Brooklyn College City University of New York

Department of Accounting
Principles of Financial Accounting
Examination of a Corporate Annual Report

Students Name Mohamed Adnan

Please choose a publicly traded company to work on. You may select a company whose
securities are traded on the NYSE, AMEX or NASDAQ. Please do not select a company
that is a financial institution or services company. The company should sell merchandise.
Part I
1. Fill in some basic information about your company.
Name of company Amazon COM INC
Principal exchange where the company trades: Seattle, Washington
Market price of the stock 431.02 as of May 12, 2015 (date)
Annual dividend $1.82 per share
Last dividend paid on January 16, 2015
2. Read the business summaries and managements discussion and analysis (MD&A).
Summarize the remarks (ex. Poor operating results/expansion plans/sale of a
division, etc.)
Amazon aims to focus on long-term, sustainable growth in free cash flow by
increasing operating income and efficiently managing their expenditures. One of their
largest issues is the high variable cost, which they will try to fix by increasing direct
sourcing, discounts from suppliers, and reducing defects in their processes. In
addition, Amazon is seeking to offer more digital payment services. Finally, they are
aiming for an improved inventory turnover and more variability within the inventory.

Page 1 of 4

3. What kinds of products and/or services does the corporation provide/sell?

The corporation hosts the website Amazon.com, which is an internet-based retailer that
sells products such as electronics, apparel, video games, food, toys, jewelry, and
furniture.

4. a. Which accounting/auditing firm audited the financial statements?

Ernst & Young LLP, Independent Registered Public Accounting Firm
b. Did the auditors report indicate any problems or exceptions?
The auditors report indicated that the financial statements of Amazon.com, Inc. were
presented fairly, so there were no problems or exceptions.

5.
a.
Did you find any new terms within the financial statements?
Excess tax benefits from stock-based compensation, Principal repayments of finance
lease obligations, Foreign-currency effect on cash and cash equivalents, Diluted earnings
per share
b.

Did you find the presentation of the financial statements clear? Why or
why not?
The presentation of the financial statements were clear because they were formatted
similarly to the financial statement tables we have been working with during the
semester. They did not have a debit or credit column, but they did have parenthesis
around some of the accounts. Nevertheless, the financial statements were very clear and
understandable.

Page 2 of 4

Part II
Indicate the formula to be used and insert the amounts used in computing each ratio.
Express your answer in suitable units (percentages, decimals etc.)
A. Current ratio
Current Assets/Current Liabilities
31,327/ 28,089 = 1.12

B. Quick ratio
Current assets inventories/ current liabilities
31,327 8,299 / 28089 = 0.82

C. Receivable turnover
Net sales / Accounts receivable
89,041 / 5,612 = 15.87

D. Average days sales uncollected

accounts receivable / net sales x365
(5,612/ 89,041) x 365 = 23 days
E. Inventory turnover
COGS/ Avg Inventory
62,752 /8,299 = 7.561

F. Profit margin
Net income/ net sales
241/ 89,041 = 0.0027

G. Return on assets
Net income / avg total assets
89,041/ 54,505 = 1.63

Page 3 of 4

H. Return on Equity
Net income preferred dividends/ avg common stock holders equity
89041 0 / 6,359 = 14

I. Earnings per share

Net income preferred dividends / weighted avg common shares outstanding
89041- 0 / 462 = 193
J. Debt to equity ratio

K. Dividend yield

L. Price earnings ratio (use price from question 1 and EPS from question 6-i)

Page 4 of 4