dolution

dolution.

The incredible growth of Amazon.com has put fear into the hearts of traditional retailers. Its stock price has soared to amazing levels. However, in 2001 many investors were very concerned about whether Amazon would survive since it had never earned a profit, and it was burning through cash. Some investors sold, but others decided to hold on to their investment in the company’s stock. The following information is taken from the 2001 and 2004 financial statements of Amazon.com.

Save your time - order a paper!

Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines

Order Paper Now

Instructions

(a) Calculate the current ratio and current cash debt coverage ratio for Amazon.com for 2001 and 2004, and discuss its comparative liquidity.

(b) Calculate the cash debt coverage ratio and the debt to total assets ratio for Amazon.com for 2001 and 2004, and discuss its comparative solvency.

(c) Amazon.com has avoided purchasing large warehouses. Instead, it has used those of others. In order to increase customer satisfaction Amazon may have to build its own warehouses. Calculate free cash flow for Amazon.com for 2001 and 2004, and discuss its ability to purchase warehouses and to finance expansion from internally generated cash.

(d) Based on your findings in parts (a) through (c), can you conclude whether or not Amazon.com’s amazing stock price is justified?

dolution

 
"Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!"