Project the value of Amazon stock on the balance sheet date for fiscal 2019 -- using both the DCS (discounted cash flow) and ROPI (residual operating income) modes.
Also, please write a short memo to report your findings. Compare your projections with the actual stock price on the balance sheet date for fiscal 2019 and speculate as to why there is a difference between your projections and the actual stock price if the differences are significant. Draw your recommendation on the affordability of Amazon's stock price relative to your projections.
Projecting Amazon's Stock Price per share using the Discounted Casa Flows Meth Amed Sales Man Cewe Lake Ad Ad Guate La Add to Cape La Asume Au Grow Rak Terminal Che Sounderlag ACTUAL PRORICTED T 30 Sales pelit wy CNOPAT 2141 NO Red OPAI NOA NOA TAM! IDR NGA d101 TV Di Pote this rapy NNO Tam Luty w shoes outstanding -Pulid Siss ACTUAL PROIECTED 2030 2002 2021 20 NOPAT NOA RPHANERAT NE X WAKE W YOR PROTONA NNO S. my Vale my valec cument Total Common Stock Tranny Stock Additional Paid in Capital Accumulated Other Comprehensive Income Los Retained Earnings 477 5 19,285 5 17,105 54916 3.033 3.033 501 4202 4202 27.700 55 (183) 2109 036 687 10.075 (547) 10.073 Consolidated Statements of Stockholders' Equity USD (5) shares in Millions, Sin Millions Beginning Balance in shares) Dec 31 2016 Beginning Balance at Dec 31, 2016 Increase Decrease in Stockholders' Equity Roll Forward Not income Other comprehensive income (s) Exercise of common stock options Exercise of common stock options Stock based compensation and sunce of employee benefit plan stock Ending Balance in shares) at Dec 31, 2012 Ending Balance Dec 31, 2017 Increase (Decrease in Stockholders' Equity Roll Forward Cumulative effect of a change in accounting principle Net income Other comprehensive income ou) Exercise of common stock options Exercise of common stock options Stock-based compensation and issuance of employee benefit plan stock Ending Balance in shares) Dec 31, 2015 Ending Balance at Dec 31, 2018 Increase (Decrease in Stockholders Equity Roll Forward Cumulative effect of a change in accounting principle Net income Other comprensive income dow) Bere of common stock options Exercise of common stock options Stock-based compensation and issuance of employee benetan stock Ending balance in shares of Dec 31 2019 Ending 31, 2019 increase (Decrease in Stockholders Equity Roll Forward Cumulative effect of a change in accounting principle (547) 0 5,402 5.402 491 $5.549 $5 (1837) 26.751 11.035) 19.05 912 916 11.580 40 TS 0 6,067 498 62.000 55 501,337 533,650 31.220 57 50 Consolidated Statements of 12 Months Ended Comprehensive Income - USD ($) $ in Millions Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2017 Statement of Comprehensive Income [Abstract] Net income S 11.588 $ 10,073 $ 3,033 Net change in foreign currency translation adjustments: Foreign currency translation adjustments, 78 (538) 533 net of tax of S5, S6, and S(5) Reclassification adjustment for foreign currency translation included in "Other 108 0 0 operating expense (income), net," net of tax of So, So, and $29 Net foreign currency translation (30) (538) 533 adjustments Net change in unrealized gains (losses) on available-for-sale debt securities: Unrealized gains (losses), net of tax of $5, 83 So, and S(12) (17) (39) Reclassification adjustment for losses (gains) included in "Other income (expense), net," net of tax of $0, $0, and 8 SO Net unrealized gains (losses) on available-for-sale debt securities 79 (9) (32) Total other comprehensive income (loss) 49 (547) 501 Comprehensive income $ 11,637 $ 9,526 $ 3,534 (4) 7 Consolidated Balance Sheets USD ($) Dec. 31, 2019 Dec. 31, 2018 Sin Millions Current assets: S 36 092 $31.750 Cash and cash equivalents 18,929 9.500 Marketable securities 20.497 17.174 Inventories Accounts receivable, net and other 20,816 16,677 Total current assets 96.334 75. 101 Property and equipment, net 72.705 61.797 0 25,141 Operating leases Goodwill 14.754 14 548 Other assets 16,314 11,202 Total assets 225 248 162,648 Current liabilities: Accounts payable 47.183 38.192 Accrued expenses and other 32 439 23 663 Unearned revenue 8,190 6.536 Total current liabilities 87 812 68,391 Long-term Tease liabilities 39.791 9 650 Long-term debt 23.414 23.495 Other long-term liabilities 12,171 17 563 Commitments and contingencies (Note 7) Stockholders' equity: Preferred stock, $0.01 par value: Authorized shares-500 Issued and 0 0 outstanding shares - none Common stock 50.01 par value Authorized shares 5 000 Issued shares 507 and 514 Outstanding shares - 484 5 5 and 491 Treasury stock, at cost (1 837) (1,837) Additional paid.in capital 33 658 26.791 Accumulated other comprehensive income (loss) (986) (1035) Retained eamings 31.220 19,625 Total stockholders equity 62,060 43.549 Total liabilities and stockholders equity $ 225.248 S 162 648 Consolidated Statements of Cash 12 Months Ended Flows USD ($) $ in Millions Dec. 31, 2019 Dec 31, 2018 Dec 31, 2017 Statement of Cash Flows (Abstract) CASH CASH EQUIVALENTS AND S 32. 173 $ 21,856 RESTRICTED CASH BEGINNING OF $ 19.934 PERIOD OPERATING ACTIVITIES: Net income 11,588 10 073 3,033 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization of property 21,789 15.341 and equipment and capitalized content 11.478 costs operating lease assets, and other Stock-based compensation 6.864 5418 4.215 Other operating expense (income), nel 164 274 202 Other expense income) net (249) 219 42923 Deferred income taxes 796 441 (29) Changes in operating assets and liabilities: Inventories 3 278) 413147 (3583 Accounts receivable, net and other T.581) 14.615) 14.780) Accounts payable 8.193 3,263 7.100 Accrued expenses and other 1.383) 472 283 Uneamed revenue 1711 1.151 738 Netcash provided by used in operating activities 38.514 30, 223 181365 INVESTING ACTIVITIES: Purchases of property and equipment (16.861) 13 4273 611,955) Proceeds from property and equipment sales and incentives 4.172 2 104 1897 Acquisitions, net of cash acquired, and other 2.461) (2.186) 13,972) Sales and maturities of marketable securities 22,681 8 240 9,677 Purchases of marketable securities (31.812) 07.100) (12.731) Net cash provided by (used in investing activities 24,281) (12.369) (27.084) FINANCING ACTIVITIES: Proceeds from long-term debt and other 2.273 768 Repayments of long-term debt and other 16,228 (2.664) (660) Principal repayments of finance cases (1.301) (9.628) (7 449) (4.799) Principal repayments of financing obligations 27) 337 (200) Net cash provided by used in financing activities (10,066) 6.686) 9,928 Foreign currency effect on cash cash equivalents, and restricted cash 70 351) 713 Netingrad (decrease in cash cash equivalents, and restricted cash 4237 10,317 1,922 CASH CASH EQUINALENTS ANO RESTRI 38,514 30.7253 (16,861) (13,427) 2,104 (11,955) 1,897 4.172 (2,461) (2,186) (13,972) 8,240 9.677 22,681 (31,812) (24,281) (7.100) (12,369) (12.731) (27,084) 2.273 (2,684) (9.628) (27) 768 (668) (7.449) 16,228 (1,301) (4.799) (337) (200) (10,066) (7.686) 9,928 Jet cash provided by (used in operating activities NVESTING ACTIVITIES: Purchases of property and equipment Proceeds from property and equipment sales and incentives Acquisitions, net of cash acquired, and other Sales and maturities of marketable securities Purchases of marketable securities 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 finance leases Principal repayments of financing obligations Net cash provided by (used in) financing activities Foreign currency effect on cash, cash equivalents and restricted cash Net increase (decrease) in cash, cash equivalents and restricted cash CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest on long-term debt Cash paid for operating leases Cash paid for interest on capital leases Cash paid for interest on finance leases Cash paid for interest on financing obligations Cash paid for income taxes net of refunds Assets acquired under operating leases Property and equipment acquired under capital leases Property and equipment acquired under finance leases Property and equipment acquired under build to suit arrangements 70 (351) 713 4.237 10,317 1,922 36,410 32,173 21,856 854 875 3,361 0 328 0 200 381 647 39 194 119 881 (957) (1.184) 0 7 870 0 10,615 9,637 13.723 S 1,362 $3,641 $ 3,541 Projecting Amazon's Stock Price per share using the Discounted Casa Flows Meth Amed Sales Man Cewe Lake Ad Ad Guate La Add to Cape La Asume Au Grow Rak Terminal Che Sounderlag ACTUAL PRORICTED T 30 Sales pelit wy CNOPAT 2141 NO Red OPAI NOA NOA TAM! IDR NGA d101 TV Di Pote this rapy NNO Tam Luty w shoes outstanding -Pulid Siss ACTUAL PROIECTED 2030 2002 2021 20 NOPAT NOA RPHANERAT NE X WAKE W YOR PROTONA NNO S. my Vale my valec cument Total Common Stock Tranny Stock Additional Paid in Capital Accumulated Other Comprehensive Income Los Retained Earnings 477 5 19,285 5 17,105 54916 3.033 3.033 501 4202 4202 27.700 55 (183) 2109 036 687 10.075 (547) 10.073 Consolidated Statements of Stockholders' Equity USD (5) shares in Millions, Sin Millions Beginning Balance in shares) Dec 31 2016 Beginning Balance at Dec 31, 2016 Increase Decrease in Stockholders' Equity Roll Forward Not income Other comprehensive income (s) Exercise of common stock options Exercise of common stock options Stock based compensation and sunce of employee benefit plan stock Ending Balance in shares) at Dec 31, 2012 Ending Balance Dec 31, 2017 Increase (Decrease in Stockholders' Equity Roll Forward Cumulative effect of a change in accounting principle Net income Other comprehensive income ou) Exercise of common stock options Exercise of common stock options Stock-based compensation and issuance of employee benefit plan stock Ending Balance in shares) Dec 31, 2015 Ending Balance at Dec 31, 2018 Increase (Decrease in Stockholders Equity Roll Forward Cumulative effect of a change in accounting principle Net income Other comprensive income dow) Bere of common stock options Exercise of common stock options Stock-based compensation and issuance of employee benetan stock Ending balance in shares of Dec 31 2019 Ending 31, 2019 increase (Decrease in Stockholders Equity Roll Forward Cumulative effect of a change in accounting principle (547) 0 5,402 5.402 491 $5.549 $5 (1837) 26.751 11.035) 19.05 912 916 11.580 40 TS 0 6,067 498 62.000 55 501,337 533,650 31.220 57 50 Consolidated Statements of 12 Months Ended Comprehensive Income - USD ($) $ in Millions Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2017 Statement of Comprehensive Income [Abstract] Net income S 11.588 $ 10,073 $ 3,033 Net change in foreign currency translation adjustments: Foreign currency translation adjustments, 78 (538) 533 net of tax of S5, S6, and S(5) Reclassification adjustment for foreign currency translation included in "Other 108 0 0 operating expense (income), net," net of tax of So, So, and $29 Net foreign currency translation (30) (538) 533 adjustments Net change in unrealized gains (losses) on available-for-sale debt securities: Unrealized gains (losses), net of tax of $5, 83 So, and S(12) (17) (39) Reclassification adjustment for losses (gains) included in "Other income (expense), net," net of tax of $0, $0, and 8 SO Net unrealized gains (losses) on available-for-sale debt securities 79 (9) (32) Total other comprehensive income (loss) 49 (547) 501 Comprehensive income $ 11,637 $ 9,526 $ 3,534 (4) 7 Consolidated Balance Sheets USD ($) Dec. 31, 2019 Dec. 31, 2018 Sin Millions Current assets: S 36 092 $31.750 Cash and cash equivalents 18,929 9.500 Marketable securities 20.497 17.174 Inventories Accounts receivable, net and other 20,816 16,677 Total current assets 96.334 75. 101 Property and equipment, net 72.705 61.797 0 25,141 Operating leases Goodwill 14.754 14 548 Other assets 16,314 11,202 Total assets 225 248 162,648 Current liabilities: Accounts payable 47.183 38.192 Accrued expenses and other 32 439 23 663 Unearned revenue 8,190 6.536 Total current liabilities 87 812 68,391 Long-term Tease liabilities 39.791 9 650 Long-term debt 23.414 23.495 Other long-term liabilities 12,171 17 563 Commitments and contingencies (Note 7) Stockholders' equity: Preferred stock, $0.01 par value: Authorized shares-500 Issued and 0 0 outstanding shares - none Common stock 50.01 par value Authorized shares 5 000 Issued shares 507 and 514 Outstanding shares - 484 5 5 and 491 Treasury stock, at cost (1 837) (1,837) Additional paid.in capital 33 658 26.791 Accumulated other comprehensive income (loss) (986) (1035) Retained eamings 31.220 19,625 Total stockholders equity 62,060 43.549 Total liabilities and stockholders equity $ 225.248 S 162 648 Consolidated Statements of Cash 12 Months Ended Flows USD ($) $ in Millions Dec. 31, 2019 Dec 31, 2018 Dec 31, 2017 Statement of Cash Flows (Abstract) CASH CASH EQUIVALENTS AND S 32. 173 $ 21,856 RESTRICTED CASH BEGINNING OF $ 19.934 PERIOD OPERATING ACTIVITIES: Net income 11,588 10 073 3,033 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization of property 21,789 15.341 and equipment and capitalized content 11.478 costs operating lease assets, and other Stock-based compensation 6.864 5418 4.215 Other operating expense (income), nel 164 274 202 Other expense income) net (249) 219 42923 Deferred income taxes 796 441 (29) Changes in operating assets and liabilities: Inventories 3 278) 413147 (3583 Accounts receivable, net and other T.581) 14.615) 14.780) Accounts payable 8.193 3,263 7.100 Accrued expenses and other 1.383) 472 283 Uneamed revenue 1711 1.151 738 Netcash provided by used in operating activities 38.514 30, 223 181365 INVESTING ACTIVITIES: Purchases of property and equipment (16.861) 13 4273 611,955) Proceeds from property and equipment sales and incentives 4.172 2 104 1897 Acquisitions, net of cash acquired, and other 2.461) (2.186) 13,972) Sales and maturities of marketable securities 22,681 8 240 9,677 Purchases of marketable securities (31.812) 07.100) (12.731) Net cash provided by (used in investing activities 24,281) (12.369) (27.084) FINANCING ACTIVITIES: Proceeds from long-term debt and other 2.273 768 Repayments of long-term debt and other 16,228 (2.664) (660) Principal repayments of finance cases (1.301) (9.628) (7 449) (4.799) Principal repayments of financing obligations 27) 337 (200) Net cash provided by used in financing activities (10,066) 6.686) 9,928 Foreign currency effect on cash cash equivalents, and restricted cash 70 351) 713 Netingrad (decrease in cash cash equivalents, and restricted cash 4237 10,317 1,922 CASH CASH EQUINALENTS ANO RESTRI 38,514 30.7253 (16,861) (13,427) 2,104 (11,955) 1,897 4.172 (2,461) (2,186) (13,972) 8,240 9.677 22,681 (31,812) (24,281) (7.100) (12,369) (12.731) (27,084) 2.273 (2,684) (9.628) (27) 768 (668) (7.449) 16,228 (1,301) (4.799) (337) (200) (10,066) (7.686) 9,928 Jet cash provided by (used in operating activities NVESTING ACTIVITIES: Purchases of property and equipment Proceeds from property and equipment sales and incentives Acquisitions, net of cash acquired, and other Sales and maturities of marketable securities Purchases of marketable securities 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 finance leases Principal repayments of financing obligations Net cash provided by (used in) financing activities Foreign currency effect on cash, cash equivalents and restricted cash Net increase (decrease) in cash, cash equivalents and restricted cash CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest on long-term debt Cash paid for operating leases Cash paid for interest on capital leases Cash paid for interest on finance leases Cash paid for interest on financing obligations Cash paid for income taxes net of refunds Assets acquired under operating leases Property and equipment acquired under capital leases Property and equipment acquired under finance leases Property and equipment acquired under build to suit arrangements 70 (351) 713 4.237 10,317 1,922 36,410 32,173 21,856 854 875 3,361 0 328 0 200 381 647 39 194 119 881 (957) (1.184) 0 7 870 0 10,615 9,637 13.723 S 1,362 $3,641 $ 3,541
