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Two Year Financial Comparison - Ebay and Amazon.com

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Review the attached EBAY and Amazon.com Balance Statements and discuss the debt and current ratios (Conclusions drawn) for both companies and last two years.

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Review the attached EBAY and Amazon.com Balance Statements and discuss the debt and current ratios (Conclusions drawn) for both companies and last two years.

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For your review, I have attached a formatted MS Word file containing an analyis of the debt and current ratios for Amazon.com and EBay.

Amazon.com / EBay Financial Ratio Review
Financial ratios are a valuable and easy way to interpret the numbers found in a company's financial statements. They can help to answer critical questions such as whether the business is carrying excess debt or inventory, whether customers are paying according to terms, whether the operating expenses are too high and whether the company assets are being used properly to generate income. Financial ratios are also useful in that they can be used as a means of measuring a firm's performance against other companies within their industry, as well as a means for management and interested parties to measure the firm's progress against managements stated goals.
When computing financial relationships such as the debt and current ratios, a good indication of the company's financial strengths and weaknesses becomes clear. Examining these ratios over time provides some insight as to how effectively the business is being operated, while serving to provide interested parties with a certain measure of information that is needed to make well informed investment decisions.
A liquidity ratio, such as the current ratio, measures a company's ability to pay its short-term obligations. Defined by the formula: current ratio = current assets / current liabilities, the current ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, ...

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