Financial plan / business plan

Amount in Dollars

Amazon Financial Plan

Year ended 31 December.

Description Business and Of Type of Business

Amazon Company is a gigantic online-based enterprise that specializes sale of music, books, housewares, electronic products, among other various products. (Aćimović et al., 2020) Jeff Bezos founded the company in the year 1994. Amazon is a multinational business that is based in America, Seattle, Washington. Amazon has been identified as one of the major companies of information technology in the United States. The company began as online bookselling but later expanded to other activities. The company has been influential in both cultural and economic forces globally.

They sell directly to the customers or sometimes through intermediaries between retailers and amazon's customers. Amazon web offers various services, such as cloud computing, artificial intelligence, and data storage. All the services are over the internet. The business that has registered with amazon enjoys easily purchasing, which is free. The registered business may benefit from better pricing and a large discount. The company has been leading to technological innovation globally.

Amazon has been the leading market in electronic book readers (Ito, 2019). Thus, the electronic book's promotion has increased the electronic book's publishing, which has turned the company into a disruptive force in the publishing market. All the company's products are available on its website. The company is a service business and also involves business to business. Moreover, the company has established major investments in mortal and brick. The company promotes transparency am diversity in its business. The company's major companies include Zappos, whole food, pill pack, kiva, and twitch. The company ensures that it educates its employee on in-demand jobs to keep the company growing. Moreover, the company ensures that it highly regard their employees and involve them in decision making. Additionally, the company is involved in corporate social responsibility to make it more appealing to the community.

Business Case

Amazon.com sellers demand funds when they are to expand their branches of Amazon.com business. The expansion can be to add new products in the stock to acquire diversification. However, due to the coronavirus pandemic, Amazon.com company may require additional funds to go through the challenging period. Amazon.com has various sources where it obtains funds, including self-funding; through advertisements, product sales, cloud, and subscription services, amazons make enough money to fund itself. However, to satisfy its running, Amazon.com borrows money from various banks led by Goldman Sachs and Bank of America. The money Amazon.com borrows, it uses it to allocate money to acquisition temporarily. The equity that the company receives provides enough money to act as a source of funds; for instance, the Amazon.com Inc total equity obtained for the quarter ending September 9, 2020, was a total of $82,775m, which was a 25.03% growth of 20,715m yearly (Henao et al., 2020). Equity represents all the company's value from the stakeholders when all the company’s debts are paid and the assets liquidated. The increase in equity is obtained by taking the total assets minus the company's total liabilities—however, Amazon. AMZN-1.06% com Inc. is planning to launch a $2 billion venture-capital fund, which will be internal, and aimed on technology investments to decrease climate change effects (Maio, 2019).

However, to obtain loans from the Bank of America, the organization must not be categorized as a private foundation. It must be following tax-free regulations under segment 501(c)(3) of the Internal Revenue Code. Moreover, organizations should align with the banks funding priorities for education, critical needs, workforce development, and community developments. For the company to benefit from its equity, it should have enough ownership stakes to sell off to investors and have minimum loan debt. Moreover, the requirements to acquire venture-capital the company should have a registered intellectual property, a scalable business model, and a recent assessment that promises a good return.

The risk associated with self-funding as a fund source includes; asset exposure, where the assets are revealed to any generated liability by legal action contrary to the self-funded plan. If Amazon.com opts to borrow funds from banks, its credit score may be negatively affected; the company misses payments. If the payment exceeds 30days, the company may be reported to credit bureaus. However, risks associated with equity as a source of the fund include conflict where not all partners may agree on the same. However, the property may be lost if the company acquires a loan from venture capital. However, equity can be considered the best source of funds since partners can discuss and settle at the same deal, helping avoid conflicts. The cost of capital for the short-term source of funding is very low as compared to long-term debt. The short-term cost of capital may be 10% yearly and 8.5% yearly for the long-term.

Amazon Profit and loss account for the year ended 31 December 2019(amount in dollars)

Dr. Profit and loss account for the year ended 31 December 2019 Cr.

Direct Costs

Amazon company expects a $9000 to $60,000 pay per month for marketing services and a $2.41 and $10 supply cost. Amazon has reported a 916.2 B capital and projects a 988.5B BY 2020.

Reference

Aćimović, S., Mijušković, V., & Milošević, N. (2020). Logistics aspects of goods home delivery: The case of Amazon company. Marketing, 51(1), 3-11. https://doi.org/10.5937/markt2001003a

Henao, E., Cantera, J., & Rzymski, P. (2020). Conserving the Amazon River Basin: The case study of the Yahuarcaca Lakes System in Colombia. Science Of The Total Environment, 724, 138186. https://doi.org/10.1016/j.scitotenv.2020.138186

Ito, J. (2019). It's OK That Amazon Will (Likely) Get the .amazon Domain. Joi Ito's Web. https://doi.org/10.31859/20190625.0600

Maio, L. (2019). Corporate Venture Capital and Corporate Accelerator: Partners to Develop Technology Ecosystem. The Case of Amazon Alexa Fund. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3460230