Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Need help answering these 6 questions.From the third to the last photo contains the information to the questions. Question 11 Calculate Amazon's return on assets

Need help answering these 6 questions.From the third to the last photo contains the information to the questions. image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Question 11 Calculate Amazon's return on assets ratio (net income / total assets) for the last two reporting periods. management: Round to two decimal places. Based on the company's return on assets ratio, the company's a used its assets more efficiently to generate earnings. C b. used its assets less efficiently to generate earnings. C C used earnings more efficiently to generate assets. C d used earnings less efficiently to generate assets Question 12 Amazon increased which account when it originally issued shares of its stock for cash? a. Retained earnings b, Treasury stock c. Common stock C d. Net product sales Question 13 At the most recent balance sheet date, Amazon's shareholder claims to the company's assets totaled (in millions): a.$21,394 b.$27,709 c.$19.557 d. $21.389 CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Year Ended December 3 2017 14,557 S CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD OPERATING ACTIVITIES Net income Adjustments to reconcile net income to net cash from operating activities: 15,890 19,334 596 2,371 3,033 Depreciation of property and equipment, i internal-use software and te development, and other amortization, including capitalized content costs 6,281 8,116 2,975 Stock-based compensation Other operating expense, net Other expense (income), net Deferred income taxes 11,478 4,215 202 (292) 160 250 (20) 81 (246) Changes in operating assets and liabilities: (1,426) (3,367) 5,030 1,724 1,955 17,272 (2,187) 3,583) (4,786) 7,175 283 738 18.434 Accounts receivable, net and other Accounts payable Accrued expenses and other (1,755) 1,292 12,039 Net cash provided by (used in) operating activities INVESTING ACTIVITIES. Purchases of property and equipment, including internal-use software and website Proceeds from property and equipment incentives Acquisitions, net of cash acquired, and other Sales and maturities of marketable securities Purchases of marketable securities (5,387) (7,804) (11,955) 1,897 (13,972) 9,988 13,777) (27,819) 1,067 (795) 3,025 (4,091) (6,450) 4,733 (7.756) 9,876) Net cash provided by (used in) investing activities FINANCING ACTIVITIES 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 353 (1,652) (2,462) (121) (3,882) (374) (354) (3,860) (147) (3,740) (212) 3,444 19,334 S 16,231 (1,372) 4,799) (200) 9,860 Net cash provided by (used in) financing activities Foreign currency effect on cash and cash equivalents Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS, END OF PERIOD SUPPLEMENTAL CASH FLOW INFORMATION 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 efunds Property and equipment acquired under capital leases Property and equipment acquired under build-to-suit leases 15,890 S 290 S 4,717 5,704 9,637 CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Year Ended December 31 2016 2015 2017 Net product sales Net service sales S 79,268 S94,665 S 118,573 59,293 177,866 27,738 41,322 107,006 3 987 Total net sales Operating expenses: Cost of sales Fulfillment Marketing Technology and content 71,651 3,410 5,254 2,540 1,747 111,934 25,249 10,069 22,620 ,674 214 173,760 4,106 202 (848) 346 (300) 3,806 (769) 88,265 17,619 7,233 16,085 2,432 167 General and administrative Other operating expense, net Total operating expenses 104,773 2,233 131,801 Operating income Interest income Interest expense Other income (expense), net Total non-operating income (expense) Income before income taxes Provision for income taxes Equity-method investment activity, net of tax Net income Basic earnings per share Diluted earnings per share Weighted-average shares used in computation of earnings per share: 50 (459) (256) (665) 1,568 (950) (22) 596 S 128 S 4,186 100 (484) 90 (294) 3,892 (1,425) (96) 2,371 S 5.01 S 6.32 6.15 4,90 S Basic Diluted 467 477 See accompanying notes to consolidated financial statements. 474 484 480 493 CONSOLIDATED BALANCE SHEETS (in millions, except per share data) December 31, 2016 2017 ASSETS Current assets Cash and cash equivalents Marketable securities Inventories Accounts receivable, net and other s 19,334 S 20,522 10,464 16,047 13,164 60,197 48,866 13,350 8,897 6,647 11,461 8339 45,781 29,114 3,784 Total current assets Property and equipment, net Goodwil Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Accrued expenses and other Unearned revenue S 25,309 S 34,616 18,170 5,097 57,883 24,743 20,975 13,739 4,768 43,816 7,694 12,607 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 Common stock, $0.01 par value: Authorized shares-5,000 Issued shares-500 and 507 Outstanding shares- 477 and 484 Treasury stock, at cost Additional paid-in capital Accumulated other comprehensive loss Retained earnings (1,837) 21,389 (484) 8,636 27.709 S 83,402 S131,310 (1,837) 17,186 (985) 4,916 19.285 Total stockholders' equity Total liabilities and stockholders' equity See accompanying notes to consolidated fi CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in millions) Common Stock Additional Other Treasury Paid-la Comprehensive Retained Stockholders Amount Capital lacome (Les)E Earning Balance as of January 1, 2015s Net income 46S S (1,837) S 11,135 S (SII) S 1,949 S 10,741 596 596 Other comprehensive income (loss) (212) (212) Exercise of common stock options Excess tax benefits from stock-based compensation 119 119 Stock-based compensation and issuance of employee benefit plan stock Issuance of common stock for acquisition activity Balance as of December 31, 2015 Net income 2.131 2,131 (1,837) 13,394 (723) 2,545 13,384 2,371 2,371 (262) 471 Other comprehensive income (loss) Exercise of common stock options (262) Excess tax benefits from stock-based compensation Stock-based compensation and issuance of employee benefit plan stock Balance as of December 31,2016 829 2,962 5 (1,837) 17,186 829 2,962 (985) 4,916 19,285 477 Cumulative effect of a change in accounting principle related to stock-based compensation Net income 687 687 3,033 3,033 501 501 Other comprehensive income Exercise of common stock options Stock-based compensation and issuance of employee benefit plan stock Balance as of December 31, 2017 -4.202 4,202 48= 5 S (1,837) S 21,389 S (484) S 8.636 S 27,709 -AS4) S 8,636 S 27,709 See accompanying notes to consolidated financial statements Leases and Asser Retirement Obligations We categorize leases at their inception as either operating or capital leases. On certain of our lease agreements, we may receive rent holidays and other incentives. We recognize lease costs on a straight-line basis without regard to deferred payment erms, such as rent holidays, that defer the commencement date of required payments. Additionally, incentives we receive are treated as a reduction of our costs over the term of the agreement Leasehold improvements are capitalized at cost and amortized over the lesser of their expected useful life or the non-cancellable term of the lease We establish assets and liabilities for the estimated construction costs incurred under build-to-suit lease arrangements to the extent we are involved in the construction of structural improvements or take construction risk prior to commencement of a lease. Upon occupancy of facilities under build-to-suit leases, we assess whether these arrangements qualify for sales recognition under the sale-leaseback accounting guidance. If we continue to be the deemed owner, the facilities are accounted for as finance leases We establish assets and liabilities for the present value of estimated future costs to retire long-lived assets at the termination or expiration of a lease. Such assets are depreciated over the lease period into operating expense, and the recorded liabilities are accreted to the future value of the estimated retirement costs Goodwill We evaluate goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate the carrying value may not be recoverable. In testing goodwill for impairment, we may elect to utilize a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount If our qualitative assessment indicates that goodwill impairment is more likely than not, we perform a two-step impairment test We test goodwill for impairment under the two-step impairment test by first comparing the book value of net assets to the fair value of the reporting units. If the fair value is determined to be less than the book value or qualitative factors indicate that it is more likely than not that goodwill is impaired, a second step is performed to compute the amount of impairment as the difference between the estimated fair value of goodwill and the carrying value. We estimate the fair value of the reporting units using discounted cash flows Forecasts of future cash flows are based on our best estimate of future net sales and operating expenses, based primanily on expected category expansion, pricing, market segment share, and general economic conditions We completed the required annual testing of goodwill for impairment for all reporting units as of April 1, 2017, and determined that goodwill is not impaired as the fair value of our reporting units substantially exceeded their book value. There were no triggering events identified from the date of our assessment through December 31, 2017 that would require an update to our annual impairment test See-Note 4-Acquisitions, Goodwill, and Acquired Intangible Assets Other Assets Included in "Other assets" on our consolidated balance sheets are amounts primarily related to acquired intangible assets net of amortization video and music content, net of amortization, long-term deferred tax assets, certain equity investments marketable securities restricted for longer than one year, the majority of which are attributable to collateralization of bank guarantees and debt related to our international operations, and equity warrant assets Video and Music Content We obtain video and music content for customers through licensing agreements that have a wide range of licensing provisions, which include both fixed and variable payment schedules. When the license fee for a specific movie, television, or music title is determinable or reasonably estimable and the content is available for streaming, we recognize an asset representing the fee and a corresponding liability for the amounts owed We relieve the liability as payments are made and we amortize the asset to "Cost of sales" on a straight-line basis or on an accelerated basis, based on estimated usage patterns which typically ranges from one to five years If we are unable to reasonably estimate the cost per title, no asset or liability is recorded and licensing costs are expensed as incurred. We also develop original content. Capitalized production costs associated with our original content are limited by the amount of revenue we expect to carn, which results in a portion being 47 expensed as incurred. These capitalized costs are amortized to "Cost of sales" on an accelerated basis that follows the viewing pattern of customer streams in the first months afler availability Note 3-PROPERTY AND EQUIPMENT Property and equipment, at cost, consisted of the following (in milions): December 31, 2016 2017 Gross property and equipment ( Land and buildings Equipment and intermal-use software (a) Other corporate assets Construction in progress S 13,998 S 23,718 38,387 2,390 4,078 68,573 19,707 48,866 25,989 649 1,805 42,441 13.327 Gross property and equipment Total accumulated depreciation (I) Total property and equipment, net 29,114 S (1) Excludes the original cost and accumulated depreciation of fully-depreciated assets (2) Includes internal-use software of S1.4 billion and S1.1 billion as of December 31, 2016 and 2017 Depreciation expense on property and equipment was $4.9 billion, $6.4 billion, and $8 8 billion which includes amortization of property and equipment acquired under capital leases of $2.7 billion, $3.8 billion, and S5.4 billion for 2015 2016, and 2017. Gross assets recorded under capital leases were $17.0 billion and $26.4 billion as of December 31, 2016 and 2017Accumulated depreciation associated with capital leases was $8.5 billion and $13.4 billion as of December 31, 2016 and 2017 We capitalize construction in progress and record a corresponding long-term liability for build-to-suit lease agreements where we are considered the owner, for accounting purposes, during the construction period. For buildings under build-to-suit lease arrangements where we have taken occupancy, which do not qualify for sales recognition under the sale-leaseback accounting guidance, we determined that we continue to be the deemed owner of these buildings. This is principally due to our significant investment in tenant improvements. As a result, the buildings are being depreciated over the shorter of their useful lives or the related leases' terms. Additionally, certain build-to-suit lease arrangements and finance leases provide purchase options. Upon occupancy, the long-term construction obligations are considered long-term finance lease obligations with amounts payable during the next 12 months recorded as "Accrued expenses and other." Gross assets remaining under finance leases were $2.9 billion and $5.4 billion as of December 31, 2016 and 2017. Accumulated depreciation associated with finance leases was $361 million and $635 million as of December 31, 2016 and 2017 Note 4-ACQU ISI TIONS, GOODw1 LL, AN D ACQUI RE D INTANG IBLE ASSETS Acquisition Activity During 2015 and 2016, we acquired certain companies for an aggregate purchase price of $690 million and $103 million. The primary reason for these acquisitions, none of which were individually material to our consolidated financial statements, was to acquire technologies and know-how to enable Amazon to serve customers more effectively On May 12, 2017, we acquired Souq Group Ltd. ("Souq"), an e-commerce company, for approximately $583 million, net of cash acquired, and on August 28, 2017, we acquired Whole Foods Market, a grocery store chain, for approximately $13.2 billion, net of cash acquired. Both acquisitions are intended to expand our retail presence. During 2017, we also acquired certain other companies for an aggregate purchase price of $204 million. The primary reason for our other 2017 acquisitions was to acquire technologies and know-how to enable Amazon to serve customers more effectively Acquisition-related costs were expensed as incurred and were not significant. The valuation of certain assets and liabilities in the Whole Foods Market acquisition is preliminary and subject to change

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management And Cost Accounting

Authors: Colin Drury

6th Edition

1844807037, 978-1844807031

More Books

Students also viewed these Accounting questions