Corporate Performance Report

Name: Garry Bray Jr.

Ashford University

Course: BUS401

Instructor: Richard Burke

Date: 26 October 2020

Amazon’s Financial Report Review

In this document, I have chosen Amazon Company to be the organization which I look at its financial statements keenly and review them. Amazon is one of the companies considered to be very valuable globally because it dominates the e-commerce business. In addition to that, it has in the recent days begun to generate disruptions in the other areas such as in the retail business. After checking its financial statements, I realized that Amazon is a one of a kind company. The company puts more focus on its growth despite the fact that it has already achieved the success that it now enjoys in its market share internationally. The company makes sure that it re-invests large amounts of cash back into the business and this is one of the factors that makes it stand out and continue to prosper (Franek, K., 2020).

I will now begin by evaluating the financials of Amazon in the year 2019. In 2019, the company had an operating cash flow of 39 billion dollars. However, I went ahead and calculated the free cash flow and accustomed the company for a lease financed investment together with compensations that are based on their stock, I realized that its free cash flow becomes negative. Nonetheless, the company is still able to operate very well and efficiently because Amazon Company has made several high level investments in its logistics, capacity of server as well as its fulfillments. Amazon went ahead and sold their products to consumers directly for reduced prices and also gave offers to their clients to order their products for free shipping which made them incur some losses in the process. I say this because I noticed that most of their profits come from AWS and third-party seller services.

Moving ahead to the balance sheet of Amazon Company, I realized that in 2019, its assets had jumped from 63 billion dollars 225 billion dollars. This assumed a positive growth by 38% from 2018. I checked the factors that lead to this jump and realized that the GAAP of United States had changed which wanted all companies to show their assets as well as obligations from their operating leases in their balance sheet. Moreover, there were various important changes which led to an increase in the growth in property together with equipment and investments that are short term. The factors that mainly brought up the increased assets came from changes in the leasing accounting. The company also had an increased capital from compensations relating to stock.

When it comes to the other accounting statement, which is the income statement, I was very fascinated by what I saw. In 2019, Amazon Company had a pretty good year since its revenues had positively surged. By this, I mean that Amazon’s revenue heightened by about 48 billion dollars, this accounted to 20% growth to 281 billion dollars. One of the features of Amazon, online stores became the biggest driver of this growth which included the products that they sold to their customers directly. In addition to that, the third-party seller services and AWS also made huge contributions to their revenue growth by contributing 11 billion dollars and 9 billion dollars to the revenue respectively. In this financial year, the only stream of revenue that did not grow at all was the physical store revenue.

Now that we have analyzed the financial statements of Amazon in the last year, now we are going to compare 2019 with the last three years. The revenues of Amazon have been increasing regularly since 2016. For instance, the revenues that Amazon Company had in 2016 were about 135 billion dollars, in 2017 it was 177 billion dollars, in 2018 they had 232 billion dollars and in 2019 it was 280 billion. As we can see from the figures, the trend is increasing gradually over the years. This simply means that the company is good at its job ensuring that they have a steady increase. When we compare the balance sheet over the last three years, we can also see that cash on hand, total assets, total liabilities, and shareholder equity all increase steadily. In 2016, total liabilities and shareholders’ equity increased from 83 billion up to 225 billion in 2019 (Macrotrends LLC, 2020).

I realized that one of strongholds that Amazon Company has over its competitors in the market share is in its ability to competently combine Artificial Intelligence and its software with physical technology which includes warehouses, servers and robotics. From its balance sheet, I noticed that the company has a significant amount of investment on property and equipment which are important factors in the success of any business. Between the years 2018 and 2019, I realized that the United States accounting regulations that needs companies to involve their long-term operating leases in the balance sheet went a long way to boost the figures in the balance sheet as we see an additional 25 billion (Franek, K., 2020). A company like Amazon works internationally and therefore is required to make as much profit as we have seen in this analysis.

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