Operating expenses Amazon 2020-Dec-31 $000 386,064,000 (363,165,000) Intel 2020-Dec-31 $000 77,867,000 (53,991,000) QUESTION 7 ANSWER ALL PARTS OF THIS QUESTION Show your workings to get full marks. The following is select financial data for Amazon and for Intel. Amazon is an international retailer of consumer products and subscriptions, while Intel is a global designer and manufacturer of computer products and technologies. Consolidated income statement for 12 months ending: Revenue Current liabilities: Trade and other payables (72,539,000) (5,581,000) Other current liabilities (53,846,000) (19,173,000) (126,385,000) (24,754,000) 6,348,000 (101,406,000) (47,299,000) 93,404,000 81,038,000 22,495,000 Net current assets Non-current liabilities Net assets Equity Ordinary share capital Other equity accounts 5,000 93,399,000 Total equity 93,404,000 25,556,000 55,482,000 81,038,000 Operating profit 22,899,000 23,876,000 Other income/(expenses) 2,926,000 1,831,000 Net finance costs (1,647,000) (629,000) Profit before tax 24,178,000 25,078,000 Tax (2,847,000) (4,179,000) Profit for the year 21,331,000 20,899,000 Basic EPS Basic average shares 42.64 500,000 4.98 4,199,000 Other information Market price/share ($) Annual dividend ($) a) Using the information provided, calculate and interpret the following ratios for both Amazon and Intel: a. Gearing ratio (%) Amazon 2020-Dec-31 3,256.93 0 Intel 2020-Dec-31 49.82 5,568,000,000 Amazon Consolidated Statement of financial 2020-Dec-31 position as at: Non-current assets: $000 Intangible non-current assets 19,998,000 Intel 2020-Dec-31 $000 20,654,000 b. Price earnings ratio c. Dividend yield 6 marks b) Based on the ratios you have computed above, which company do you think is a better investment? Explain your answer. Property, plant and equipment 150,667,000 56,584,000 4 marks Other tangible non-current assets 17,797,000 28,604,000 188,462,000 105,842,000 c) Briefly explain why creative accounting presents a concern for analysts. List two reasons for why management might engage in creative accounting. Current assets: Inventories 23,795,000 8,427,000 Trade and other receivables 24,542,000 6,782,000 Other current assets 8,145,000 Cash 84,396,000 23,895,000 132,733,000 47,249,000 3 marks d) Identify two methods of creative accounting that would impact any of the ratios in a). Explain your answer. How might an analyst be able to identify whether creative accounting is taking place? 4 marks