Brooklyn college city University of New York

Brooklyn College City University of New YorkDepartment of AccountingPrinciples of Financial AccountingExamination of a Corporate Annual Report

Students Name Mohamed AdnanPlease choose a publicly traded company to work on. You may select a company whose securities are traded on the NYSE, AMEX or NASDAQ. Please do not select a company that is a financial institution or services company. The company should sell merchandise.

Part I

1. Fill in some basic information about your company.

Name of company Amazon COM INCPrincipal exchange where the company trades: Seattle, WashingtonMarket price of the stock 431.02 as of May 12, 2015 (date)

Annual dividend $1.82 per shareLast dividend paid on January 16, 20152. Read the business summaries and managements discussion and analysis (MD&A). Summarize the remarks (ex. Poor operating results/expansion plans/sale of a division, etc.)

Amazon aims to focus on long-term, sustainable growth in free cash flow by increasing operating income and efficiently managing their expenditures. One of their largest issues is the high variable cost, which they will try to fix by increasing direct sourcing, discounts from suppliers, and reducing defects in their processes. In addition, Amazon is seeking to offer more digital payment services. Finally, they are aiming for an improved inventory turnover and more variability within the inventory.3. What kinds of products and/or services does the corporation provide/sell?

The corporation hosts the website Amazon.com, which is an internet-based retailer that sells products such as electronics, apparel, video games, food, toys, jewelry, and furniture.4. a.Which accounting/auditing firm audited the financial statements? Ernst & Young LLP, Independent Registered Public Accounting Firm

b. Did the auditors report indicate any problems or exceptions?

The auditors report indicated that the financial statements of Amazon.com, Inc. were presented fairly, so there were no problems or exceptions.5.a.Did you find any new terms within the financial statements?

Excess tax benefits from stock-based compensation, Principal repayments of finance lease obligations, Foreign-currency effect on cash and cash equivalents, Diluted earnings per share

b.Did you find the presentation of the financial statements clear? Why or why not?

The presentation of the financial statements were clear because they were formatted similarly to the financial statement tables we have been working with during the semester. They did not have a debit or credit column, but they did have parenthesis around some of the accounts. Nevertheless, the financial statements were very clear and understandable.

Part II

Indicate the formula to be used and insert the amounts used in computing each ratio. Express your answer in suitable units (percentages, decimals etc.)

A. Current ratio

Current Assets/Current Liabilities31,327/ 28,089 = 1.12

B. Quick ratio

Current assets inventories/ current liabilities31,327 8,299 / 28089 = 0.82C. Receivable turnover

Net sales / Accounts receivable89,041 / 5,612 = 15.87

D. Average days sales uncollected

accounts receivable / net sales x365(5,612/ 89,041) x 365 = 23 days

E. Inventory turnover

COGS/ Avg Inventory62,752 /8,299 = 7.561

F. Profit margin

Net income/ net sales241/ 89,041 = 0.0027

G. Return on assets

Net income / avg total assets89,041/ 54,505 = 1.63H. Return on Equity

Net income preferred dividends/ avg common stock holders equity89041 0 / 6,359 = 14

I. Earnings per share

Net income preferred dividends / weighted avg common shares outstanding89041- 0 / 462 = 193J. Debt to equity ratio

K. Dividend yield

L. Price earnings ratio (use price from question 1 and EPS from question 6-i)

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