Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Best Buy Co., Inc.

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Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Best Buy Co., Inc. (BBY) is a leading retailer of consumer electronics and media products in the United States, while Wal-Mart Stores, Inc. (WMT) is the leading retailer in the United States. Amazon, Best Buy, and Wal-Mart compete in similar markets. Best Buy and Wal Mart sell through both traditional retail stores and the Internet, while Amazon sells only through the internet. Sales and cash flow information from recent annual reports for all three companies is as follows (in millions):

Best Buy Amazon Wal-Mart $485,873 31,530 (10,619) Sales Cash flows from operating activities Purchases of property, plan


a. Determine the free cash flow for all three companies.
b. Compute the ratio of free cash flow to sales for all three companies. Round percentages to one decimal place.
c. How does Amazon compare to the other two companies with respect to generating free cash flow?

Free Cash Flow
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...
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Corporate Financial Accounting

ISBN: 9781337398169

15th Edition

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

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