Please help calculate Amazon.com's actual ratios and evaluate financial performance for 2010 and 2009 (please see list below) using the balance sheet and income statement. Then compare and discuss how these trends may impact the financial condition of each company. What do ratio results mean to management (e.g. a current ratio of 1.30 means the company's current assets are 1.3 times their current liabilities). Based upon the analysis of Amazon.com would you invest in it? Why?
1) Current ratio
2) Acid-test ratio
3) Average collection period
4) Inventory turnover ratio
5) Times interest earned
6) Debt ratio
7) Operating income return on investment
8) Operating profit margin
9) Return on equity
10) Total asset turnover
11) Fixed asset turnover
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From the results it may be determined that Amazon has shown relatively favourable results, for some ratios measures, from 2009 to 2010. Some of its activity ratios showed marked improvements from 2009 to 2010.
However the improving trends were not observed in the profitability ratios. All the profitability ratios showed a marked deterioration from 2009 to 2010. Also ...
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