Amazon.com, Inc.'s financial statements are presented in Appendix D. Click here to view Appendix D. Financial statements of Walmart Stores, Inc. are presented in Appendix E. (Use Walmart's January 31, 2019, financial statements for comparative purposes.) The complete annual reports of Amazon and Walmart, including the notes to the financial statements, are available at each company's respective website. Click here to view Appendix E. Based on the information contained in these financial statements, determine each of the following for each company. Use Amazon's net product sales to compute gross profit information. (Enter the amounts in millions. Round percentages to 1 decimal place, eg 15.2%) 1) Gross profit. 2) Gross profit rate. 3) Operating income. 4) Percentage change in operating income from 2017 to 2018. Percentage change in operating income from 2018 to 2019. eTextbook and Media Amazon For the Year Ended December $ $ +9 31, 2018 % % What conclusions concerning the relative profitability of the two companies can you draw from these data? Walmart has a gross profit, gross profit rate, and operating income than Amazon. Walmart's operating income is increasing at a rate than Amazon. Walm For the Year Ended J $ $ Amazon.com, Inc. Consolidated Statements of Cash Flows (in millions) CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash from operating activities: Depreciation of property and equipment and other amortization, including capitalized content costs Stock-based compensation Other operating expense, net Other expense (income), net Deferred income taxes Changes in operating assets and liabilities: Inventories Accounts receivable, net and other Accounts payable Accrued expenses and other Unearned revenue Net cash provided by (used in) operating activities INVESTING ACTIVITIES: Purchases of property and equipment Proceeds from property and equipment incentives 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: 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, cash equivalents, and restricted cash Net increase (decrease) in cash, cash equivalents, and restricted cash CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, 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 Year Ended December 31, 2016 $16,175 2017 $19,934 2018 $21,856 2:371 3:033 10,073 8,116 11,478 15:341 2:975 4,215 5:418 160 202 274 (20) (292) 219 (246) (29) 441 (1:426) (3.583) (1:314) (3:436) (4:780) (4,615) 5,030 7,100 3,263 1,724 283 472 1.955 738 17,203 18,365 1,151 30,723 (7,804) (11,955) (13:427) 1,067 1,897 2,104 (116) (13:972) (2,186) 4:577 9,677 8,240 (7,240) (12,731) (7:100) (9:516) (27,084) (12,369) 618 16,228 768 (327) (1,301) (668) (3,860) (4:799) (7:449) (147) (200) (337) (3:716) 9:928 (7,686) (212) 713 (351) 3:759 $19.934 $21,856 1,922 10:317 $32,173 $ 290 206 $ 328 $ 854 319 412 957 575 1,184 5:704 1,209 9:637 10,615 3:541 3,641 See accompanying notes to consolidated financial statements. Amazon.com, Inc. Consolidated Statements of Operations (in millions, except per share data) Year Ended December 31, Net product sales 2016 $94,665 2017 $118,573 2018 $141,915 Net service sales Total net sales Operating expenses: Cost of sales Fulfillment 41,322 59:293 90,972 135:987 177,866 232,887 88,265 111,934 139:156 17,619 25:249 34,027 Marketing 7:233 10,069 13,814 Technology and content 16,085 22,620 28,837 General and administrative 2:432 3,674 4:336 Other operating expense, net 167 214 Total operating expenses 131,801 Operating income 4:186 Interest income 100 173.760 4,106 202 296 220,466 12:421 440 Interest expense (484) (848) (1,417) Other income (expense), net 90 346 (183) Interest expense Other income (expense), net Total non-operating income (expense) Income before income taxes Provision for income taxes (484) (848) (1,417) 90 346 (183) (294) (300) (1,160) 3,892 3,806 11,261 (1:425) (769) (1,197) Equity-method investment activity, net of tax (96) (4) 9 Net income $ 2,371 $ 3,033 $ 10,073 Basic earnings per share $ 5.01 $ 6.32 $ 20.68 Diluted earnings per share $ 4.90 $ 6.15 $ 20.14 Weighted-average shares used in computation of earnings per share: Basic Diluted 474 480 487 484 493 500 See accompanying notes to consolidated financial statements. Amazon.com, Inc. Consolidated Statements of Comprehensive Income (in millions) Year Ended December 31, 2016 2017 2018 Net income Other comprehensive income (loss): $2,371 $3,033 $10,073 Foreign currency translation adjustments, net of tax of $(49), $5, and $6 Net change in unrealized gains (losses) on available-for-sale debt securities: Unrealized gains (losses), net of tax of $(12), $5, and $0 (279) 533 (538) 9 (39) Reclassification adjustment for losses (gains) included in "Other income (expense), net," net of tax of So, $o, and So Net unrealized gains (losses) on available-for-sale debt securities 8 (17) 8 17 (32) Total other comprehensive income (loss) (262) 501 Comprehensive income $2,109 $3,534 (9) (547) $9.526 See accompanying notes to consolidated financial statements. Amazon.com, Inc. Consolidated Balance Sheets (in millions, except per share data) December 31, 2017 2018 ASSETS Current assets: Cash and cash equivalents Marketable securities $ 20,522 10:464 $ 31,750 9:500 Inventories 16,047 17:174 Accounts receivable, net and other 13:164 16,677 Total current assets 60,197 75,101 Property and equipment, net 48,866 61,797 Goodwill 13:350 14:548 Other assets 8,897 11,202 Total assets $131,310 $162,648 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 34,616 $ 38,192 Accrued expenses and other 18,170 23,663 Unearned revenue 5:097 6,536 Total current liabilities 57,883 68.391 Long-term debt 24:743 23:495 Other long-term liabilities 20:975 27,213 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-507 and 514 Outstanding shares-484 and 491 Treasury stock, at cost 5 5 (1,837) (1,837) Balance as of January 1, 2016 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 Cumulative effect of a change in accounting principle related to stock-based compensation Net income Other comprehensive income (loss) Exercise of common stock options Stock-based compensation and issuance of employee benefit plan stock Balance as of December 31, 2017 Cumulative effect of changes in accounting principles related to revenue recognition, income taxes, and financial instruments Net income Other comprehensive income (loss) Exercise of common stock options Stock-based compensation and issuance of employee benefit plan stock Balance as of December 31, 2018 Current assets: ASSETS Cash and cash equivalents $ 20,522 $ 31,750 Marketable securities 10:464 9:500 Inventories 16,047 17,174 Accounts receivable, net and other 13,164 16,677 Total current assets 60,197 75,101 Property and equipment, net 48,866 61,797 Goodwill 13:350 14:548 Other assets 8,897 11,202 Total assets $131,310 $162,648 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 34,616 Accrued expenses and other 18,170 $ 38,192 23,663 Unearned revenue 5:097 6,536 Total current liabilities 57,883 68,391 Long-term debt 24:743 23:495 Other long-term liabilities 20,975 27,213 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-507 and 514 Outstanding shares-484 and 491 5 5 Treasury stock, at cost (1,837) (1,837) Additional paid-in capital 21,389 26,791 Accumulated other comprehensive loss (484) (1,035) Retained earnings 8,636 19,625 Total stockholders' equity 27:709 43:549 Total liabilities and stockholders' equity $131,310 $162,648 See accompanying notes to consolidated financial statements Amazon.com, Inc. Consolidated Statements of Stockholders' Equity (in millions) Shares Common Stock Amount 471 $5 Treasury Stock $(1,837) Additional Paid-In Capital $13:394 Accumulated Other Comprehensive Income (Loss) $ (723) Retained Earnings $ 2,545 2:371 Total Stockholders' Equity $13:384 2:371 (262) (262) 829 2,962 (1,837) 17,186 829 2.962 (985) 4:916 19,285 687 687 3:033 3,033 501 501 4.202 4,202 (1,837) 21,389 (484) 8,636 27:709 (4) 916 912 10,073 10,073 (547) (547) 5:402 5:402 $(1,837) $26,791 $(1,035) $19,625 $43:549 See accompanying notes to consolidated financial statements. Walmart Inc. (Amounts in millions, except per share data) Revenues: Net sales Membership and other income Consolidated Statements of Income Fiscal Years Ended January 31, 2019 2018 2017 $510,329 4,076 $495,761 4:582 $481,317 4:556 Total revenues 514:405 500:343 485,873 Costs and expenses: Cost of sales 385,301 373:396 361,256 Operating, selling, general and administrative expenses 107,147 106,510 101,853 Operating income 21,957 20,437 22,764 Interest: Debt 1,975 1,978 2,044 Capital lease and financing obligations 371 352 323 Interest income Interest, net (217) (152) (100) 2,129 2,178 2,267 Loss on extinguishment of debt 3:136 Other (gains) and losses 8,368 Income before income taxes 11,460 15,123 20:497 Provision for income taxes 4-281 4,600 6,204 Consolidated net income 7:179 10:523 14:293 Consolidated net income attributable to noncontrolling interest Consolidated net income attributable to Walmart (509) (661) (650) $ 6,670 $ 9,862 $ 13,643 Net income per common share: Basic net income per common share attributable to Walmart Diluted net income per common share attributable to Walmart Weighted-average common shares outstanding: Basic Diluted Dividends declared per common share See accompanying notes. $ 2.28 $ 2.26 3.29 3.28 $ 4.40 4-38 2,929 2:945 2,995 3,010 3:101 3,112 $ 2.08 $ 2.04 $ 2.00 Walmart Inc. Consolidated Statements of Comprehensive Income Fiscal Years Ended January 31, (Amounts in millions) Consolidated net income 2019 2018 2017 $7,179 $10,523 $14,293 Consolidated net income attributable to noncontrolling interest Consolidated net income attributable to Walmart (509) 6,670 (661) 9,862 (650) 13,643 Other comprehensive income (loss), net of income taxes Currency translation and other Net investment hedges Cash flow hedges (226) 2,540 (3,027) 272 (405) (290) 437 Minimum pension liability 131 147 413 21 (397) Unrealized gain on available-for-sale securities 1,501 145 Other comprehensive income (loss), net of income taxes (113) 4:220 (2,845) Other comprehensive (income) loss attributable to noncontrolling interest 188 (169) 210 Other comprehensive income (loss) attributable to Walmart 75 4:051 (2,635) Comprehensive income, net of income taxes 7:066 14:743 11,448 Comprehensive (income) loss attributable to noncontrolling interest Comprehensive income attributable to Walmart (321) (830) (440) $6,745 $13.913 $11,008 See accompanying notes. (Amounts in millions) ASSETS Walmart Inc. Consolidated Balance Sheets As of January 31, 2019 2018 Current assets: Cash and cash equivalents Receivables, net Inventories $ 7:722 $ 6,756 6,283 44:269 5,614 43,783 Prepaid expenses and other Total current assets Property and equipment: 3,623 3:511 61,897 59,664 Property and equipment 185,810 185:154 Less accumulated depreciation (81,493) (77:479) Property and equipment, net 104:317 107,675 Property under capital lease and financing obligations: Property under capital lease and financing obligations Less accumulated amortization 12,760 12,703 (5,682) (5.560) Property under capital lease and financing obligations, net 7,078 7:143 Goodwill 31,181 18,242 Other long-term assets 14.822 11,798 Total assets $219,295 $204,522 LIABILITIES AND EQUITY Current liabilities: Short-term borrowings Accounts payable $ 5,225 $ 5:257 47,060 22,159 428 46,092 22,122 Accrued liabilities Accrued income taxes 645 Long-term debt due within one year 1,876 31738 Capital lease and financing obligations due within one year 729 667 Total current liabilities 77:477 78,521 Long-term debt 43:520 30,045 Long-term capital lease and financing obligations 6,683 6,780 Deferred income taxes and other 11,981 8,354 Commitments and contingencies Equity: Common stock 288 295 Capital in excess of par value 2,965 2,648 Retained earnings 80,785 85,107 Accumulated other comprehensive loss (11,542) (10,181) Total Walmart shareholders' equity 72:496 77,869 Noncontrolling interest 7:138 2.953 Total equity 79,634 80,822 Total liabilities and equity $219,295 $204,522 See accompanying notes. (Amounts in millions) Total liabilities and equity See accompanying notes. Shares Common Stock Amount 3:162 $317 Capital in Excess of Par Value $1,805 Balances as of February 1, 2016 Consolidated net income Other comprehensive income (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 Consolidated net income Other comprehensive income (loss), net of income taxes Cash dividends declared ($2.04 per share) Purchase of Company stock Cash dividend declared to noncontrolling interest Other Balances as of January 31, 2018 Adoption of new accounting standards on February 1, 2018, net of income taxes Consolidated net income Other comprehensive income (loss), net of income taxes Cash dividends declared ($2.08 per share) Purchase of Company stock Cash dividend declared to noncontrolling interest Noncontrolling interest of acquired entity Other Balances as of January 31, 2019 See accompanying notes. (120) 6 3,048 (103) 2,952 (80) 6 2,878 || '| ' , @ $219,295 $204,522 Walmart Inc. Consolidated Statements of Shareholders' Equity Retained Earnings $90,021 Accumulated Other Comprehensive Income (Loss) $(11,597) Total Walmart Shareholders' Equity $80,546 Noncontrolling Interest 13,643 13,643 (2,635) (2,635) (6,216) (6,216) (174) (8,090) (8.276) 740 (4) 736 2:371 89:354 (14:232) 77:798 9,862 9,862 4:051 4:051 (6,124) (6,124) (219) (7:975) (8,204) 496 (10) 486 $2,648 $85,107 2,361 $(10,181) (1,436) $77,869 925 6,670 6,670 75 75 (6,102) (245) (7:234) (6,102) (7:487) Total Equity $83,611 14:293 (2,845) (6,216) (8,276) (519) 487 80,535 10:523 4,220 (6,124) (8,204) (687) 559 $80,822 924 7:179 (113) (6,102) (7:487) (488) 4:345 562 $2,965 (17) $80,785 Walmart Inc. Consolidated Statements of Cash Flows $(11,542) Fiscal Years Ended January 31, (Amounts in millions) Cash flows from operating activities: 2019 2018 2017 Consolidated net income Adjustments to reconcile consolidated net income to net cash provided by operating activities: $ 7:179 $10,523 $14,293 Depreciation and amortization 10,678 10,529 10,080 Unrealized (gains) and losses 3:516 (Gains) and losses for disposal of business operations 4,850 Deferred income taxes (499) (304) 761 Loss on extinguishment of debt 3:136 Other operating activities 1:734 1,210 206 Changes in certain assets and liabilities, net of effects of acquisitions: 546 $72-496 554 $79,634 Walmart Inc. Consolidated Statements of Cash Flows (Amounts in millions) Cash flows from operating activities: Consolidated net income Adjustments to reconcile consolidated net income to net cash provided by operating activities: Fiscal Years Ended January 31, 2018 2019 2017 Depreciation and amortization Unrealized (gains) and losses (Gains) and losses for disposal of business operations Deferred income taxes $ 7:179 $10,523 $14,293 10,678 10,529 10,080 3:516 4,850 (499) (304) 761 Loss on extinguishment of debt - 3:136 Other operating activities 1:734 1,210 206 Changes in certain assets and liabilities, net of effects of acquisitions: Receivables, net (368) (1,074) (402) Inventories (1,311) (140) 1,021 Accounts payable 1,831 4,086 3:942 Accrued liabilities 183 928 1,280 Accrued income taxes (40) (557) 492 Net cash provided by operating activities Cash flows from investing activities: 27:753 28:337 31,673 Payments for property and equipment (10:344) (10,051) (10,619) Proceeds from the disposal of property and equipment 519 378 456 Proceeds from the disposal of certain operations 876 1,046 662 Purchase of available for sale securities (1,901) Payments for business acquisitions, net of cash acquired (14:656) (375) (2:463) Other investing activities (431) (77) (31) Net cash used in investing activities (24,036) (9,079) (13,896) Cash flows from financing activities: Net change in short-term borrowings Proceeds from issuance of long-term debt Repayments of long-term debt Premiums paid to extinguish debt (53) 4:148 (1,673) 15.872 7:476 137 (3,784) (13,061) (2,055) (3,059) Dividends paid (6,102) (6,124) (6,216) Purchase of Company stock (7:410) (8,296) (8,298) Dividends paid to noncontrolling interest (431) (690) (479) Purchase of noncontrolling interest (8) (90) Other financing activities (629) (261) (398) Net cash used in financing activities (2:537) (19,875) (19,072) Effect of exchange rates on cash, cash equivalents and restricted cash (438) 487 (452) Net increase (decrease) in cash, cash equivalents and restricted cash 742 (130) (1,747) Cash, cash equivalents and restricted cash at beginning of year Cash, cash equivalents and restricted cash at end of period Supplemental disclosure of cash flow information: Income taxes paid Interest paid See accompanying notes. 7,014 7:144 8,891 $7:756 $ 7,104 $ 7,144 3.982 6,179 4:507 2:348 2:450 2:351