E12-23. Analyze, Forecast, and Interpret Both Income Statement and Balance Sheet
ID: 2542366 • Letter: E
Question
E12-23. Analyze, Forecast, and Interpret Both Income Statement and Balance Sheet Following are the income statements and balance sheets of Amazon.com Inc. AMAZON.COM INC. Consolidated Statements Of Operations Dec. 31, 2015 Dec. 31,2014 S millions Net product sales Net service sales Total net sales. $79,268 70,080 18,908 88,988 27,738 . 107,006 71,651 13,410 5,254 2,540 1,747 62,752 10,766 4.332 9,275 1,552 133 88,810 Cost of sales. Technology and content General and administrative. Other operating expense (income), net .104,773 2,233 50 (459) (256) Income from operations. 178 39 210) (118 Total non-operating income (expense). . . . . . 1,568 (950) Provision for income taxes. Equity-method investment activity, net of tax . . . . . . . . . . . . . . . . . . . . . (167) 37 . $ 596 (241) AMAZON COM INC. Consolidated Balance Sheets Dec. 31,2014 In millions, except par value Current assets Marketable securities. Accounts receivable, net and other .. Total current assets . Goodwill... Dec. 31, 2015 $15,890 $14,557 2.859 3,9188299 ...10,243 6,423 36,474 21,838 3,759 3,373 5,612 31.327 16,967 3.319 $65,444 $54,50Explanation / Answer
b.
The adjustment to cash balance indicates that the cash to total assets ratio is increaseing from 24% to 30% of the total assets, without any increase in the financing for the company.
If we look at the ratio of long term debt to total assets, the ratio is 15.2% in 2014 and 12.6% in 2015.Therefore the ratio for 2016 of 10.8% based on no increase in long term debt is meeting the trend for the last two years of decreasing ternd in the long term debt.
The company is having a high cash surplus, which may be profitably utilised.
AMAZON .COM , INC Forecast income statement for the year ending December 31,2016 (million $) Net product sales 91158 Net service sales 38833 Total Net Sales 129991 Operating expenses: Cost of sales 87094 Fulfillment 16249 Marketing 6370 Technology and Content 15209 General and administrative 2080 Other operating expense(income), net 171 Total operating expenses 127173 Income from operations 2819 Interest income 60 Interest expense -520 Other income (expense), net -256 Total non-operating income(expense) -716 Income(loss) before income taxes 2103 Provision for income taxes -799 Equity method investment activity, net of tax -22 Net Income (loss) 1282 AMAZON .COM , INC Forecast Balance Sheet as at December 31,2016 (millions $) Current Asets Cash and cash equvalents 23178 Marketable securities 3918 Inventories 12479 Accounts Receivable, net and others 7799 Total current assets 47375 Property and equipment, net 21116 Goodwill 3759 Other Assets 4160 Total Assets 76409 Current Liabilities Accounts Payable 24828 Accrued expenses and others 12609 Unearned revenue 3770 Total current liabilities 41207 Long term debt 8235 Other long term liabilities 12089 Stockholders' equity Preferred Stock 0 Common Stock 5 Treasury stock, at cost -1837 Additional paid-in-capital 13394 Accumulated other comprehensive loss -511 Retained earninngs 3827 Total stockholders' equity 14878 Total liabilities and stockholders' equity 76409 Beginning balance of PPE 21838 Additions : 4.3% of sales 5590 PPE befor depreciation 27428 Less: Depreciation expense - 28.9% of 21,838 6311 Ending net value of PPE 21116Related Questions
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