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Analyze and compare Amazon,com and Wol-Mart Amazon.com, Inc. (AMzN) is one of the largest internet retallers in the world. Wal-Mart Stores, Inc. (WMT) is the
Analyze and compare Amazon,com and Wol-Mart Amazon.com, Inc. (AMzN) is one of the largest internet retallers in the world. Wal-Mart Stores, Inc. (WMT) is the largest retaller in the United States. Amazon and Wal-Mart compete in similar markets; however, Wal-Mart sells through both traditional retail stores and the internet, while Amazon sells only through the internet interest expense and income before income tax expense from the financial statements of both companies for two recent years follow (in milions): a. Compute the times interest earned ratio for both companies for the two years. Round your answers to one decimal place. b. Based on your calculations for Amazon above, which of these statements is correct? The Interest coverape Indicated by these ratios sugqests that Amazon wil be able to cover Interest payments from current-period income befori c. Does a times interest earned ratio less than 1.0 mean that creditors will not get paid interest? Low times interest earned ratio is an early warning signal, but it does not mean the company will not be able to pay interest to creditors. d. Interpret Woimart's interest coverage from Year 1 , to Year 2 . Wal-mart's times interest earned ratio decilned sifghtiy, but is stable and indicates very healthy protectlon for interest payments to creditors. e. Which company appears to have the greater protection for creditors
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