Company Name: Nike
Stock Ticker: NKE
Industry and Brief Description: NIKE Inc was incorporated in 1967 under the laws of the
State of Oregon. Their principal business activity is the design, development and worldwide
marketing and selling of athletic footwear, apparel, equipment, accessories and services. d d d d d
d d d d d d d d d d d d d d d d d d d d
Valuation Policies: Nike uses adjusted historical cost for their inventory valuation. “As the
firm consumes the service potential of an asset, the firm expenses the consumed portion (that
is, the asset is reduced and an expense is increased).” Additionally, Nike uses the lower of
cost or net realizable value method meaning, the inventory is valued at the lower of cost or the
amount it can sell the goods for. I think this is the best way to value inventory because goods
are constantly being bought and sold, the prices frequently changing and raw materials,
transportation costs, etc. are included in inventory as well.
I have chosen Amazon for my company. My company's stock ticker is AMZN. Amazon is
currently in the e-commerce retail industry. Amazon started in 1994 in Bellevue, Washington.
Amazon participates in e-commerce retail which catalogues millions of products from
thousands of different suppliers around the world for purchase by consumers. Amazon has
pioneered one-day delivery of many of their products through their Prime service, which is a
monthly subscription. Amazon has many regional warehouses around the world and currently
services 58 countries. By pioneering ultra-fast shipping and delivery, Amazon has grown to
be the biggest e-commerce giant in the United States.
The inventory line item from Amazon's balance sheet is accounted for at first-in, first-out.
The valuation method is lower of cost or market and net realizable value. I believe that lower
of cost or market is the best way to ensure that investors are receiving the most accurate
information and considers the principle of conservatism. Using first-in, first-out is the most
accurate way to account for inventory cost when it comes to time-relevant distribution
methods from their consumer ordering/fulfillment process. There are many perishable items
on Amazon's product lists such as food, paint, chemicals, etc. Many of these have expiration
dates or shelf lives and the oldest must be fulfilled to a consumer as soon as they are ordered
to ensure that Amazon's inventory isn't written down because of the expiration.
The company I chose to do my project on is Disney "DIS"; they are in the entertainment
business. They not only create animated movies but action like marvel and Lucasfilm's,
storefronts, streaming services, amusement parks, and hotels/resorts. Their closing stock price
as of July 7, 2022, is $97.43.
After looking over their balance sheet what stood out to me the most was that in 2021 their
cash and short-term investment growth decreased to -10.91% and the year before it was up
+229.11%. That is a huge difference especially since they were so high in the green and
dropped into the red. This decrease is due to the world opening back up again. Since more
families are able to leave the house their projected subscriber numbers were off by millions.
In 2020 it was obviously up due to closures and it was literally pure luck that they released
DISNEY+ before the pandemic in late 2019. Due to the rising prices everywhere, streaming
services are the first to go since it is not a necessity. Amazon is an e-commerce site that
allows you to buy just about anything and if you pay for the Prime membership can enjoy
Audible, free shipping, music and much more. It was founder by Jeff Bezos on July, 5 1994 in
Bellevue, Washington. d Andy Jassy is the current president and CEO.
One thing that stands out to me on the balance sheet is that they have no short-term debt for
2021, long-term debt of $9,574 and a total for both short-term and long-term debt of $15,923.
All other years the numbers add up to the totals, but in 2021 there is about 6,350 of
unaccounted for debt. d Financial information is supposed to be accurate, but for the life of me
I cannot find any other information as to why they would have a discrepancy like this. d Maybe
work was too rough tonight for me or I need to take another look on a different site. d
I selected Netflix Inc. (NASDAQ: NFLX) in the entertainment industry for my company
evaluation project. Netflix provides entertainment content through their video streaming
platform via the internet for a paid subscription, allowing subscribers to stream unlimited
content, anytime, anywhere. They were the first of their nature and remain at the top of their
industry sector. Unlike their competitors, they are one of the only without commercials or
paid advertising, though this could increase their revenue substantially. (Mergent, 2022)
Netflix structures their operating cash starting from the top and working their way down.
They estimate revenue and evaluate where to spend to maintain their desired margins. With
the competition for streaming content driven prices upward, Netflix has focused on spending
more toward producing original content and providing less third-party content instead of
overspending. This allows them to operate with higher profitability and nearly term free
cashflow. (Netflix, 2022) You can see the proof of this concept on their balance sheet looking
at their current content assets and current content liabilities. (Mergent, 2022)
In my opinion this structure seems to be working, the company is profitable and continues to
lead their competition. I would however agree with the plan for Netflix to follow the
competition's lead in offering a lower cost subscription with ads, as more and more
subscribers are overloaded with the cost of having multiple subscriptions, and ultimately
cancelling the less affordable subscriptions, or new subscribers opting for the competition's
streaming services. Offering a more affordable option should increase interest in new
subscribers and increase operating cash to invest in more third-party content or to add to the
budget for producing original content. (Mccluskey, 2022)
My selected company name was Disney. The stock ticker for this company is NYSE: DIS and
it is in the entertainment industry. Disney is a company that has been around for about a
hundred years now starting from just one person creating cartoons and it has grown to be one
of the most well know companies around the world having theme parks across the world. Not
only does Disney have theme parks and merchandise, but the company as a whole owns a
number of other companies, streaming services and television networks. Some of the assets
are ABC and NBC, Disney+, Pixar, Marvel and Star Wars. Overall, over one hundred years
has shown how just one person can turn a small business into one of the largest companies in
the world.
One thing that stood out to me on the balance sheet was the total assets. In the article that I
found, you can see that the total assets double that of 2017 to 2021. This shows just how
much this company has gained in just about four years and I think it would be interesting to
see a much longer span of time to see how fast they have been obtaining assets or if just in the
last few years is where they are doing this.
The company I chose for the milestone is Amazon, and their stock ticker is AMZN. Amazon
is a retail shopping service that sells various products and services to consumers, and sellers.
Jeff Bezos, the founder of Amazon, intended to just sell books online but shortly after
expanded to selling clothes, electronics, video games, anything else you may need.
Each year on Amazon’s balance sheet, prepayments of the Amazon Web Service and Amazon
prime memberships are classified as unearned revenue. This is because the revenue has not
been fully earned yet, but the company is still liable to produce the service. As the revenue
comes through, the unearned revenue will reduce. For example, some Amazon prime
members pay $99 for a year of the service prior to the services being provided. Amazon has
performance obligations that tie mainly to the web service and the connection to the
customers contracts for future services. Amazon having unearned revenue on the books could
be concerning for investors as it can cause inaccuracies within the balance sheets.
My company is Amazon.com, Inc. (NASDAQ: AMZN), which falls in the industry(s) of e-
commerce cloud computing artificial intelligence consumer electronics entertainment digital
distribution self-driving cars supermarkets. The company was founded on July 5, 1994, in
Bellevue, Washington, in the garage of the creator, Jeff Bezos. “Amazon has experienced
several ups and downs from its inception, but today, it stands out as one of the top companies
globally” (Hughes, J., 2021, December 7). Amazon is an American Multinational Technology
company that is based in Seattle, Washington with a second headquarters in Arlington,
Virginia. Amazon falls second among the world’s Fortune 500 companies, behind Walmart.
“Cash and Cash Equivalents” is an item that is naturally seen on the balance sheet. Amazon’s
policy is “We generally invest our excess cash in investment-grade short- to intermediate-
term fixed income securities and AAA-rated money market funds.” (SEC, n.d.). Amazon
seems to be holding true. Amazon reported $96,049,000 in their Cash, Cash Equivalents &
Short-Term Investments and $59,829,000 in Other Short-Term Investments, while Cash and
Cash Equivalents were reported as $36,220,000.
For a company as large as Amazon this is the most appropriate option. “Amazon has a $1.091
Trillion market cap. Amazon ranks 5th in the world’s most valuable companies” (Tijam, G.
R., 2022, May 24). As large as Amazon is, the company is still growing. Amazon may need
cash for the growth, so if Cash and Cash Equivalents were tied up in long-term investments,
Amazon may not have immediate access, or the company would take a loss and penalties for
pulling out of the investment sooner.
References
Hughes, J. (2021, December 7). Amazon SWOT analysis: All you need to know. Business
Chronicler. Retrieved July 2, 2022, from https://businesschronicler.com/swot/amazon-swot-
analysis/
SEC. (n.d.). DESCRIPTION OF BUSINESS AND ACCOUNTING POLICIES. Sec.gov.
Retrieved July 6, 2022, from
https://www.sec.gov/Archives/edgar/data/1018724/000101872417000011/R9.htm
Tijam, G. R. (2022, May 24). Top 10 Richest Companies in the World as of 2022. USA.
Inquirer. Retrieved July 6, 2022, from https://usa.inquirer.net/100754/top-10-richest-
companies-in-the-world
(2022). DIS | Walt Disney Co. Annual Balance Sheet - WSJ. Walt Disney Co.
https://www.wsj.com/market-data/quotes/DIS/financials/annual/balance-sheet
Mccluskey, M. (2022. June 23). Netflix is Adding Ads. Time.
https://time.com/6175837/netflix-ads-coming/
Mergent Online. (2022, July 7). Mergent Online. Netflix. https://www-mergentonline-
com.ezproxy.snhu.edu/companydetail.php?compnumber=129614
Netflix. (2022, July 7). Netflix Long-Term View. Netflix Margin Structure.
https://ir.netflix.net/ir-overview/long-term-view/default.aspx
AMZN | Amazon.com Inc. Annual Balance Sheet - WSJ
Dow Jones & Company. (n.d.). Dis | Walt Disney Co. annual balance sheet - WSJ. The Wall
Street Journal. Retrieved July 7, 2022, from https://www.wsj.com/market-
data/quotes/DIS/financials/annual/balance-sheet
