According to the horizontal analysis of income statement, net income has been increased $837,000 in 2015. Amazon.com margins increased at a faster rate than expenses. The cost of revenue increased 14% in 2015 as against gross profit increasing 35%. Amazon.com did not incur any environmental expenses in 2013. The company also focused on reducing debt. As a result interest expense is 0.
Vertical analysis of income statement shows that the company focused on increasing expenses along with increasing revenues. Additionally, Amazon.com also reduced debt and interest expenses in turn. The previous caused gross profit and net income to rise in 2015 .
Horizontal analysis of the balance shows that total assets increased by 61% in 2013, 57% in 2014 and 56% in 2015. Amazon.com Jeff Bezos's opinion is: keeping investing. He thinks the opportunity will be wasted if Amazon.com takes the profit out of the business. The increase in assets was due to increase in current assets. Amazon.com property plant and equipment increased 33% in 2015 respectively. The long-term debt decreased 16% in 2015. The increase in net income in 2015 resulted in an increase in retained earnings during the same period (Schepp & Schepp, 2009).
Amazon.com sales have grown over three years, and net income is going up sharply in years. Selling general and administrative has risen. Amazon.com is deferring profit producing. The revenue growth was 20% in 2015. A compounded annual growth in 24% in the past five years.
The company has based its growth on a continuous investment strategy in new technologies from 312 million dollars in 2013, 979 million dollars in 2014 and 795 million dollars in 2015. The company is developing new technologies in digital content, music, electronic readers, and cloud computing and home assistant. The last development of the company was the Alexa Assistant and Echo devices (Amazon, 2016). Its cloud revenues grew 50% in 2015, and it is just a start. There will have more than 17 data centers in 2016. The management of the company continues under control of the co-founder and Chief Executive Officer Jeff Bezos , who is today the fifth richest person in the world, thanks the market capitalization of the Amazon Company.
Reference List
Amazon. (2016, January 29). AMAZON.COM, INC. FORM 10-K. Retrieved from Phoenix Corporate: http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=IROL-secToc&TOC=aHR0cDovL2FwaS50ZW5rd2l6YXJkLmNvbS9vdXRsaW5lLnhtbD9yZXBvPXRlbmsmaXBhZ2U9MTA2OTY3NDMmc3Vic2lkPTU3&ListAll=1&sXBRL=1
Forbes. (2016). The World's Billionaires. Retrieved from Forbes: http://www.forbes.com/billionaires/list/
Nasdaq. (2016). Amazon Income Statemet. Retrieved from Nasdaq: http://www.nasdaq.com/symbol/amzn/financials?query=income-statement
Schepp, B., & Schepp, D. (2009). Amazon Top Seller Secrets. Insider Tips from Amazon's Most Sucessful Sellers. New York: American Management Association.
