Line Item Description Amazon Best Buy Walmart

Sales $$469,822$ $$51,761$ $$572,754$

Net cash flows from operating activities $46,3273,25224,181$

Cash used to purchase property, plant, and equipment $(61,053)(737)(13,106)$

a$.$ Determine the free cash flow for all three companies. Enter answers in millions. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Amazon: fill in the blank $1$ of $3$$

Best Buy: fill in the blank $2$ of $3$$

Walmart: fill in the blank $3$ of $3$$

b$.$ Compute the ratio of free cash flow to sales for all three companies. Round percentages to one decimal place. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Amazon: fill in the blank $1$ of $3$

$\%$

Best Buy: fill in the blank $2$ of $3$

$\%$

Walmart: fill in the blank $3$ of $3$

$\%$

c$.$ How does Amazon compare to the other two companies with respect to generating free cash flow?

$1.$ Amazon$$s free cash flow is lower than both Best Buy$$s and Walmart$$s$.$ However, these companies vary greatly in size. Thus, a relative measure that can be used to compare free cash flow across the three companies is the ratio of free cash flow to sales. Using this measure, it can be seen that Best Buy is stronger at generating free cash flow from sales than are Amazon and Walmart.

$2.$ Amazon$$s free cash flow is higher than both Best Buy$$s and Walmart$$s$.$ However, these companies vary greatly in size. Thus, a relative measure that can be used to compare free cash flow across the three companies is the ratio of free cash flow to sales. Using this measure, it can be seen that Amazon is weaker at generating free cash flow from sales than are Best Buy and Walmart.

$3.$ Amazon$$s free cash flow is higher than the Best Buy$$s but lower than the Walmart$$s$.$ However, these companies vary greatly in size. Thus, a relative measure that can be used to compare free cash flow across the three companies is the ratio of free cash flow to sales. Using this measure, it can be seen that Amazon is stronger at generating free cash flow from sales than are Best Buy and Walmart.

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