Question
Instructions: Describe how and why each of the ratios has changed over the three-year period. For example, did the current ratio increase or decrease? Why?
Instructions: Describe how and why each of the ratios has changed over the three-year period. For example, did the current ratio increase or decrease? Why? Describe how three of the ratios you calculated for your company compare to the general industry.
Below are the rations for Amazon.com from 2015 through 2017
| 2017 | ||||||
| Ratio Calculations | Equations | |||||
| Current ratio | 60,197,000 | / | 57,883,000 | = | 1.04 | current assets / current liabilities |
| Debt/equity ratio | 103,601,000 | / | 27,709,000 | = | 373.9% | total liabilities / total equity |
| Free cash flow | 18,434,000 | - | 27,819,000 | = | $ (9,385,000) | total operating cash flow - capital expenditures |
| Earnings per share | 3,033,000 | / | 480,000 | = | $ 6.32 | net income / common shares outstanding |
| Price/earnings ratio | 1169.47 | / | 6.32 | = | 185.04 | stock price / earnings per share |
| Return on equity | 3,033,000 | / | 27,709,000 | = | 10.9% | net income / total equity |
| Net profit margin | 3,030,000 | / | 177,866,000 | = | 1.7% | net income / total revenue |
|
2016 | ||||||
| Ratio Calculations | Equations | |||||
| Current ratio | 45,781,000 | / | 43,816,000 | = | 1.04 | current assets / current liabilities |
| Debt/equity ratio | 64,117,000 | / | 19,285,000 | = | 332.5% | total liabilities / total equity |
| Free cash flow | 16,443,000 | - | 6,737,000 | = | $ 9,706,000 | total operating cash flow - capital expenditures |
| Earnings per share | 2,371,000 | / | 474,000 | = | $ 5.00 | net income / common shares outstanding |
| Price/earnings ratio | 749.87 | / | 5.00 | = | 149.97 | stock price / earnings per share |
| Return on equity | 2,371,000 | / | 19,285,000 | = | 12.3% | net income / total equity |
| Net profit margin | 2,371,000 | / | 135,987,000 | = | 1.7% | net income / total revenue |
| 2015 | ||||||
| Ratio Calculations | Equations | |||||
| Current ratio | 36,474,000 | / | 33,899,000 | = | 1.08 | current assets / current liabilities |
| Debt/equity ratio | 52,060,000 | / | 13,384,000 | = | 389.0% | total liabilities / total equity |
| Free cash flow | 11,920,000 | - | 4,589,000 | = | $7,331,000 | total operating cash flow - capital expenditures |
| Earnings per share | 596,000 | / | 467,000 | = | $ 1.28 | net income / common shares outstanding |
| Price/earnings ratio | 675.89 | / | 1.28 | = | 528.04 | stock price / earnings per share |
| Return on equity | 596,000 | / | 13,384,000 | = | 4.5% | net income / total equity |
| Net profit margin | 596,000 | / | 107,006,000 | = | 0.6% | net income / total revenue |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Ripple The Ultimate Guide To The World Of Ripple
Authors: Ikuya Takashima
1st Edition
1986181618, 978-1986181617
