Amazon comany 1)Introduction to Amazon comany 2)If your firm\'s actual debt rati

Question

Amazon comany

1)Introduction to Amazon comany

2)If your firm's actual debt ratio is different from its "recommended" debt ratio, how should they get from the actual to the optimal? In particular, should they do it gradually over time or should they do it right now? should they alter their existing mix (by buying back stock or retiring debt) or should they take new projects with debt or equity? and What type of financing should this firm use? In particular, should it be short term or long term? what currency should it be in? and what special features should the financing have?

Explanation / Answer

1) Amazon - Amazon is a big giant in electronics commerce and Cloud computing. It is the largest internet retailer in the world in terms of its revenue and market capitalization and second largest in terms of volume.

2) Debt ratio - Debt ratio is defined as the ratio of total debt to total equity. It is always recommended a debt ratio of less than 1. However it depends on the industry segment and the optimum level. Now if the firm has more debt means debt equity ratio of >1 then there are two ways to make it to the optimum level either by debt restructuring and retiring few of the existing debt on the books or by issuing more fresh equity.

It is always recommended to make these changes in the longer term and not immediately in order to the business taking its impact and adjust accordingly.

It is good to alter the existing mix in order to improve the efficiency and make the organization more stronger.

Also the long term financing is recommended and always in domestic currency to avoid any currency risk and non use of hedging instruments.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.