Complete the following with the cash flow statement below
1. Find net income, comprehensive income and gross margin. What are the key expenses? Briefly discuss fulfillment costs. 2. Check that the change of cash is the sum of operating cash flow, investing cash flows, and financing cash flows using the $ amounts. Describe the items that explain the discrepancy between net income and operating cash flow. Check whether Amazon increased or decreased A/R, Inventory, and A/P. 3. Find the amount of accruals. 4. Discuss the firm's investment activities. 5. Find the amount and conditions (e.g. interest rate) of debt issuance. Why does Amazon issue debt although they have cash? Briefly discuss the benefits and costs of debt issuance. Year Ended December 31, 2016 2017 2018 $ 16,175 $ 19,934 21,856 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD OPERATING ACTIVITIES: Net income 2,371 3,033 10,073 8,116 11,478 15,341 2,975 4,215 5,418 160 202 274 219 (20) (246) (292) (29) 441 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 (1,426) (3,436) (3,583) (4,780) (1,314) (4,615) 5,030 7,100 3,263 1,724 283 472 1,955 738 1,151 17,203 18,365 30,723 (7,804) (11,955) (13,427) 1,067 1,897 2,104 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 (116) (13,972) (2,186) 4,577 9,677 8,240 (7,240) (7,100) (12,731) (27,084) (9,516) (12,369) FINANCING ACTIVITIES: 618 16,228 768 (1,301) 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: (327) (3,860) (147) (3,716) (212) (4,799) (200) (668) (7,449) (337) (7,686) (351) 9,928 713 3,759 1,922 10,317 $ 19,934 $ 21,856 $ 32,173 290 328 854 206 319 575 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 412 957 1,184 5,704 9,637 10,615 1,209 3,541 3,641 1. Find net income, comprehensive income and gross margin. What are the key expenses? Briefly discuss fulfillment costs. 2. Check that the change of cash is the sum of operating cash flow, investing cash flows, and financing cash flows using the $ amounts. Describe the items that explain the discrepancy between net income and operating cash flow. Check whether Amazon increased or decreased A/R, Inventory, and A/P. 3. Find the amount of accruals. 4. Discuss the firm's investment activities. 5. Find the amount and conditions (e.g. interest rate) of debt issuance. Why does Amazon issue debt although they have cash? Briefly discuss the benefits and costs of debt issuance. Year Ended December 31, 2016 2017 2018 $ 16,175 $ 19,934 21,856 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD OPERATING ACTIVITIES: Net income 2,371 3,033 10,073 8,116 11,478 15,341 2,975 4,215 5,418 160 202 274 219 (20) (246) (292) (29) 441 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 (1,426) (3,436) (3,583) (4,780) (1,314) (4,615) 5,030 7,100 3,263 1,724 283 472 1,955 738 1,151 17,203 18,365 30,723 (7,804) (11,955) (13,427) 1,067 1,897 2,104 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 (116) (13,972) (2,186) 4,577 9,677 8,240 (7,240) (7,100) (12,731) (27,084) (9,516) (12,369) FINANCING ACTIVITIES: 618 16,228 768 (1,301) 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: (327) (3,860) (147) (3,716) (212) (4,799) (200) (668) (7,449) (337) (7,686) (351) 9,928 713 3,759 1,922 10,317 $ 19,934 $ 21,856 $ 32,173 290 328 854 206 319 575 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 412 957 1,184 5,704 9,637 10,615 1,209 3,541 3,641
