Read and analyze the "Management Discussions and Analysis of Financial Condition and Results of
Operations" and "Financial Statements and Supplementary Data" sections of your selected company's
annual report. Based on the information found, calculate the relevant ratios and write a 500-750 word
analysis providing an assessment of the following with a determination of whether your company of
choice is favorable or unfavorable:
1. Liquidity
1. The current ratio is a liquidity ratio that measures a company's ability to pay short-term
obligations. It is calculated as a company's Total Current Assets divides by its Total
Current Liabilities. Amazon.com's current ratio for the quarter that ended in Dec. 2019
was 1.10.
2. Amazon.com has a current ratio of 1.10. It generally indicates good short-term financial
strength.
3. During the past 13 years, Amazon.com's highest Current Ratio was 3.09. The lowest was
1.04. And the median was 1.33.
4. NAS:AMZN's Current Ratio is ranked lower than 69% of the 984 Companies in the Retail -
Cyclical industry.
2. Effectiveness
1. The current ratio can give a sense of the efficiency of a company's operating cycle or its
ability to turn its product into cash. Companies that have trouble getting paid on their
receivables or have long inventory turnover can run into liquidity problems because they
are unable to alleviate their obligations. Because business operations differ in each
industry, it is always more useful to compare companies within the same industry.
Acceptable current ratios vary from industry to industry and are generally between 1
and 3 for healthy businesses. The higher the current ratio, the more capable the
company is of paying its obligations. A ratio under 1 suggests that the company would be
unable to pay off its obligations if they came due at that point. While this shows the
company is not in good financial health, it does not necessarily mean that it will go
bankrupt - as there are many ways to access financing - but it is definitely not a good
sign. If all other things were equal, a creditor, who is expecting to be paid in the next 12
months, would consider a high current ratio to be better than a low current ratio,
because a high current ratio means that the company is more likely to meet its liabilities
which fall due in the next 12 months.
3. Leverage
1. This is the expense the company spent on research and development.
2. Research & Development for the trailing twelve months (TTM) ended in Dec. 2019 was
7927 (Mar. 2019 ) + 9065 (Jun. 2019 ) + 9200 (Sep. 2019 ) + 9740 (Dec. 2019 ) = USD
35,932 Mil.
This study source was downloaded by 100000844555733 from CourseHero.com on 04-19-2022 01:27:37 GMT -05:00
https://www.coursehero.com/file/65677698/week-8-projectdocx/
Operations" and "Financial Statements and Supplementary Data" sections of your selected company's
annual report. Based on the information found, calculate the relevant ratios and write a 500-750 word
analysis providing an assessment of the following with a determination of whether your company of
choice is favorable or unfavorable:
1. Liquidity
1. The current ratio is a liquidity ratio that measures a company's ability to pay short-term
obligations. It is calculated as a company's Total Current Assets divides by its Total
Current Liabilities. Amazon.com's current ratio for the quarter that ended in Dec. 2019
was 1.10.
2. Amazon.com has a current ratio of 1.10. It generally indicates good short-term financial
strength.
3. During the past 13 years, Amazon.com's highest Current Ratio was 3.09. The lowest was
1.04. And the median was 1.33.
4. NAS:AMZN's Current Ratio is ranked lower than 69% of the 984 Companies in the Retail -
Cyclical industry.
2. Effectiveness
1. The current ratio can give a sense of the efficiency of a company's operating cycle or its
ability to turn its product into cash. Companies that have trouble getting paid on their
receivables or have long inventory turnover can run into liquidity problems because they
are unable to alleviate their obligations. Because business operations differ in each
industry, it is always more useful to compare companies within the same industry.
Acceptable current ratios vary from industry to industry and are generally between 1
and 3 for healthy businesses. The higher the current ratio, the more capable the
company is of paying its obligations. A ratio under 1 suggests that the company would be
unable to pay off its obligations if they came due at that point. While this shows the
company is not in good financial health, it does not necessarily mean that it will go
bankrupt - as there are many ways to access financing - but it is definitely not a good
sign. If all other things were equal, a creditor, who is expecting to be paid in the next 12
months, would consider a high current ratio to be better than a low current ratio,
because a high current ratio means that the company is more likely to meet its liabilities
which fall due in the next 12 months.
3. Leverage
1. This is the expense the company spent on research and development.
2. Research & Development for the trailing twelve months (TTM) ended in Dec. 2019 was
7927 (Mar. 2019 ) + 9065 (Jun. 2019 ) + 9200 (Sep. 2019 ) + 9740 (Dec. 2019 ) = USD
35,932 Mil.
This study source was downloaded by 100000844555733 from CourseHero.com on 04-19-2022 01:27:37 GMT -05:00
https://www.coursehero.com/file/65677698/week-8-projectdocx/
