http://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_AMZN_2016.pdf P
ID: 2517617 • Letter: H
Question
http://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_AMZN_2016.pdf
PLEASE ANSWER THE FOLLOWING QUESTIONS BY REFERING TO THE LINK ABOVE:
1. What percentage of Amazon.com, Inc. authorized stock was issued at December 31, 2016?
2. How does Amazon.com, Inc. report treasury stock? How does this differ from the presentation in the textbook?
3. What is the dividend policy for the company? How does the policy impact stockholders’ investment goals?
4. What is the net cost of Property and Equipment at December 31, 2016 and December 31, 2015? What is the trend in property and equipment for the past two years?
5. Calculate the current ratio for the past two years. Did the current ratio improve or weaken in the more recent years?
Explanation / Answer
1). Authorised No. of shares 5000million. Issued at December 2016 are 6million.
percentage = 6/5000 *100 = 0.12%
2) Amazon Inc. reports Treasury stock in Liability side as a reduction from Stockholder's Equity i.e $ (1837).
(You have to chec how you have done reporting of treasury stock as per textbooks and write the difference).
3). Amazon inc. never declared and paid any dividend. This policy doesn't effect much on stockholder's investment goals because a dividend is paid out of the company's earnings. If there is no dividend paid by the company, the value of stock increases which otherwise decreases when dividend paid, so there is no major impact on shareholder's wealth because there is share of stockholder in company's earnings.
4). The net cost of property and equipment on Dec 31, 2016 is $29114 million and on Dec 31, 2015 is $21838 million. There is addition in property and equipment from last year which means Amazon has incurred the capital expenditure for acquiring property and equipment.
5). Current Ratio = Current Assets/Current Liabilities
Year 2015 = 35705/33887= 1.05
Year 2016 = 45781/43816 = 1.04
After seeing the above ratios it can be said that the Current Ratio weakens in the recent year in comparison from last year.
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