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Mohammed Imran Ali Baig

STUDENT ID

AMAZON.COM INC.

Overview of Amazon.com Inc.

Founded by Jeff Bezos, upon reading a report on internet based business returns
Two Major operational segments: North America and International
Amazon is the largest internet-based retailer in the United States
Amazon was launched with the online retail sells of books and Movies & TV shows
Amazon sells products under various categories today. Even after two decades
company is still finding innovative ways of operating business
Pioneered Internet-based retailer and Largest in USA
Company offers own and third-party products
Primary source of revenue is the sale of a wide range of products and services to
customers
Four principles: customer obsession rather than competitor focus, passion for
invention, commitment to operational excellence, and long-term thinking
Enable sellers to sell their products online, enable other developers and businesses
through Amazon Web Services and enable content creators & independent
publishers get an online platform to develop and sell.

Overview Continued

Competitors are physical world retailers and publishers to technology


developers and other e-commerce portals.

Suppliers sellers, enterprises and content creators

Customers get access through online portal

The company has a broad variety of products to offer and has found innovative
products to sell.

This innovative business has been replicated by e-commerce portals and have
been successful.

Suppliers and consumers go to other e-commerce businesses, if best price is


not provided

http://www.reuters.com/finance/stocks/companyProfile?symbol=AMZN.O

https://www.sec.gov/Archives/edgar/data/1018724/000101872415000006/amzn20141231x10k.htm#s82C42D977EC46522480F52F1D4A24BC7

Amazon Business Initiatives

Financial focus is on long-term, sustainable growth

To Improve sales - improving all aspects of the customer experience, including


lowering prices, improving availability, offering faster delivery and performance
times, increasing selection, increasing product categories and service offerings,
expanding product information, improving ease of use, improving reliability, and
earning customer trust

https://www.sec.gov/Archives/edgar/data/1018724/000101872415000006/amzn20141231x10k.htm#s82C42D977EC46522480F52F1D4A24BC7

Stated Financial Targets Of Amazon

To reduce our variable costs per unit and work to leverage our fixed costs

Variable costs include product and content costs, payment processing and related transaction
costs, picking, packaging, and preparing orders for shipment, transportation, customer service
support, costs necessary to run AWS, and a portion of marketing costs

Fixed costs include the costs necessary to run technology infrastructure; to build, enhance, and
add features to the websites and web services, their electronic devices, and digital offerings;
and to build and optimize their fulfillment centers

Fixed costs include the costs necessary to run our technology infrastructure; to build, enhance,
and add features to our websites and web services, our electronic devices, and digital offerings;
and to build and optimize our fulfillment centers

Increase direct sourcing, increase discounts from suppliers, and reduce defects in processes.

Minimize growth in fixed costs, to improve process efficiencies and maintain a lean culture.

https://www.sec.gov/Archives/edgar/data/1018724/000101872415000006/amzn20141231x10k.htm#s82C42D977EC46522480F52F1D4A24BC7

Identified Risks

Online portals are a major competition and to stay in business the company
must evolve rapidly.

Risk of expansion: organizations ability to manage growth

Risk of new segments: Profitability low and consumer trust takes time

National and International Risks

Risk due to terminating agreements

Risk due to new acquisitions

https://www.sec.gov/Archives/edgar/data/1018724/000101872415000006/amzn20141231x10k.htm#s82C42D977EC46522480F52F1D4A24BC7

Financial History Amazon

Profit and Loss statement (Income statement)

Gradual but differential increase in revenue and expenses till 2015

http://financials.morningstar.com/income-statement/is.html?t=AMZN&region=usa&culture=en-US

Balance Sheet - Analysis

ASSETS ANALYSIS

Increase in Cash and tangible assets


Overall increase in assets (also
goodwill)
Decrease in short-term assets in 2014
Increase in all liabilities and exponential
increase in Long-term and Capital
leases in 2014
No change in treasury stock from 2012
Reduction in retained earnings in 2014
due to loss

http://financials.morningstar.com/bala
nce-sheet/bs.html?
t=AMZN&region=usa&culture=en-US

Balance Sheet Analysis


Contd

LIABILITIES ANALYSIS

Increase in Cash and tangible assets

Overall increase in assets (also


goodwill)

Decrease in short-term assets in 2014

Increase in all liabilities and


exponential increase in Long-term and
Capital leases in 2014

No change in treasury stock from


2012

Reduction in retained earnings in 2014


due to loss

http://financials.morningstar.com/
balance-sheet/bs.html?
t=AMZN&region=usa&culture=enUS

CASH FLOW Analysis -

CASH FLOW Analysis Contd.

Financial Analysis

Financial Ratios

Return on Sales and return on


assets decrease till 2012, increase
in 2013 and decrease in 2014.

Asset turnover and financial


leverage gradual Increase

Return on equity drastic decrease


till 2012, slight increase in 2013
and becomes negative in 2014.

Major characteristics are


noticeable are increase in
operating and other expenses

Increase in asset to equity ratio

Conclusion:
Tough competition (easy
mimicking)
Increase in assets; shows
determination to provide
better for organization to
succeed

Most Recent MD&A Overview