Amazon Essay

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Nov 22, 2013 Nov 22, 2013 Amazon Michael Hamer Instructor Rebecca Shaffer Amazon Michael Hamer Instructor Rebecca Shaffer 08 Fall 08 Fall BUS500 Accounting for Managers As I compare the financial records of Amazon.com for 2012 and 2011 I come to think that Amazon is not doing as well as one would think. On the surface they look good but as you dig into their 10K, things are not as rosy as they appear. The first thing I looked at was their debt ratio. The ratio was basically stagnating from 2012 to 2011. The ration for 2012 was 58.3% compared to a ratio of 58.9 % for 2011. Although this is a slight decrease I do not feel it warrants either a recommendation either way. But I do feel they could do a better job in reducing their ratio. The gross profit margin for the time period is up 2.3%. This is not bad for a company of this size. This show me that profits are rising and for a company this big I would way that it is moving fairly quickly. The gross profit margins for 2012 was 24.7% compared to 22.4% in 2011. Amazons free cash flow dropped immensely. The cash flow went from 2103 in 2011 to 380 in 2012. That is a loss of 1723. To me that is a big drop. For a company to lose that much in free cash something happened for them to take such a big hit like that. They lost a lot of liquidbility. Their times interest is doing well but there was a change from 2011 to 2012 and it was not in the direction you would like to see. In 2011 they were able to cover 726 periods of interest and in 2012 they were only able to cover 667 periods of interest. The company seems to be losing some of its liquidbility here also. The accounts receivable turnover increased during the same period. The turnover has increased 2 fold. This is not good, as it is taking longer to collect accounts receivable. When I look at the ROE for Amazon this is where it gets pretty bad.

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