Running head: DISCUSSION BOARD FORUM 5
Discussion Board Forum 5
Jessica Potter
Liberty University
Dr. Touhey
BUSI532: Advanced Financial Statement Analysis
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DISCUSSION BOARD FORUM 5
Amazon Discussion
Business firms create financial statements for many helpful reason, one being for the
shareholders to understand the financial position of the business. Financial statements are not
only used to disclose crucial information to shareholders, they are also used to play a role in
aiding investors in assessing management stewardship. Additionally, financial statements ensure
organizational goals are being met by analyzing efforts made by management (Wadesango,
2016). Financial statements are incredibly important for informed decision making.
Reformulation of financial statements helps simplify information so that crucial information can
be easily understood. Amazon is a diverse company that is at a competitive advantage in many
ways. Amazon is a leading online retailer, and its services and features have allowed the
company to compete in several different industries.
Balance Sheet
Amazon’s reformulated balance sheet includes assets and liabilities that consist of cash
equivalents, short term assets, long term debt, accounts payable, along with other long term debt.
Amazon does not participate in dividends, notes payable, or redeemable preferred stock.
Amazon’s reformulated balance sheet shows a steady increase in assets; however, there is also a
steady increase in liabilities as well. Amazon’s costs increase with each new year, as does its
profits.
Income Statement
The reformulation of the income statements for Amazon shows that the operating
revenues for the past five years has dramatically increased. As previously stated, with an increase
comes another increase. Although Amazon has increased operating revenue, its operating
expenses have increased as well. The increase in operating expenses can be noted as a steady
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DISCUSSION BOARD FORUM 5
increase rather than as significant of an increase as operating revenue is. Comprehensive income
for Amazon has increased. However, there was a point in 2014 where a notable decrease was
acknowledged.
Cash Flow
Whether it is operation cash flow, free cash flow, or cash flow from financing cash flow
is incredibly important for businesses. Amazon is a dominant, leading company, and it has
displayed its capabilities of increasing its long term liabilities even though it could have saved
cost on expenses and possibly increased its assets. Operating cash flow has increased for
Amazon as a result of its expansion of services. Amazon’s free cash flow has displayed some
issues in regard to investors. It can be argued that Amazon’s free cash flow does not equate with
the value of its stock.
Conclusion
Amazon is doing very well in the business world, and it continuously working on ways to
increase its profits. With new features and expansion available, Amazon can continue to expect
increasing its profits, stock, assets, and expectedly its liabilities. Amazon could work harder to
decrease to amount that is spent in expenses. Amazon should look into its expenses and evaluate
where costs can be cut to plan for a very profitable year. Proverbs 16:3 tells us, “Commit your
work to the Lord, and your plans will be established” (ESV).
Reformulate Balance Sheet
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DISCUSSION BOARD FORUM 5
2017 2016 2015 2014 2013
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DISCUSSION BOARD FORUM 5
Net operating assets
Operating assets
Working cash
$889.
33
$679.
94
$535.
03
$444.
94
$372.
26
AR
$13,1
64.00
$8,33
9.00
$5,65
4.00
$5,61
2.00
$4,76
7.00
Inventories
$16,0
47.00
$11,4
61.00
$10,2
43.00
$8,29
9.00
$7,41
1.00
Prepaid expenses
Property and
Equipment
$48,8
66.00
$29,1
14.00
$21,8
38.00
$16,9
67.00
$10,9
49.00
Goodwill
$13,3
50.00
$3,78
4.00
$3,75
9.00
$3,31
9.00
$2,65
5.00
Identifiable
intabgible assets
$3,37
1.00
$854.
00
$992.
00
$764.
00
$645.
00
Deferred income
taxes and other assets
$5,111
.00
$3,62
7.00
$2,45
3.00
$1,91
9.00
$1,15
8.00
Total operating
assets
$100,
798.33
$57,8
58.94
$45,4
74.03
$37,3
24.94
$27,9
57.26
Operating liabilities
AP
$34,6
16.00
$25,3
09.00
$20,3
97.00
$16,4
59.00
$15,1
33.00
Accrued expenses
$11,9
49.00
$8,54
2.00
$10,3
72.00
$6,20
7.00
$4,95
2.00
Income taxes payable
$990.
00
$392.
00
$407.
00
$1,02
1.00 $-
Deferred income
taxes & other
liabilities
$6,80
2.00
$4,69
6.00
$2,89
4.00
$2,16
5.00
$2,25
2.00
Total operating
liabilities
$54,3
57.00
$38,9
39.00
$34,0
70.00
$25,8
52.00
$22,3
37.00
Net operating assets
NOA
$46,4
41.33
$18,9
19.94
$11,4
04.03
$11,4
72.94
$5,62
0.26
Financial assets
Cash equivalents
$19,6
32.67
$18,6
54.07
$15,3
54.97
$14,1
12.06
$8,28
5.74
Short term
investments
$10,4
64.00
$6,64
7.00
$3,91
8.00
$2,85
9.00
$3,78
9.00
Total financial
assets
$30,0
96.67
$25,3
01.07
$19,2
72.97
$16,9
71.06
$12,0
74.74
Financial liabilities
Current portion of
long term debt
$6,62
1.00
$5,19
7.00 -
$3,60
0.00
$1,73
6.00
Notes payable $- $- $- $- $-
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DISCUSSION BOARD FORUM 5
AP
$34,6
16.00
$25,3
09.00
$20,3
97.00
$16,4
59.00
$15,1
33.00
Long term debt
$24,7
43.00
$77,6
94.00
$8,22
7.00
$8,26
5.00
$3,19
1.00
Redeemable
preferred stock $- $- $- $- $-
Total financial
liabilities
$65,9
80.00
$108,
200.00
$28,6
24.00
$28,3
24.00
$20,0
60.00
Net financial assets
(obligations)
(NFA/NFO)
$(35,8
83.33)
$(82,8
98.94)
$(9,35
1.03)
$(11,3
52.94)
$(7,98
5.26)
Common
Shareholder's
equity
$10,5
58.00
$(63,
979.00
)
$2,05
3.00
$120.
00
$(2,3
65.00)
Reformulated Income Statement
2017 2016 2015 2014 2013
Operating
revenues
$177,8
66.00
$135,9
87.00
$107,0
06.00
$88,9
88.00
$74,4
52.00
Cost of sales
$111,9
34.00
$88,26
5.00
$71,65
1.00
$62,7
52.00
$54,1
81.00
Gross margin
$65,93
2.00
$47,72
2.00
$35,35
5.00
$26,2
36.00
$20,2
71.00
Operating
expenses
Administrative
expenses
$38,99
2.00
$25,98
9.00
$19,51
6.00
$15,9
57.00
$12,3
16.00
Advertising
$6,300.
00
$5,000.
00
$3,800.
00
$3,30
0.00
$2,40
0.00
Research and
Development
$22,62
0.00
$16,08
5.00
$12,54
0.00
$9,27
5.00
$6,56
5.00
Other expense
income
$(406.
00)
$(371.
00)
$(680.
00)
$(295.
00)
$(241.
00)
Total operating
expenses
$67,50
6.00
$46,70
3.00
$35,17
6.00
$28,2
37.00
$21,0
40.00
Taxes
Taxes as reported
$3,806.
00
$3,892.
00
$1,568.
00
$(111.
00)
$506.
00
Tax on financial
items & other
operating income 40.94 36.61 60.59 0 31.82
Total tax on $3,846. $3,928. $1,628. $(111. $537.
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DISCUSSION BOARD FORUM 5
operating income 94 61 59 00) 82
Operating income
before tax
$(1,57
4.00)
$1,019.
00
$179.0
0
$(2,00
1.00)
$(769.
00)
Operating
income from
sales (after tax)
$(5,42
0.94)
$(2,90
9.61)
$(1,44
9.59)
$(1,89
0.00)
$(1,30
6.82)
Other operating
income (before
tax items) 4106 4186 2233 178 745
Other operating
income (after tax
items)
Currency
translation gains
$378.0
0
$(1,00
1.00)
$(722.
00)
$(512.
00)
$63.0
0
Operating
income (after
tax)
Financing
income (expense)
Interest income 202 100 50 39 38
Interest expense -848 -484 -459 -210 -141
Translation
adjustment 533 279 210 -325 63
Net income 3033 2371 596
$241.
00
$274.
00
Other income
expense -32 17 -7 -1 -9
Other
comprehensive
loss 501 -262 212 -326 54
Net unrealized
gains -32 17 -7 -1 -9
Comprehensive
income 3357 2038 595 -412 373
Reformulated Cash Flow
2017 2016 2015 2014 2013
Operating
income
$(5,42
0.94)
$(2,90
9.61)
$(1,4
49.59)
$(1,8
90.00)
$(1,3
06.82)
NOA
$46,4
41.33
$18,9
19.94
$11,4
04.03
$11,4
72.94
$5,62
0.26
$27,5
21.40
$7,51
5.91
$(68.
91)
$5,85
2.68
Free cash flow $(32,9 $(10,4 $(1,3 $(7,7 -
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DISCUSSION BOARD FORUM 5
42.34) 25.52) 80.68) 42.68)
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