DIs one and 2

Student 1

Asset Management is the act of expanding all out abundance over the long haul by procuring, keeping up with, and exchanging ventures that can possibly increase company value. Asset Management experts  perform this help for small and big companies. They may likewise be called portfolio administrators or financial consultants. Many work freely while others work for a venture bank or other financial establishment.

The Accounts Payable Turnover formula demonstrates transient liquidity and shows the rate at which the organization can pay its suppliers. ETSY is somewhat higher than Amazon in 2015 yet had an altogether higher proportion in 2014 and 2013 showing ETSY pays its debt more rapidly than Amazon.

It is calculated Purchases = Cost of revenue + Ending inventory – Starting inventory Accounts payable turnover ratio = Total purchases / Average accounts payable

Profitability ratios are financial metrics used by analysts and investors to measure and evaluate the ability of a company to generate income relative to revenue, balance sheet assets

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, operating costs, and shareholders’ equity

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 during a specific period of time. They show how well a company utilizes its assets to produce profit and value to shareholders. Leverage ratios. A leverage ratio is any of a few financial measurements that express how much capital comes as debts (loans) or surveys the capacity of an organization to meet its monetary obligation. ETSY has a comparative Debt ratio as Amazon yet is roughly multiple times lower in the obligation to value proportion. This shows Amazon is utilizing influence to buy resources at a pace of 3:1 looked at to ETSY.

Debt to equity ratio = Total Debt / Total Equity Debt ratio = Total Debt / Total Assets A high ratio indicates that the bulk of asset purchases are being funded with debt.

Amazon is a proper optimistic friend for Etsy in that it gives a positive financial good example. Amazon's consistent ROE is something exceptionally alluring to financial backers. ETSY can likewise be glad that their Accounts Payable Turnover Ratio has been practically twofold Amazon's in 2014 and 2013. The recent drop in 2015 ought to be investigated further to assess the reason. Ultimately, ETSY can see that utilizing more influence is entirely conceivable while going on with a comparable Debt Ratio as this is the thing is noticed right now in Amazon.

 

References:

Ross S. A., Westerfield R. W., & Bradford D. J. (2019).  Fundamentals of Corporate Finance. (12th ed.) New York, NY: McGraw-Hill Education.

Wilkins, G. (2020). 6 Basic Financial Ratios and What They Reveal. Retrieved from https://www.investopedia.com/financial-edge/0910/6-basic-financial-ratios-and-what-they-tell-you.aspx

Student 2

To ascertain whether Amazon is an appropriate aspirational peer for Etsy in that it provides a positive financial role model, evaluate trends in both Etsy and Amazon’s financial performance, using peer group analysis and ratio analysis to evaluate these firms’ relative performance in the following three areas:

asset management

profitability

use of leverage

Individuals use numerous factors when comparing and analyzing the financial trends and ratio documentation amongst Amazon and Etsy. Amazon buys merchandise from retailers to resale to other consumers. However, the company discovered a cost-effective consumer base in Etsy’s customer base interested in handmade items. More significantly, each company receives most of its revenue from online retail sales. Amazon has taken the idea of handmade items originally started by Etsy. They incorporated Handmade by Amazon in 2015 and launched more than 80,000 items (Sun, 2015).

Etsy is a relatively successful company. Therefore, in this assessment, we will utilize ratio evaluation and peer group analysis to make performance determinations in asset management, profitability, and use of leverage. Unfortunately, there are no two identical firms (Ross et al., 2019). For peer group analysis, the intent is to establish a standard to compare Amazon and Etsy. There will also be an examination of total assets turnover ratios for assessing asset management, debt to equity ratio for analyzing leverage, and return on total assets for probability.

Examination of Total Assets Turnover:

Amazon 2015		Etsy 2015
Sales	$107,006,000,000	Sales	$273,499,000
Total Assets	$65,444,000,000	Total Assets	$553,061,000
Turnovers	1.64	Turnovers	0.49

(M2D1 Tables, n.d.)                                                             (Etsy, Inc., 2015)    

When conducting a comparison, Amazon makes $1.64 in sales compared to Etsy’s $.49 for each dollar of assets. As it pertains to asset management, Amazon seems to have preferable asset management. Although these results are not necessarily a substantial benchmark, products such as plant machinery are still part of the total assets. More significantly, Etsy does not presently make goods or store massive quantities of goods in warehouses for sale compared to Amazon relying heavily on such business practices.

Return on Total Assets:

Amazon 2015		Etsy 2015
Net income	$596,000,000	Net Income	-$54,063,000
Total Assets	$65,444,000,000	Total Assets	$553,061,000
Profitability	.01 or 1%	Profitability	(.10) or -10%

In examining and comparing the return on assets for probability, Amazon has a 1 percent profit. On the other hand, Esty has taken a loss in the past three years (Etsy Inc., 2015). In 2015, Etsy experienced a 10 percent loss (Etsy, Inc., 2015). However, Etsy may be able to ease some of its diminishing returns as the company continues to gain more investments.

Debt-to-Equity Ratio to Determine Leverage:

Amazon 2015		Etsy 2015
Total Debt	$52,060,000	Total Debt	$222,563,000
Stockholder Equity	$13,384,000	Stockholder Equity	$330,498,000
Leverage	3.89	Leverage	0.67

                                                (M2D1 Tables, n.d.)                                     (Etsy, Inc., 2015)    

Amazon has a higher use of debt in its current capital structure when comparing leverage. As a result, they have a higher level of financial leverage (Ross et al., 2019). This situation raises the rewards and potential risk for investors. However, the low number may indicate more security for Etsy’s stakeholders as the firm launches publicly.  

Ultimately, identifying the contrast between Amazon and Etsy will likely cause rivalry. The risks related to Etsy’s lower figures are simple to explain by the market Etsy primarily focuses its efforts, which are handmade goods. There needs to be an extensive degree of financial data collected, analyzed, and compared to examine Amazon and Etsy in-depth. The balance sheets and Form 10-K statements for Amazon and Etsy do not display the financial information in a format to directly compare the information.

Katrina

References:

Etsy, Inc. (2015). Form 10-K.

            https://www.sec.gov/Archives/edgar/data/1370637/000137063716000032/etsy12

            31201510k.htm#s47292EF3EF7FC80B95CFFDF6504245EB

M2D1 Tables: Etsy versus Amazon in the market for ‘artisan’ goods. (n.d.).

            https://excelsior.instructure.com/courses/28284/pages/m2d1-tables-etsy-versus-

            amazon-in-the-market-for-artisan-goods?module_item_id=2462319

Ross S. A., Westerfield R. W., & Bradford D. J. (2019). Fundamentals of corporate

            finance. (12th Ed.) New York, NY: McGraw-Hill Education.

Sun, L. (2015, October 12), Amazon Inc vs. Etsy Inc: Will Goliath kill David?

                https://www.fool.com/investing/general/2015/10/12/amazon-inc-vs-etsy-inc-will-

            goliath-kill-david.aspx