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Amazon.com, Inc. (AMZN) is one of the largest internet retailers in the world. Best Buy, Co. In however, Best Buy sells through both traditional retail

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Amazon.com, Inc. (AMZN) is one of the largest internet retailers in the world. Best Buy, Co. In however, Best Buy sells through both traditional retail stores and the Internet, while Amazon se Amazon Best Buy $19,334 6,647 8,339 11,461 Current assets: Cash Short-term investments Accounts receivable Inventories Other current assets Total current assets Current liabilities: Accounts payable Other current liabilities Total current liabilities $ 1,976 1,305 1,162 5,051 392 $9,886 $45,781 $25,309 18,507 $43,816 $ 4,450 2,475 $6,925 Required: a. Compute working capital for each company, Amazon: $ Best Buy: $ b. Compute the current ratio for each company. Round to one decimal place. Amazon: Best Buy: c. Compute the quick ratio for each company. Round to one decimal place. Amazon: Best Buy: d. Can the working capital be usefully compared between the two companies? Which of the following Yes, working capital is a good measure for comparing the liquidity of two companies becaus e. Which company has the greater debt-paying ability according to the current ratio? Best Buy Best Buy Which company has the greater short-term debt-paying ability according to the quick ratio? Amazon g. Why are the results different between (e) and (f)? (Hint: Perform a vertical analysis of the currer Amazon Best Buy Current assets: Cash % % % % Short-term investments Accounts receivable Inventories % % % % Other current assets % % Total current assets % % Amazon has % of its current assets consisting of cash and short-term investments, comp its current assets in inventory, while Amazon only has 25.0% of current assets in inventory. This differ relationship between the current and quick ratios to diverge between the two companies. Q. Why are the results different between (e) and inti Performa vertical analysis of the current) Rount to deal Amazon Best Buy Current assets: Ch Short-term investments Accounts receivable Inventories Othat current assets Total current assets Amazon has 5 of its current assets consisting of cash and short-term investments, compared to for Best. This direct its current assets in inventory, while Amazon oly has 25.0% of current assets in Inventory. This ofference reflects Amprentstricht relationship between the current and quick ratios to diverge between the two companies

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