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    Financial Analysis of Apple, Google, and Amazon

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    1. Choose any three publicly traded companies as long as you have at least one company that deals with a product and at least one company that deals with a service.

    2. Next, go to the web site of each company and find their annual report to shareholders. You will generally find this in "investor" or "shareholder" information. You may need to dig in by several layers before you come to financial statements. If the company has a search feature on its web site, enter "annual report."

    3. For each company answer these questions: How much cash is available for the company to pay its current debts? Is the company in trouble or in good shape? [Hint: compare Current Assets with Current Liabilities. Assume that all Current Assets will be converted into cash before all of the Current Liabilities become due.] You will need to provide supporting details such as numbers from the financial statements.

    4. Is each company increasing or decreasing its investment in its operations. [Hint: look at "Cash Flow from Investing Activities on the Statement of Cash Flows. Then note the change in Non-Current Assets on the Balance Sheet from one year to the next.]

    5. How well is each company doing in its operations? [Hint: Look at the three year trend in Net Income on the Income Statement and at Cash Flow from Operating Activities on the Statement of Cash Flows.]

    6. Finally, based on your answers to the above questions, give each of the presidents of your companies a letter grade (A, B, etc) for his/her performance over the most recent year reported in the financial statements. Explain your grade.

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    Solution Preview

    1. We will look at Apple, Google and Amazon. Apple deals with products and the other two provides services.


    Google's annual report is here: http://investor.google.com/documents/20101231_google_10K.html

    Apple: http://investor.apple.com/secfiling.cfm?filingID=1193125-10-238044&CIK=320193

    Amazon: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9OTA4OTN8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1

    3. To see how much cash (i.e. current asset) they have, we look under the current asset part of the balance sheet. Open up the three annual reports provided and use search to find the current asset section. We see that

    Google: 41,562

    Apple: 41,678

    Amazon: 13,747

    All figures are in millions.

    Next, we look at the current liability of each of them.

    Google: 9,996

    Apple: 20,722

    Amazon: 10,372

    Next, we compute the difference, that is, if all three companies are required to pay their debts, how much money will they have after ...

    Solution Summary

    Financial Analysis of Apple, Google, and Amazon