Compare Amazon.com to Best Buy Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. We will use Amazon as a continuing company exercise to reinforce the various tools and techniques for analyzing financial statements. We will begin with the ratio of liabilities to stockholders' equity. Ratios can be used to compare companies in the same industry. For Amazon, there are a number of competitors that sell media, electronic, and other merchandise. Best Buy, Inc. (BBY) is one such company. The following total liabilities and stockholders' equity information (in millions) is provided for Amazon and Best Buy for the end of a recent year: Total assets Best Buy $19,067 14,480 Total liabilities Total stockholders' equity 4,587 a. Compute the ratio of liabilities to stockholders' equity for each company. Round to two decimal places. Amazon Best Buy $420,549 282,304 138,245 Liabilities to stockholders' equity ratio Amazon b. Which of the following indicates the level of protection available to creditors? 1. The ratio of total liabilities to stockholders' equity. 2. The ratio of current liabilities to total liabilities. 3. The ratio of total liabilities to total assets. 4. The ratio of current liabilities to total assets.
Compare Amazon.com to Best Buy Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. We will use Amazon as a continuing company exercise to reinforce the various tools and techniques for analyzing financial statements. We will begin with the ratio of liabilities to stockholders' equity. Ratios can be used to compare companies in the same industry. For Amazon, there are a number of competitors that sell media, electronic, and other merchandise. Best Buy, Inc. (BBY) is one such company. The following total liabilities and stockholders' equity information (in millions) is provided for Amazon and Best Buy for the end of a recent year: Total assets Best Buy $19,067 14,480 Total liabilities Total stockholders' equity 4,587 a. Compute the ratio of liabilities to stockholders' equity for each company. Round to two decimal places. Amazon Best Buy $420,549 282,304 138,245 Liabilities to stockholders' equity ratio Amazon b. Which of the following indicates the level of protection available to creditors? 1. The ratio of total liabilities to stockholders' equity. 2. The ratio of current liabilities to total liabilities. 3. The ratio of total liabilities to total assets. 4. The ratio of current liabilities to total assets.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Compare Amazon.com to Best Buy
Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. We will use Amazon as a continuing company exercise to reinforce the various tools and
techniques for analyzing financial statements. We will begin with the ratio of liabilities to stockholders' equity.
Ratios can be used to compare companies in the same industry. For Amazon, there are a number of competitors that sell media, electronic, and other merchandise. Best
Buy, Inc. (BBY) is one such company. The following total liabilities and stockholders' equity information (in millions) is provided for Amazon and Best Buy for the end of
a recent year:
Total assets
Total liabilities
Total stockholders' equity
a. Compute the ratio of liabilities to stockholders' equity for each company. Round to two decimal places.
Amazon
Best Buy
$420,549 $19,067
282,304
14,480
138,245
4,587
Liabilities to stockholders' equity ratio
Amazon
Best Buy
b. Which of the following indicates the level of protection available to creditors?
1. The ratio of total liabilities to stockholders' equity.
2. The ratio of current liabilities to total liabilities.
3. The ratio of total liabilities to total assets.
4. The ratio of current liabilities to total assets.
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