-equity rate for the easy management o0f the company’s solvency. It can be observed that it was an improvement from the previous years, where it had higher leverage as indicated by the higher debt-equity ratio. In addition, the company did well in terms of interest earned as compared to OPRCL. The ratio of times interest earned has shown an improvement to 8.95 in comparison to previous years. The rate emerges to be also higher as compared to the market in which ORCL registered a ratio of 6.89. This clearly shows that Amazon Company was far better placed to be considered by the investors who are after high return from their investment.

In conclusion, the financial statement for the year-end on 31^St Decembers 2018, has evidenced a tremendous growth for the Amazon company in different aspects. As seen from the above analysis, it can be observed that the net sales of the company have increased from year to year to year with 2018 being the climax where great deals had been registered. The company in that specific year has improved in terms of advertising that has attracted enormous marketing costs, as seen in the financial statement, an aspect that can be believed to have played a significant role in attracting more customers for the company’s products. Looking at the investors, the has meant them to smile with a lamp sum increase in interest earned that signifies great dividends for the investor’s shares. Besides, the management has also been impressed by the significant growth of net incomes registered by the company in 2018 in comparison to the previous years.  On the other hand, creditors in that specific year have gained more trust with the company, following the drop in debt to equity ratio, which reveals that the company is capable of settling its debts with difficulties. As a result, the creditors are not afraid of lending the company capital. When compared to competitors in the market, the company also is doing better than other companies in the same industry, an aspect that makes it more preferable as compared to their competitors. This attracts more investors to the company leading to its growth both locally and worldwide.