Mod 2 1. Balance Sheet Analysis. Prepare a common-size balance sheet. To facilitate this, obtain the balance sheet in spreadsheet form from SEC Website at the "Interactive Data" link on the search results page. Look for major differences over time. Some questions to consider: a. What are the company's largest assets? Largest Liabilities? Amazon's largest assets are property and equipment. Amazon's largest liabilities are accounts payable. b. What proportion of total assets is financed by owners? (Hint: Compare with total equity.) C. What proportion of total assets is financed by nonowners? 2. Income Statement Analysis. Prepare a common size income statement. Express each item on the income statement as a percent of total sales or revenue. Do this for all years on the income statement. Look for major differences over time and between the companies. Do any patterns emerge? Some questions to consider: a. What are the major expenses? b. Are there any unusual or discontinued items? Are they large in magnitude? c. Was the company more or less profitable when compared with the prior year? 3. Statement of Cash Flows Analysis. Determine the size and direction (cash source or use) of cash flows from operations, investing, and financing. One goal is to understand the company's pattern of cash flows and to form an opinion about the general strength of its cash flows. Some questions to consider: a. What where the cash flows from operations? Were they positive? b. Were operating cash flows smaller or larger than net income? c. Did the company generate or use cash from investing activities? d. Did the company generate or use cash from financing activities? 4. Market Capitalization. Determine the market capitalization at the most recent year-end. Determine the number of shares outstanding for the balance sheet. Recall that shares outstanding is total shares issued less any treasury shares. Obtain the year-end stock price from an Investment website such as Seeking Alpha or Yahoo Finance. Compare market can with the book value (total equity) of the company. Dec 31, 2018 Dec 31, 2017 Consolidated Balance Sheets - USD ($) $ in Millions Current assets: Cash and cash equivalents Marketable securities Inventories Accounts receivable, net and other Total current assets Property and equipment, net Goodwill Other assets Total assets Current liabilities: Accounts payable Accrued expenses and other Unearned revenue Total current liabilities Long-term debt Other long-term liabilities Commitments and contingencies (Note 7) Stockholders' equity: Preferred stock. $0.01 par value: Authorized shares - 500 issued and outstanding shares . none $ 31,750 9,500 17,174 16,677 75,101 61,797 14,548 11,202 162,648 $ 20,522 10,464 16,047 13,164 60,197 48,866 13,350 8,897 131,310 38,192 23,663 6,536 68,391 23,495 27,213 34,616 18,170 5,097 57,883 24,743 20,975 Common stock, $0.01 par value: Authorized shares - 5,000 Issued shares. 507 and 514 Outstanding shares - 484 and 491 Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total stockholders' equity Total liabilities and stockholders' equity (1,837) 26,791 (1,035) 19,625 43,549 $ 162,648 (1,837) 21,389 (484) 8,636 27,709 $ 131,310 Mod 2 1. Balance Sheet Analysis. Prepare a common-size balance sheet. To facilitate this, obtain the balance sheet in spreadsheet form from SEC Website at the "Interactive Data" link on the search results page. Look for major differences over time. Some questions to consider: a. What are the company's largest assets? Largest Liabilities? Amazon's largest assets are property and equipment. Amazon's largest liabilities are accounts payable. b. What proportion of total assets is financed by owners? (Hint: Compare with total equity.) C. What proportion of total assets is financed by nonowners? 2. Income Statement Analysis. Prepare a common size income statement. Express each item on the income statement as a percent of total sales or revenue. Do this for all years on the income statement. Look for major differences over time and between the companies. Do any patterns emerge? Some questions to consider: a. What are the major expenses? b. Are there any unusual or discontinued items? Are they large in magnitude? c. Was the company more or less profitable when compared with the prior year? 3. Statement of Cash Flows Analysis. Determine the size and direction (cash source or use) of cash flows from operations, investing, and financing. One goal is to understand the company's pattern of cash flows and to form an opinion about the general strength of its cash flows. Some questions to consider: a. What where the cash flows from operations? Were they positive? b. Were operating cash flows smaller or larger than net income? c. Did the company generate or use cash from investing activities? d. Did the company generate or use cash from financing activities? 4. Market Capitalization. Determine the market capitalization at the most recent year-end. Determine the number of shares outstanding for the balance sheet. Recall that shares outstanding is total shares issued less any treasury shares. Obtain the year-end stock price from an Investment website such as Seeking Alpha or Yahoo Finance. Compare market can with the book value (total equity) of the company. Dec 31, 2018 Dec 31, 2017 Consolidated Balance Sheets - USD ($) $ in Millions Current assets: Cash and cash equivalents Marketable securities Inventories Accounts receivable, net and other Total current assets Property and equipment, net Goodwill Other assets Total assets Current liabilities: Accounts payable Accrued expenses and other Unearned revenue Total current liabilities Long-term debt Other long-term liabilities Commitments and contingencies (Note 7) Stockholders' equity: Preferred stock. $0.01 par value: Authorized shares - 500 issued and outstanding shares . none $ 31,750 9,500 17,174 16,677 75,101 61,797 14,548 11,202 162,648 $ 20,522 10,464 16,047 13,164 60,197 48,866 13,350 8,897 131,310 38,192 23,663 6,536 68,391 23,495 27,213 34,616 18,170 5,097 57,883 24,743 20,975 Common stock, $0.01 par value: Authorized shares - 5,000 Issued shares. 507 and 514 Outstanding shares - 484 and 491 Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total stockholders' equity Total liabilities and stockholders' equity (1,837) 26,791 (1,035) 19,625 43,549 $ 162,648 (1,837) 21,389 (484) 8,636 27,709 $ 131,310