Continuing Company Analysis-Amazon: Short-term liquidity analysis
Amazon.com, Inc. is one of the largest Internet retailers in the world. Best Buy, Inc. is a leading retailer of consumer electronics and media products in the United States. Amazon and Best Buy compete in similar markets; however, Best Buy sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Current asset and current liability information from recent financial statements are as follows (in millions):
Amazon | Best Buy | |
Current assets: | ||
Cash | $14,557 | $ 2,432 |
Short-term investments | 2,859 | 1,456 |
5,612 | 1,280 | |
Inventories | 8,299 | 5,174 |
Other current assets | — | 1,387 |
Total current assets | $31,327 | $11,729 |
Current liabilities: | ||
Accounts payable | $16,459 | $ 5,122 |
Other current liabilities | 11,630 | 2,314 |
Total current liabilities | $28,089 | $ 7,436 |
A. Compute
B. Compute the
C. Compute the quick ratio for each company. (Round to one decimal place)
D. Can the working capital be usefully compared between the two companies? Explain.
E. Which company has the greater debt-paying ability according to the current ratio?
F. Which company has the greater short-term debt-paying ability according to the quick ratio?
G. Why are the results different between (E) and (F)? (Hint: Perform a vertical analysis of the current assets)
Trending nowThis is a popular solution!
Chapter 10 Solutions
Bundle: Financial & Managerial Accounting, Loose-Leaf Version, 14th + CengageNOWv2, 2 terms Printed Access Card
Additional Business Textbook Solutions
Financial Accounting, Student Value Edition (5th Edition)
Horngren's Accounting (12th Edition)
Marketing: An Introduction (13th Edition)
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning