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HELP!!! Analyze and compare Amazon.com to Best Buy Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Best Buy, Co. Inc.
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Analyze and compare Amazon.com to Best Buy 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. Amazon and Best Buy compete in similar markets; however, Best Buy sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Current asset and current liability information from recent financial statements are as follows (in millions): Amazon Best Buy $19,334 6,647 8,339 11,461 Current assets: Cash Short-term investments Accounts receivable Inventories Other current assets Total current assets Current liabilities: Accounts payable Other current liabilities Total current liabilities $ 1,976 1,305 1,162 5,051 392 $ 9,886 $45,781 $25,309 18,507 $43,816 $ 4,450 2,475 $ 6,925 Required: a. Compute working capital for each company. Amazon: $ 9,706 x Best Buy: $ 1,963 x b. Compute the current ratio for each company. Round to one decimal place. Amazon: Best Buy: c. Compute the quick ratio for each company. Round to one decimal place. Amazon: Best Buy: d. Can the working capital be usefully compared between the two companies? Which of the following statements is correct. e. Which company has the greater debt-paying ability according to the current ratio? f. Which company has the greater short-term debt-paying ability according to the quick ratio? g. Why are the results different between (e) and (f)? (Hint: Perform a vertical analysis of the current assets.) Round to one decimal place. Amazon Best Buy Current assets: Cash Short-term investments Accounts receivable Inventories Other current assets Total current assets g. Why are the results different between (e) and (f)? (Hint: Perform a vertical analysis of the current assets.) Round to one decimal place. Amazon Best Buy Current assets: Cash Short-term investments Accounts receivable Inventories Other current assets Total current assets Amazon has % of its current assets consisting of cash and short-term investments, compared to % for Best Buy. This difference will Amazon's quick ratio relative to Best Buy's. Best Buy has 51.1% of its current assets in inventory, while Amazon only has 25.0% of current assets in inventory. This difference reflects Amazon's pure Internet strategy, which causes the current ratio to be than Best Buy's. It also causes the relationship between the current and quick ratios to diverge between the two companiesStep by Step Solution
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