Amazon Trend percentage
Amazon Trend Percentage
Amazon is one of the leading and most trusted platforms available online for shopping today. The financial performance of the Amazon is very profitable and consistent over the last decade. However, in last three to four years, the overall profitability is lower because of acquiring of Amazon’s competitors to gain more market share. In the year of 2013, the overall revenue of Amazon is 74,452 Millions of dollars, which is greater than the overall revenue from last year. The gross profit ratio for the current year is twenty seven percent, which shows that the company’s ‘cost of sales’ is almost seventy percent of the revenue. Moreover, the net profit ratio of Amazon for the year 2013 is only 1%, which shows that the expenses of the Amazon are reducing their actual profit to very low levels. However, it is very important to state that the Amazon is investing huge amounts of money as a ‘capital investments’, and most probably these investments are made to acquire other online websites who are doing business is the same sector. Most of the audience and customers of Amazon are North Americans and to acquire the market share is Europe, it is very important for the Amazon to either invest heavily in European countries or to acquire the companies working in Europe. Therefore, the constant increase in the expenses related to the investment is the signal that the management of the Amazon has a lot of investment opportunities for the future. The re-investment opportunities for any business are the favorable signals for the investors in the stock exchange regarding the dividends. Therefore, in the future, it will be easy for the Amazon to collect money via the right issue from their existing shareholders for the enhancement of the business. (Khoja, 2013)
The last four years financial performance of the Amazon is very impressive and it can be discussed on financial and non-financial basis.
The increase in the gross profit ratio shows that the management of the Amazon has controlled the expenses of ‘cost of goods sold’ over the last four years, which is a good sign for the company. The decrease is the net profit ratio shows that the Amazon is spending a lot of funds in ‘selling and distribution’ and ‘R & D’ of the business. Another main factor for the lower net profit ratio is that the Amazon management sale their goods at cheaper prices as compare to other companies. That’s why the overall revenue is lower which is affecting the net profit ratio. However, the expense of the selling and the general administrative expenses are increasing constantly. The decrease/loss in the currency exchange is due to the overseas shipments and this loss is out of the control of the management. The representation of the overseas branch in the financial statements can impact adversely on the home country’s financial statement. However, it is not an adverse signal to the investors and management because this problem is not in the control of management. Equity Investment in the last four years is also increasing because it is very important to provide the best facilities for the customers. Moreover, there are many leading retail stores like the Wal-Mart, who is trying to capture the online customers to maximizing their profits. Therefore, the investments in equity are the signal to maintaining and enhancing the market share of the business. ("Amazon.com inc (amzn:nasdaq," 2014)
References
Khoja, A. (2013, November 18). Amazon: Telling the story through financial statement analysis.
Retrieved from http://seekingalpha.com/article/1847022-amazon-telling-the-story-through-financial-statement-analysis
Amazon.com inc (amzn:nasdaq gs). (2014, February 27). Retrieved from
http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=AMZN
