Amazon.com, Inc.s financial statements are presented in Appendix D. . Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. (b) What conclusions concerning the management of cash can be drawn from free cash flow for each company?

AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Year Ended December 31, 2014 2015 8,658 $ 14,557 $ 2016 15,890 (241) 596 2,371 4,746 1,497 129 6.281 2,119 155 250 81 (119) 59 8,116 2.975 160 (20) (246) (829) (316) (1,193) (1,039) 1.759 706 4,433 (3.692) 6,842 (2,187) (1,755) 4.294 913 7,401 (6,109) 11,920 (1,426) (3.367) 5,030 1,724 11,931 (9.976) 16,443 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD OPERATING ACTIVITIES: Net income (loss) Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation of property and equipment, including internal-use software and website development, and other amortization, including capitalized content costs Stock-based compensation Other operating expense, net Other expense (income), net Deferred income taxes Excess tax benefits from stock-based compensation Changes in operating assets and liabilities: Inventories Accounts receivable, net and other Accounts payable Accrued expenses and other Additions to unearned revenue Amortization of previously unearned revenue Net cash provided by (used in) operating activities INVESTING ACTIVITIES: Purchases of property and equipment, including internal-use software and website development, net Acquisitions, net of cash acquired, and other Sales and maturities of marketable securities Purchases of marketable securities Net cash provided by (used in) investing activities FINANCING ACTIVITIES: Excess tax benefits from stock-based compensation Proceeds from long-term debt and other Repayments of long-term debt and other Principal repayments of capital lease obligations Principal repayments of finance lease obligations Net cash provided by (used in) financing activities Foreign currency effect on cash and cash equivalents Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS, END OF PERIOD SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest on long-term debt Cash paid for interest on capital and finance lease obligations Cash paid for income taxes, net of refunds Property and equipment acquired under capital leases Property and equipment acquired under build-to-suit leases (4.893) (979) 3,349 (2.542) (5,065) (4,589) (795) 3,025 (4.091) (6,450) (6,737) (116) 4,733 (7.756) (9,876) 6,359 (513) (1.285) (135) 4,432 (310) 5.899 14,557 $ 119 353 (1,652) (2.462) (121) (3.763) (374) 1,333 15,890 $ 829 621 (354) (3.860) (147) (2.911) (212) 3.444 19,334 91 $ $ 177 4,008 920 325 153 273 4,717 544 290 206 412 5,704 1,209 See accompanying notes to consolidated financial statements. AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Year Ended December 31, 2014 2015 70,080 $ 79,268 $ 18,908 27,738 88,988 107,006 2016 94,665 41,322 135,987 62,752 10,766 4,332 9.275 1,552 Net product sales Net service sales Total net sales Operating expenses: Cost of sales Fulfillment Marketing Technology and content General and administrative Other operating expense, net Total operating expenses Operating income Interest income Interest expense Other income (expense), net Total non-operating income (expense) Income (loss) before income taxes Provision for income taxes Equity-method investment activity, net of tax Net income (loss) Basic earnings per share Diluted earnings per share Weighted average shares used in computation of earnings per share: Basic 133 88,810 178 39 (210) (118) (289) (111) (167) 37 (241) $ (0.52) S (0.52) $ 71,651 13,410 5,254 12,540 1,747 171 104,773 2,233 50 (459) (256) (665) 1,568 (950) (22) 596 $ 1.28 $ 1.25 $ 88,265 17.619 7,233 16,085 2.432 167 131,801 4,186 100 (484) 90 (294) 3,892 (1,425) (96) 2,371 5.01 4.90 467 462 462 474 484 Diluted 477 See accompanying notes to consolidated financial statements. AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions) Year Ended December 31, 2014 2015 (241) $ 596 $ 2016 2,371 $ (325) (210) (279) Net income (loss) Other comprehensive income (loss): Foreign currency translation adjustments, net of tax of $(3), $10, and $(49) Net change in unrealized gains (losses) on available-for-sale securities: Unrealized gains (losses), net of tax of $1. $(5), and $(12) Reclassification adjustment for losses (gains) included in "Other income (expense), net," net of tax of $(1), SO, and $0 Net unrealized gains (losses) on available-for-sale securities Total other comprehensive income (loss) Comprehensive income (loss) (2) (326) (567) $ (212) 384 $ 17 (262) 2,109 S See accompanying notes to consolidated financial statements. AMAZON.COM, INC. CONSOLIDATED BALANCE SHEETS (in millions, except per share data) December 31, 2015 2016 15,890 $ 3,918 10,243 5,654 35,705 21,838 3,759 3,445 64,747 $ 19,334 6,647 11,461 8,339 45,781 29,114 3,784 4,723 83,402 $ ASSETS Current assets: Cash and cash equivalents Marketable securities Inventories Accounts receivable, net and other Total current assets Property and equipment, net Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Accrued expenses and other Unearned revenue Total current liabilities Long-term debt Other long-term liabilities Commitments and contingencies (Note 7) Stockholders' equity: Preferred stock, $0.01 par value: Authorized shares - 500 Issued and outstanding shares - none Common stock, $0.01 par value: Authorized shares - 5,000 Issued shares 494 and 500 Outstanding shares 471 and 477 Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 20,397 $ 10,372 3,118 33,887 8,227 9,249 25,309 13,739 4,768 43,816 7,694 12,607 (1,837) 17,186 (1,837) 13,394 (723) 2,545 (985) 13,384 4,916 19,285 83,402 $ 64,747 $ See accompanying notes to consolidated financial statements. AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in millions) Common Stock Shares 459 $ Amount 5 $ Accumulated Additional Other Total Treasury Paid-In Comprehensive Retained Stockholders Stock Capital Income (Loss) Earnings Equity (1,837) $ 9,573 $ (185) $ 2,190 $ 9,746 (241) (326) (326) (241) 6 1,510 1,510 44 11,135 (1,837) 1,949 44 10,741 596 (212) Balance as of January 1, 2014 Net loss Other comprehensive income (loss) Exercise of common stock options Excess tax benefits from stock-based compensation Stock-based compensation and issuance of employee benefit plan stock Issuance of common stock for acquisition activity Balance as of December 31, 2014 Net income Other comprehensive income (loss) Exercise of common stock options Excess tax benefits from stock-based compensation Stock-based compensation and issuance of employee benefit plan stock Issuance of common stock for acquisition activity Balance as of December 31, 2015 Net income Other comprehensive income (loss) Exercise of common stock options Excess tax benefits from stock-based compensation Stock-based compensation and issuance of employee benefit plan stock Balance as of December 31, 2016 in III IIIIIIIIIIIIII 119 119 2,131 2,131 5 (1,837) 13,394 13,384 2,371 (262) 829 829 2,962 17,186 2.962 19,285 5 $ (1,837) $ $ (985) $ 4,916 $ See accompanying notes to consolidated financial statements. Wal-Mart Stores, Inc. Consolidated Statement of Income Fiscal Years Ended January 31, 2017 2016 2015 $481,317 4,556 485,873 $478,614 3,516 482,130 $482,229 3,422 485,651 361,256 101,853 22,764 360,984 97,041 24,105 365,086 93,418 27,147 (Amounts in millions, except per share data) Revenues: Net sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating, selling, general and administrative expenses Operating income Interest: Debt Capital lease and financing obligations Interest income Interest, net Income from continuing operations before income taxes Provision for income taxes Income from continuing operations Income from discontinued operations, net of income taxes Consolidated net income Consolidated net income attributable to noncontrolling interest Consolidated net income attributable to Walmart 2,044 323 (100) 2,267 20,497 6,204 14,293 2,027 521 (81) 2,467 21,638 6,558 15,080 2,161 300 (113) 2,348 24,799 7,985 16,814 285 17,099 (736) $ 16,363 14,293 (650) $ 13,643 15,080 (386) $ 14,694 $ 4.40 $ 4.58 $ 5.01 0.06 5.07 $ 4.40 $ 4.58 $ $ 4.38 $ 4.57 $ Basic net income per common share: Basic income per common share from continuing operations attributable to Walmart Basic income per common share from discontinued operations attributable to Walmart Basic net income per common share attributable to Walmart Diluted net income per common share: Diluted income per common share from continuing operations attributable to Walmart Diluted income per common share from discontinued operations attributable to Walmart Diluted net income per common share attributable to Walmart Weighted-average common shares outstanding: Basic Diluted Dividends declared per common share 4.99 0.06 5.05 $ 4.38 $ 4.57 $ 3,101 3,112 2.00 3,207 3,217 1.96 3,230 3,243 1.92 $ $ $ See accompanying notes. Wal-Mart Stores, Inc. Consolidated Statement of Comprehensive Income (Amounts in millions) Consolidated net income Less consolidated net income attributable to nonredeemable noncontrolling interest Consolidated net income attributable to Walmart Fiscal Years Ended January 31, 2017 2016 2015 $14,293 $15,080 $17,099 (650) (386) (736) 13,643 14,694 16,363 (2,882) 413 Other comprehensive income (loss), net of income taxes Currency translation and other Net investment hedges Cash flow hedges Minimum pension liability Other comprehensive income (loss), net of income taxes Less other comprehensive income (loss) attributable to nonredeemable noncontrolling interest Other comprehensive income (loss) attributable to Walmart Comprehensive income, net of income taxes Less comprehensive income (loss) attributable to nonredeemable noncontrolling interest Comprehensive income attributable to Walmart 21 (397) (2,845) 210 (2,635) 11,448 (440) $11,008 (5,220) 366 (202) 86 (4,970) 541 (4429) 10,110 155 $10,265 (4,558) 379 (470) (69) (4,718) 546 (4,172) 12,381 (190) $12,191 See accompanying notes Wal-Mart Stores, Inc. Consolidated Balance Sheets As of January 31, 2017 2016 $ $ 6,867 5,835 43,046 1,941 57,689 8,705 5,624 44,469 1,441 60,239 (Amounts in millions) ASSETS Current assets: Cash and cash equivalents Receivables, net Inventories Prepaid expenses and other Total current assets Property and equipment: Property and equipment Less accumulated depreciation Property and equipment, net Property under capital lease and financing obligations: Property under capital lease and financing obligations Less accumulated amortization Property under capital lease and financing obligations, net Goodwill Other assets and deferred charges Total assets 179,492 (71,782) 107,710 176,958 (66,787) 110,171 11,637 (5,169) 6,468 17,037 9,921 $198,825 11,096 (4,751) 6,345 16,695 6,131 $199,581 $ LIABILITIES AND EQUITY Current liabilities: Short-term borrowings Accounts payable Accrued liabilities Accrued income taxes Long-term debt due within one year Capital lease and financing obligations due within one year Total current liabilities 1,099 41,433 20,654 921 2,256 565 $ 2,708 38,487 19,607 521 2,745 551 64,619 66,928 Long-term debt Long-term capital lease and financing obligations Deferred income taxes and other 36,015 6,003 9,344 38,214 5,816 7,321 Commitments and contingencies Equity: Common stock Capital in excess of par value Retained earnings Accumulated other comprehensive loss Total Walmart shareholders' equity Nonredeemable noncontrolling interest Total equity Total liabilities and equity 305 2,371 89,354 (14,232) 77,798 2,737 80,535 $198,825 317 1,805 90,021 (11,597) 80,546 3,065 83,611 $199,581 See accompanying notes Wal-Mart Stores, Inc. Consolidated Statements of Shareholders' Equity and Redeemaole Noncontrolling Interest Common Stock Shares Amount 3,233 $323 Capital in Excess of Par Value $2,362 - Accumulated Other Comprehensive Loss $ (2,996) Nonredeemable Noncontrolling Interest Retained Earnings $76,566 16,363 Total Walmart Shareholders' Equity $76,255 16,363 Total Equity $81,339 17,099 Redeemable Noncontrolling Interest $ 1,491 $5,084 736 - (4,172) (4,172) (546) (4,718) 20 LIIT (6,185) (950) (6,185) (980) (6,185) (980) -1 al (1,491) (17) 113 (731) (618) 1 129 3232,462 3,228 85,777 14,694 (7,168) - 81,394 14,694 4,543 386 85,937 15,080 (4,429) (4,429) (541) (4,970) Amounts in millions Balances as of February 1, 2014 Consolidated net income Other comprehensive loss, net of income taxes Cash dividends declared ($1.92 per share) Purchase of Company stock Purchase of redeemable noncontrolling interest Other Balances as of January 31, 2015 Consolidated net income Other comprehensive loss, net of income taxes Cash dividends declared ($1.96 per share) Purchase of Company stock Cash dividend declared to noncontrolling interest Other Balances as of January 31, 2016 Consolidated net income Other comprehensive loss, net of income taxes Cash dividends declared ($2.00 per share) Purchase of Company stock Cash dividend declared to noncontrolling interest Other Balances as of January 31, 2017 (6,294) (4,148) (6,294) (4,256) (6,294) (4,256) (102) - (691) (632) (563) (555) 1,805 (691) (1,195) 83,611 14,293 (8) 90,021 13,643 3,162 (11,597) 80,546 13,643 3,065 650 - - (2,635) (2,635) (210) (2,845) - - (12) - - (174) (120) (6,216) (8,090) (6,216) (8,276) (6,216) (8,276) - - | 740 736 (519) (249) $2,737 (519) 487 $80,535 3,048 $305 $2,371 $89,354 $(14,232) $77,798 $ - See accompanying notes. Wal-Mart Stores, Inc. Consolidated Statements of Cash Flow Fiscal Years Ended January 31, 2017 2016 2015 $ 14,293 $ 15,080 $ 17,099 (285) 16,814 14,293 15,080 (Amounts in millions) Cash flows from operating activities: Consolidated net income Income from discontinued operations, net of income taxes Income from continuing operations Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation and amortization Deferred income taxes Other operating activities Changes in certain assets and liabilities, net of effects of acquisitions: Receivables, net Inventories Accounts payable Accrued liabilities Accrued income taxes Net cash provided by operating activities 10,080 761 206 9,454 (672) 1,410 9,173 (503) 785 (402) 1,021 3,942 1,137 492 (19) (703) 2,008 1,303 (472) 27,389 (569) (1,229) 2,678 1,249 166 31,530 28,564 (11,477) (12,174) 570 246 671 Cash flows from investing activities: Payments for property and equipment Proceeds from the disposal of property and equipment Proceeds from the disposal of certain operations Purchase of available for sale securities Investment and business acquisitions, net of cash acquired Other investing activities Net cash used in investing activities (10,619) 456 662 (1,901) (2,463) (122) (79) (10,675) (192) (11,125) (13,987) 1,235 39 Cash flows from financing activities: Net change in short-term borrowings Proceeds from issuance of long-term debt Payments of long-term debt Dividends paid Purchase of Company stock Dividends paid to noncontrolling interest Purchase of noncontrolling interest Other financing activities Net cash used in financing activities (1,673) 137 (2,055) (6,216) (8,298) (479) (90) (255) (18,929) (4,432) (6,294) (4,112) (719) (1,326) (513) (16,122) (6,288) 5,174 (3,904) (6,185) (1,015) (600) (1,844) (409) (15,071) Effect of exchange rates on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (452) (1,838) 8,705 $ 6,867 (1,022) (430) 9,135 $ 8,705 (514) 1,854 7,281 9,135 $ Supplemental disclosure of cash flow information: Income taxes paid Interest paid 4,507 2,351 8,111 2,540 8,169 2,433 See accompanying notes