Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter 11, Problem 1MAD
Analyze and compare Amazon.com and Wal-Mart
Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Wal-Mart Stores, Inc. (WMT) is the largest retailer in the United States. Amazon and Wal-Mart compete in similar markets; however, Wal-Mart sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Interest expense and income before income tax expense from the financial statements of both companies for two recent years follow (in millions):
- a. Compute the times interest earned ratio for both companies for the two years. Round to one decimal place.
- b. Interpret Amazon’s interest coverage from Year 1 to Year 2.
- c. Does a times interest earned ratio less than 1.0 mean that creditors will not get paid interest?
- d. Interpret Wal-Mart’s interest coverage from Year 1 to Year 2.
- e. Which company appears to have the greater protection for creditors?
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Analyze and compare Amazon.com and Wal-Mart
Amazon.com, Inc. (AMZN) is one of the largest internet retailers in the world. Wal-Mart Stores, Inc. (WMT) is the largest retailer in the United States. Amazon and Wal-Mart compete in similar markets; however, Wal-Mart sells through both traditional retail stores and the internet, while Amazon sells only through the internet. Interest expense and income before income tax expense from the financial statements of both companies for two recent years follow (in millions):
Amazon
Walmart
Year 2
Year 1
Year 2
Year 1
Interest expense
$484
$459
$2,548
$2,461
Income (loss) before income tax expense
3,892
1,568
21,638
24,799
a. Compute the times interest earned ratio for both companies for the two years. Round your answers to one decimal place.
Amazon
Walmart
Year 2
Year 1
Year 2
Year 1
Times Interest Earned Ratio
Which retailer do you think is mosy likely Walmart, which one is Costco, and which ones is Target? and why do you think that based on the finanacials?
Analyze and compare Amazon.com and Wal-Mart
Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Wal-Mart (WMT) is the largest retailer in the United States. Amazon and Wal-Mart compete in similar markets; however, Wal-Mart sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Earnings and common stock outstanding information was obtained from recent financial statements for both companies as follows (in millions):
Amazon
Wal-Mart
Net income
$2,371
$14,694
Average number of common shares outstanding
474
3,207
a. Determine the earnings per share for each company. Neither company had preferred stock outstanding. Round your answers to two decimal places.
Amazon
$
Wal-Mart
$
b. Which company appears more profitable from an earnings-per-share perspective?
c. The market price of Amazon common stock was $750 per share at a time when Wal-Mart’s was $69 per share. How…
Chapter 11 Solutions
Financial And Managerial Accounting
Ch. 11 - Describe the two distinct obligations incurred by...Ch. 11 - Explain the meaning of each of the following terms...Ch. 11 - If you asked your broker to purchase for you a 12%...Ch. 11 - Prob. 4DQCh. 11 - Prob. 5DQCh. 11 - Prob. 6DQCh. 11 - Prob. 7DQCh. 11 - Fleeson Company needs additional funds to purchase...Ch. 11 - Prob. 9DQCh. 11 - Issuing bonds at face amount On January 1, the...
Ch. 11 - Issuing bonds at a discount On the first day of...Ch. 11 - Prob. 3BECh. 11 - Prob. 4BECh. 11 - Prob. 5BECh. 11 - Prob. 6BECh. 11 - Times interest earned Averill Products Inc....Ch. 11 - Prob. 1ECh. 11 - Entries for issuing bonds Thomson Co. produces and...Ch. 11 - Prob. 3ECh. 11 - Prob. 4ECh. 11 - Prob. 5ECh. 11 - Entries for issuing and calling bonds; gain Mia...Ch. 11 - Prob. 7ECh. 11 - Present value of amounts due Assume that you are...Ch. 11 - Prob. 9ECh. 11 - Present value of an annuity On January 1, you win...Ch. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prob. 13ECh. 11 - Prob. 14ECh. 11 - Appendix 2 Amortize premium by interest method...Ch. 11 - Prob. 16ECh. 11 - Prob. 17ECh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 2PACh. 11 - Entries for bonds payable, including bond...Ch. 11 - Appendix 1 and Appendix 2 Bond discount, entries...Ch. 11 - Prob. 5PACh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 2PBCh. 11 - Entries for bonds payable, including bond...Ch. 11 - Prob. 4PBCh. 11 - Prob. 5PBCh. 11 - Analyze and compare Amazon.com and Wal-Mart...Ch. 11 - Analyze and compare Clorox and Procter Gamble The...Ch. 11 - Prob. 3MADCh. 11 - Analyze and compare Hilton and Marriott Hilton...Ch. 11 - Prob. 1TIFCh. 11 - Prob. 3TIFCh. 11 - Prob. 4TIF
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