The incredible growth of Amazon.com has put fear into the hearts of traditional retailers. Amazon's stock price has soared to amazing levels. However, it is often pointed out in the financial press that it took the company several years to report its first profit. The following financial information is taken from a recent annual report.

Case 4: Amazon.com The incredible growth of Amazon.com has put fear into the hearts of traditional retailers. Amazon's stock price has soared to amazing levels. However, it is often pointed out in the nancial press that it took the company several years to report its rst prot. The following nancial information is taken from a. recent annual report. I $ in millions Current Year Prior Year Current assets $ 31,327 $ 24,625 Total assets 54,505 40,159 Current liabilities 28,089 22,9 80 Total liabilin'es 43,764 30,413 Cash provided by operations 6,842 5,475 Capital expenditures 4,893 3,444 Dividends paid Net income (loss) (241) 274 Sales 88,988 74,452 Instructions (a) Calculate free cash ow for Amazon for the current and prior years, and discuss its ability to nance expansion from internally generated cash. Thus far Amazon has avoided purchasing large warehouses. Instead, it has used those of others. It is possible, however, that in order to increase customer sasfaction the company may have to build its own warehouses. If this happens, how might your impression of its ability to nance expansion change? (b) Discuss any potential iinplicaons of the change in Amazon's cash provided by operations from the prior year to the current year. _ _ _ _ _ _ _