2. 1)What is Amazon.com?What is Amazon.com? 2)What does Amazon sell?What does Amazon sell? Main categories of products How products appears in the financial statements Products’ sales 3) The first years of salesThe first years of sales 4) Is Amazon in a good financial position?Is Amazon in a good financial position? Financial statements Liquidity Long-term credit risk Profitability Current market price 5) Future prospectsFuture prospects Index

3. What is Amazon.com? Amazon is an American company specialized in e-commerce. Its headquarter is in Seattle, and it was founded in 1994 by Jeffrey Bezos. Amazon Index

4. What does Amazon sell? Amazon was born as a bookstore, but today it sells everything. everything Index

5. Main categories of products Instant Videos MP3s & Cloud Player Kindle E-readers Movies, Music & Games Books & Audible Digital Games & Software Electronics & Computers Home, Garden & Tools Beauty, Health & Grocery Toys, Kids & Baby Clothing, Shoes & Jewelry Sports & Outdoors Automotive & Industrial Index

6. In the financial statements the products are divided in three main categories: Media Electronics and other general merchandise Other Index

7. Products Net Sales

8. The first years of sales Amazon's initial business plan was unusual; it did not expect to make a profit for four to five years. In fact, the first years of sales were characterized by a slow growth of the profits. Index

9. Net Sales and Net income from 1997 to 2002

10. Is Amazon in a good financial position? In order to have detailed view of the financial situation of the company it is necessary to analyze its financial statements and provide key financial analysis ratios. Income statement Balance sheet Index

11. Measures of liquidity

12. Index Measures of liquidity 20122011 Current Assets $21,296 $17,490 Current Liabilities 19,002 14,896 Current ratio 1.12 : 11.17 : 1 the capability of paying short-term debts slightly decreased the company’s current assets are 1.12 times its current liabilities

13. Index Measures of liquidity 20122011 Current Assets $21,296 $17,490 Less: Current Liabilities 19,002 14,896 Working capital $2,294 $2,594 the amount of money available to satisfy current liabilities is going down.

14. Index Measures of liquidity 20122011 Net cash provided by operating activities $4,180 $3,903 The net cash provided by operating activities increased from 2011 to 2012 by $277, which is a positive change.

15. Measures of long- term credit risk Index

16. Measures of long-term credit risk Index 20122011 Total liabilities: Long-term debt $3,084 $255 Other long-term liabilities 2,277 $2,370 Total current liabilities 19,002 24,363 $14,896 17,521 Total assets 32,555 25,278 Debt ratio 74.84% 69.31% This trend is not favorable, since a high debt ratio means a low margin of protection to creditors against shrinkage of assets.

17. Measures of long-term credit risk Index 20122011 Operating income $676 $862 Annual interest expense 92 65 Interest coverage ratio7.35 times13.26 times the interest coverage of both years was strong, since it was far above 2.0.

18. Measures of profitability Index

19. Measures of profitability Index 20122011 Gross profit $ 15,122 $ 10,789 Net Sales 61,093 48,077 Gross profit rate24.75%22.44% These rates are satisfactory and the increase between 2011 and 2012 can be considered positive, as it means the demand for the company’s products is increasing.

20. Measures of profitability Index 20122011 Operating expenses $ 60,417 $ 47,215 Net sales 61,093 48,077 Operating expense ratio 98.89%98.21% an operating expense ratio of 98% is not favorable, since it is excessively high.

21. Measures of profitability Index 20122011 Gross profit $ 15,122 $ 10,789 Less: Operating expenses 14,4469,927 Operating income 676862 the profitability of the company’s basic business operations in 2011 amounted to $862, while in 2012 it decreased reaching the amount of $676.

22. Current market value Index

23. Current market value Index 20122011 Stock price $ 243.75 $ 173.36 Amazon’s market value increased from $173.36 to $243.75. Therefore, the company experienced a favorable trend.

24. Current market value Index 20122011 Current stock price $ 243.75 $ 173.36 Earnings per share $ (0.09) $ 1.39 Price earnings ratio(2708.3)124.5 investors’ expectations concerning the performance of the company are not positive.

25. Current market value Index 20122011 Common stockholders' equity $8,192 $7,757 Shares of commonstock outstanding453 Book value per share18.0817.12 The book value per share in 2011 was $17.12, and in 2012 was $18.8. Therefore, it increased generating a favorable trend.

26. Future prospects Index Although Amazon experienced a huge decrease in net income in 2012, the company is not in a bad financial position Because there is a continuous increase in net sales. Increase or decrease 2012 over 20112011 over 2010 Year 2012Year 2011Year 2010 Amount % Net Sales $ 61,093.00 $ 48,077.00 $ 34,204.00 $ 13,016.0027.07% $ 13,873.0040.56% Net Income $ -39.00 $ 631.00 $ 1,152.00 $ -670.00-106.18% $ -521.00-45.23%

27. Net sales and profits from 2003 to 2012 Index

28. Future prospects If this trend will continue, and the costs will be reduced, the company will become extremely strong, and the net income will restart to increase. Therefore, the unfavorable trend of the net income will be reversed. Index