PROMPT:
Based on these analyses, recommend to us, as investors, which company (Amazon or your comparison company) we should choose to invest in. In no more than one page using Microsoft Word (Times New Roman 12-point font), convince us using information from your financial analysis as to why we should invest in one company versus the other. You MUST pick one company.
QUESTION:
How do I use the info gathered so far to pick which company to invest in? What points would be best used to back up the proposed company?
M N Amazon VS. eBay 1 2 a 4 From Most Recent Period - Horizontal Analysis Tab Amazon eBay Numerator Denominator Ratio Numerator Denominator Amazon Denominator 5 Ratio Numerator 6 Liquidity (5) $ $ $ 7 8 Liquidity Ratios - Ability to pay currently maturing obligations: Current Ratio = Current Assets - Current Liabilities Quick Ratio = (Cash, marketable securities, and receivables) = Accounts Receivables Turnover = Net Sales - Average Accounts Receivable Inventory Turnover = Cost of Goods Sold - Average Inventory Asset Turnover = Net Sales : Average Total Assets 9 96.334 $ 75,837 280,522 165,536 280,522 87,812 87,812 18,747 18,836 193,948 1.10 to 1 0.86 to 1 14.96 times 8.79 times 1.45 times 4,706 3,525 10,800 2,508 10.800 $ 4,066 1.16 to 1 4,066 0.87 to 1 706 15.30 times N/A N/A 20.497 0.53 times 1 Current Ratio 2 Quick Ratio 3 Accounts Receivables Turnover Inventory Turnover 5 Asset Turnover 96,334 75,837 280.522 165,536 280,522 87,812 87,812 18,747 18,836 193,94 10 11 12 1a 14 $ $ $ $ 15 16 Profitability Ratios - The ability to generate income: Earnings per Share (EPS) = (Net Income - Preferred Dividends) - Average Price-Earnings Ratio = Market Price Per Share of Stock + Earnings Per Gross Margin Rate = Gross Margin = Net Sales or (Net Sales - Cost Return on Sales (ROS) = Net Income - Net Sales Return on Assets (ROA = Net Income - Average Total Assets Return on Equity (ROE) = Net Income + Average Total Equity Dividend Yield - Dividends per Share - Market Price per Share 11,588 1.847.845 114,986 11,588 11,588 11,588 491 $ 5.00 280,522 280,522 193,948 52,805 23.62 369.6 41.0% 4.1% 6.0% 21.9% 1,786 28.07 $ 8,292 1,786 1,786 1,786 915$ 2.00 10,800 10,800 20,497 4,576 1.95 14.0 76.8% 16.59 8.7% 39.0 Profitability (7) Earnings per Share (EPS) 7 Price-Earnings Ratio 8 Gross Margin Rate 9 Return on Sales (ROS) 10 Return on Assets (ROA) 11 Return on Equity (ROE) 12 Dividend Yield 11,588 1,847.84 114,986 11.588 11.588 11,588 17 494 Shane 23.46 280,522 280,522 193.94 52,805 1.847.84 19 19 20 21 22 2a $ $ 24 25 26 Solvency - Ability to meet all obligations (over the long-term): Debt to Assets (aka Debt Ratio) = Total Liabilities + Total Assets there are not Debt to Equity = Total Liabilities - Total Owners' Equity (these are Times Interest Earned = (Net Income before Interest & Taxes Expense) = Free Cash Flow = Cash Provided by Operations - PP&E 163,188$ 163,188 13,976 225,248 62,060 1,600 0.72 to 1 2.63 to 1 0.2 times (36,613) 15,304 15,304 2.207 18,174 2,870 415 0.84 to 1 1 5.33 to 1 5.3 times (535) Solvency (4) 13 Debt to Assets (aka Debt Ratio) 14 Debt to Equity 15 Times Interest Earned 16 Free Cash Flow $ $ $ $ 163,188 $ 163.188 15,562 $ 21,653 225.24 62.060 1,600 $ $ 27 29 29 G H J K M N P 0 R S T U v w Y 1 Professor's Ratios Student Comparison 2. 3 4 d - Horizontal Analysis Tab eBay Numerator Denominator Amazon Denominator Amazon Difference eBay Denominator eBay Difference 5 Ratio Numerator Ratio Numerator Ratio 6 Liquidity (5) $ $ 7. 8 $ $ 4,706 $ 4,066 3,525 4,066 10,800 706 2,508 N/A 10,800 20,497 1.16 to 1 0.87 to 1 15.30 times N/A 0.53 times 9 1 Current Ratio 2 Quick Ratio 3 Accounts Receivables Turnover 4 Inventory Turnover 5 Asset Turnover 96,334 75,837 280.522 165,536 280,522 87,812 87,812 18,747 18,836 193,948 1.10 to 1 0.86 to 1 14.96 times 8.79 times 1.45 times 4,706 3,525 10,800 2,508 10,800 4,066 4,066 706 1.16 to 1 0.87 to 1 15.30 times NA 0.00 to 1 0.00 to 1 0.00 times 0.00 times 0.00 times 0.00 to 0.00 to 0.00 tim NA 0.00 time 10 20,497 0.53 times 11 12 12 14 15 $ $ $ $ $ 16 1,786 28.07 $ 8,292 1,786 1,786 1,786 915$ 2.00 10,800 10,800 20,497 4,576 1.95 14.0 76.8% 16.5% 8.79 39.0% Profitability (7) 6 Earnings per Share (EPS) 7 Price-Earnings Ratio 8 Gross Margin Rate 9 Return on Sales (ROS) 10 Return on Assets (ROA) 11 Return on Equity (ROE) 12 Dividend Yield 11,588 1,847.84 114,986 11.588 11,588 11,588 494 Shares $ 23.46 280.522 280.522 193,948 52,805 1,847.84 23.46 78.8 41.0% 4.1% 6.0% 21.9% 0.0% 1,786 28.07 8,292 1,786 1.786 1.786 849 Shares $ 2.10 10,800 10,800 20,497 4,576 28.07 2.10 13.3 76.8% 16.5% 8.7% 39.0% 0.0% $ (0.17) $ (290.79) 0.096 0.096 0.096 0.096 0.096 0.15 (0.69 0.00 0.00 0.00 0.0 0.00 19 19 20 21 $ 18,174 $ $ 15,304$ 15,304 2.207 24 2.870 Solvency (4) 13 Debt to Assets (aka Debt Ratio) 14 Debt to Equity 15 Times Interest Earned 16 Free Cash Flow 0.72 to 1 2.63 to 1 0.84 to 1 5.33 to 1 5.3 times (535) 163,188 $ 163,188 $ 15,562 $ 21,653 225,248 62,060 1,600 18,174 2.870 15,304 $ 15,304 $ 1,371 $ 2,560 0.84 to 1 5.33 to 1 NA 2.560 0.00 to 1 0.00 to 1 -0.2 times 58,266 0.00 to 0.00 to NA 3,09 415 25 26 $ $ $ $ 21,653 $ $ $ $ $ 27 29 E F a 4 5 6 7 CONDENSED INCOME STATEMENT ($ Millions) $ $ 9 10 11 12 12 Amazon For the Year Ended December 31 2019 Percent 160,408 57.2% 120.114 42.8% 280,522 100.0% 165,536 59.0% 0.0% 114,986 41.0% 100,244 35.7% 201 0.1% 14,541 5.296 1,600 0.6% (832) -0.3% (203) -0.1% 13,976 5.0% 2,374 0.896 14 0.0% 11,588 4.1% Net Product Sales (or Revenue) Net Services Sales or Other Sales Total Net Sales or Revenue Cost of Goods Sold Other Costs of Sales Gross Profit SG&A Expenses (Includes Depreciation Expense) Other Expenses Operating Income Interest Expense (Enter as a positive value) Interest/Investment Income (Enter as a negative value) Other (Income)/Expense (If income enter as negative value) Income before Income Taxes Income Tax Provision (if expense enter as positive value) Other (Income)/Expense - After Tux (You may need to reverse sign) Net Income eBay For the Year Ended December 31 2019 Percent 8.292 76.8% 2.508 23.2% 10,800 100.0% 5,971 55.3% 0.0% 8,292 76.8% 5,971 55.3% (114) 1.0% 2,321 21.5% 114 1.0% (2,207) -20.4% (114) 1.0% 1,792 16.6% (415) 2.5% 6 0.0% 1,786 16.5% 14 15 16 17 19 20 21 22 22 25 26 27 29 29 80 As of December 31 2019 Percent 975 5.496 1,850 10.2% 700 3.8% $ $ 81 CONDENSED BALANCE SHEET ($ Millions) Assets Cash and cash equivalents Marketable Securities / Short term investments Receivables, net of allowance Inventory Other Current Assets Total Current Assets Property, Plant & Equipment - net Goodwill and/or Other Assets Total Assets As of December 31 2019 Percent 36,092 16.0% 18,929 8.4% 20,816 9.2% 20,497 9.196 0 0.0% 96,334 42.8% 72,705 32.3% 56,209 25.0% 225,248 100.0% 22 32 35 1,181 4,706 1,510 11,958 18,174 6.5% 25.9% 8.3% 65.8% 100.0% 36 37 s S 29 A c E F G 114 17 19 19 20 Interest Expense (Enter as a positive value) Interest/Investment Income (Enter as a negative value) Other (Income)/Expense (If income enter as negative value) Income before Income Taxes Income Tax Provision (if expense enter as positive value) Other (Income)/Expense - After Tux (Yinu may need to reverse sign) Net Income 1,600 (832) (203) 13,976 2,374 14 11,588 0.6% -0.3% -0.1% 5.0% 0.896 0.0% 4.1% (2.207) (114) 1,792 (415) 6 1,786 1.0% -20.4% 1.096 16.6% 2.5% 0.0% 16.5% 21 $ $ 25 26 27 29 As of December 31 2019 Percent 975 5.496 1,850 10.2% 700 3.8% $ $ 30 31 32 38 CONDENSED BALANCE SHEET ($ Millions) Assets Cash and cash equivalents Marketable Securities / Short term investments Receivables, net of allowance Inventory Other Current Assets Total Current Assets Property, Plant & Equipment - net Goodwill and/or Other Assets Total Assets As of December 31 2019 Percent 36,092 16.0% 18,929 8.4% 20,816 9.2% 20,497 0 0.0% 96,334 42.8% 72,705 32.3% 56,209 25.0% 225,248 100.0% 9.1% 34 35 26 37 29 29 1,181 4,706 1,510 11,958 18,174 6.5% 25.9% 8.396 65.896 100.0% $ 41 Current Liabilities Accounts Payable Other Current Liabilities Total Current Liabilities Long-term debt (LTD) Other Long-term Liabilities Total Liabilities Common Stock @ Par Value/Share Retained Earnings Other Equity (Incl. Treasury Stock APIC, & other) Total Owners' Equity Total Liabilities & Owners' Equity 45 47,183 40,629 87,812 23,414 51,962 163,188 5 31,220 30,835 62,060 225,248 20.9% 18.0% 39.0% 10.4% 23.1% 72.4% 0.0% 13.9% 13.7% 27.6% 100.0% 270 3,796 4,066 6,738 4,500 15,304 2 17,754 (14,886) 2,870 18,174 1.5% 20.9% 22.4% 37.1% 24.8% 84.2% 0.0% 97.7% -81.896 15.8% 100.0% 46 $ S 50 51 52 M N Amazon VS. eBay 1 2 a 4 From Most Recent Period - Horizontal Analysis Tab Amazon eBay Numerator Denominator Ratio Numerator Denominator Amazon Denominator 5 Ratio Numerator 6 Liquidity (5) $ $ $ 7 8 Liquidity Ratios - Ability to pay currently maturing obligations: Current Ratio = Current Assets - Current Liabilities Quick Ratio = (Cash, marketable securities, and receivables) = Accounts Receivables Turnover = Net Sales - Average Accounts Receivable Inventory Turnover = Cost of Goods Sold - Average Inventory Asset Turnover = Net Sales : Average Total Assets 9 96.334 $ 75,837 280,522 165,536 280,522 87,812 87,812 18,747 18,836 193,948 1.10 to 1 0.86 to 1 14.96 times 8.79 times 1.45 times 4,706 3,525 10,800 2,508 10.800 $ 4,066 1.16 to 1 4,066 0.87 to 1 706 15.30 times N/A N/A 20.497 0.53 times 1 Current Ratio 2 Quick Ratio 3 Accounts Receivables Turnover Inventory Turnover 5 Asset Turnover 96,334 75,837 280.522 165,536 280,522 87,812 87,812 18,747 18,836 193,94 10 11 12 1a 14 $ $ $ $ 15 16 Profitability Ratios - The ability to generate income: Earnings per Share (EPS) = (Net Income - Preferred Dividends) - Average Price-Earnings Ratio = Market Price Per Share of Stock + Earnings Per Gross Margin Rate = Gross Margin = Net Sales or (Net Sales - Cost Return on Sales (ROS) = Net Income - Net Sales Return on Assets (ROA = Net Income - Average Total Assets Return on Equity (ROE) = Net Income + Average Total Equity Dividend Yield - Dividends per Share - Market Price per Share 11,588 1.847.845 114,986 11,588 11,588 11,588 491 $ 5.00 280,522 280,522 193,948 52,805 23.62 369.6 41.0% 4.1% 6.0% 21.9% 1,786 28.07 $ 8,292 1,786 1,786 1,786 915$ 2.00 10,800 10,800 20,497 4,576 1.95 14.0 76.8% 16.59 8.7% 39.0 Profitability (7) Earnings per Share (EPS) 7 Price-Earnings Ratio 8 Gross Margin Rate 9 Return on Sales (ROS) 10 Return on Assets (ROA) 11 Return on Equity (ROE) 12 Dividend Yield 11,588 1,847.84 114,986 11.588 11.588 11,588 17 494 Shane 23.46 280,522 280,522 193.94 52,805 1.847.84 19 19 20 21 22 2a $ $ 24 25 26 Solvency - Ability to meet all obligations (over the long-term): Debt to Assets (aka Debt Ratio) = Total Liabilities + Total Assets there are not Debt to Equity = Total Liabilities - Total Owners' Equity (these are Times Interest Earned = (Net Income before Interest & Taxes Expense) = Free Cash Flow = Cash Provided by Operations - PP&E 163,188$ 163,188 13,976 225,248 62,060 1,600 0.72 to 1 2.63 to 1 0.2 times (36,613) 15,304 15,304 2.207 18,174 2,870 415 0.84 to 1 1 5.33 to 1 5.3 times (535) Solvency (4) 13 Debt to Assets (aka Debt Ratio) 14 Debt to Equity 15 Times Interest Earned 16 Free Cash Flow $ $ $ $ 163,188 $ 163.188 15,562 $ 21,653 225.24 62.060 1,600 $ $ 27 29 29 G H J K M N P 0 R S T U v w Y 1 Professor's Ratios Student Comparison 2. 3 4 d - Horizontal Analysis Tab eBay Numerator Denominator Amazon Denominator Amazon Difference eBay Denominator eBay Difference 5 Ratio Numerator Ratio Numerator Ratio 6 Liquidity (5) $ $ 7. 8 $ $ 4,706 $ 4,066 3,525 4,066 10,800 706 2,508 N/A 10,800 20,497 1.16 to 1 0.87 to 1 15.30 times N/A 0.53 times 9 1 Current Ratio 2 Quick Ratio 3 Accounts Receivables Turnover 4 Inventory Turnover 5 Asset Turnover 96,334 75,837 280.522 165,536 280,522 87,812 87,812 18,747 18,836 193,948 1.10 to 1 0.86 to 1 14.96 times 8.79 times 1.45 times 4,706 3,525 10,800 2,508 10,800 4,066 4,066 706 1.16 to 1 0.87 to 1 15.30 times NA 0.00 to 1 0.00 to 1 0.00 times 0.00 times 0.00 times 0.00 to 0.00 to 0.00 tim NA 0.00 time 10 20,497 0.53 times 11 12 12 14 15 $ $ $ $ $ 16 1,786 28.07 $ 8,292 1,786 1,786 1,786 915$ 2.00 10,800 10,800 20,497 4,576 1.95 14.0 76.8% 16.5% 8.79 39.0% Profitability (7) 6 Earnings per Share (EPS) 7 Price-Earnings Ratio 8 Gross Margin Rate 9 Return on Sales (ROS) 10 Return on Assets (ROA) 11 Return on Equity (ROE) 12 Dividend Yield 11,588 1,847.84 114,986 11.588 11,588 11,588 494 Shares $ 23.46 280.522 280.522 193,948 52,805 1,847.84 23.46 78.8 41.0% 4.1% 6.0% 21.9% 0.0% 1,786 28.07 8,292 1,786 1.786 1.786 849 Shares $ 2.10 10,800 10,800 20,497 4,576 28.07 2.10 13.3 76.8% 16.5% 8.7% 39.0% 0.0% $ (0.17) $ (290.79) 0.096 0.096 0.096 0.096 0.096 0.15 (0.69 0.00 0.00 0.00 0.0 0.00 19 19 20 21 $ 18,174 $ $ 15,304$ 15,304 2.207 24 2.870 Solvency (4) 13 Debt to Assets (aka Debt Ratio) 14 Debt to Equity 15 Times Interest Earned 16 Free Cash Flow 0.72 to 1 2.63 to 1 0.84 to 1 5.33 to 1 5.3 times (535) 163,188 $ 163,188 $ 15,562 $ 21,653 225,248 62,060 1,600 18,174 2.870 15,304 $ 15,304 $ 1,371 $ 2,560 0.84 to 1 5.33 to 1 NA 2.560 0.00 to 1 0.00 to 1 -0.2 times 58,266 0.00 to 0.00 to NA 3,09 415 25 26 $ $ $ $ 21,653 $ $ $ $ $ 27 29 E F a 4 5 6 7 CONDENSED INCOME STATEMENT ($ Millions) $ $ 9 10 11 12 12 Amazon For the Year Ended December 31 2019 Percent 160,408 57.2% 120.114 42.8% 280,522 100.0% 165,536 59.0% 0.0% 114,986 41.0% 100,244 35.7% 201 0.1% 14,541 5.296 1,600 0.6% (832) -0.3% (203) -0.1% 13,976 5.0% 2,374 0.896 14 0.0% 11,588 4.1% Net Product Sales (or Revenue) Net Services Sales or Other Sales Total Net Sales or Revenue Cost of Goods Sold Other Costs of Sales Gross Profit SG&A Expenses (Includes Depreciation Expense) Other Expenses Operating Income Interest Expense (Enter as a positive value) Interest/Investment Income (Enter as a negative value) Other (Income)/Expense (If income enter as negative value) Income before Income Taxes Income Tax Provision (if expense enter as positive value) Other (Income)/Expense - After Tux (You may need to reverse sign) Net Income eBay For the Year Ended December 31 2019 Percent 8.292 76.8% 2.508 23.2% 10,800 100.0% 5,971 55.3% 0.0% 8,292 76.8% 5,971 55.3% (114) 1.0% 2,321 21.5% 114 1.0% (2,207) -20.4% (114) 1.0% 1,792 16.6% (415) 2.5% 6 0.0% 1,786 16.5% 14 15 16 17 19 20 21 22 22 25 26 27 29 29 80 As of December 31 2019 Percent 975 5.496 1,850 10.2% 700 3.8% $ $ 81 CONDENSED BALANCE SHEET ($ Millions) Assets Cash and cash equivalents Marketable Securities / Short term investments Receivables, net of allowance Inventory Other Current Assets Total Current Assets Property, Plant & Equipment - net Goodwill and/or Other Assets Total Assets As of December 31 2019 Percent 36,092 16.0% 18,929 8.4% 20,816 9.2% 20,497 9.196 0 0.0% 96,334 42.8% 72,705 32.3% 56,209 25.0% 225,248 100.0% 22 32 35 1,181 4,706 1,510 11,958 18,174 6.5% 25.9% 8.3% 65.8% 100.0% 36 37 s S 29 A c E F G 114 17 19 19 20 Interest Expense (Enter as a positive value) Interest/Investment Income (Enter as a negative value) Other (Income)/Expense (If income enter as negative value) Income before Income Taxes Income Tax Provision (if expense enter as positive value) Other (Income)/Expense - After Tux (Yinu may need to reverse sign) Net Income 1,600 (832) (203) 13,976 2,374 14 11,588 0.6% -0.3% -0.1% 5.0% 0.896 0.0% 4.1% (2.207) (114) 1,792 (415) 6 1,786 1.0% -20.4% 1.096 16.6% 2.5% 0.0% 16.5% 21 $ $ 25 26 27 29 As of December 31 2019 Percent 975 5.496 1,850 10.2% 700 3.8% $ $ 30 31 32 38 CONDENSED BALANCE SHEET ($ Millions) Assets Cash and cash equivalents Marketable Securities / Short term investments Receivables, net of allowance Inventory Other Current Assets Total Current Assets Property, Plant & Equipment - net Goodwill and/or Other Assets Total Assets As of December 31 2019 Percent 36,092 16.0% 18,929 8.4% 20,816 9.2% 20,497 0 0.0% 96,334 42.8% 72,705 32.3% 56,209 25.0% 225,248 100.0% 9.1% 34 35 26 37 29 29 1,181 4,706 1,510 11,958 18,174 6.5% 25.9% 8.396 65.896 100.0% $ 41 Current Liabilities Accounts Payable Other Current Liabilities Total Current Liabilities Long-term debt (LTD) Other Long-term Liabilities Total Liabilities Common Stock @ Par Value/Share Retained Earnings Other Equity (Incl. Treasury Stock APIC, & other) Total Owners' Equity Total Liabilities & Owners' Equity 45 47,183 40,629 87,812 23,414 51,962 163,188 5 31,220 30,835 62,060 225,248 20.9% 18.0% 39.0% 10.4% 23.1% 72.4% 0.0% 13.9% 13.7% 27.6% 100.0% 270 3,796 4,066 6,738 4,500 15,304 2 17,754 (14,886) 2,870 18,174 1.5% 20.9% 22.4% 37.1% 24.8% 84.2% 0.0% 97.7% -81.896 15.8% 100.0% 46 $ S 50 51 52
