Financial Statement Review for Amazon.com, Inc.

Posted: August 26th, 2021

Ashford University

Amazon.com, Inc.

Name

Student #

Course

Professor

Date

Financial Statement Review for Amazon.com, Inc.

Amazon.com, Inc. offers conglomerate technological services globally. The company’s financial performance has been improving from overtime. An examination of the last three years’ financial statements and reports, which comprise the income statements, balance sheet, and cash flow statements, clearly shows the strength andfinancial health of the company. As such, subsequent parts of the paper conducts an evaluation of the three accounting statements compared to the previous three years, describe and assess the trends of the selected financial statements.

Income Statement

An income statement is meant to evaluate the profit generated by a business for a specified period, such as annually or quarterly. The results of an income statement are to ascertain net income or loss according to the company’s financial activities for a given period (Narayanaswamy, 2017). Table 1 below shows the consolidated income statement for Amazon.com Inc. over the last four years.

Table 1: Amazon.com, Inc Consolidated Four Year Income Statement

Year	2016 Amount ($) ‘Millions.’	2017 Amount ($) ‘Millions’	2018 Amount ($) ‘Millions’	2019 Amount ($) ‘Millions’
Net Income	2,371	3,033	10,073	11,588
Comprehensive Income	2,109	3,534	9,526	11,637

Source: Amazon.com, inc. financial statements (2020)

As shown in Table, the net and comprehensive income have been gradually increasing from over the period since 2016.

Balance Sheet Statement

            The balance sheet of a company shows assets,which are an indication of a company’s resources, liabilities, shareholder’s equity, and the owners’ funds (Narayanaswamy, 2017). In a balance sheet report, the company’s assets in a particular period should be equal to liabilities and equity. According to the Amazon Company report, these items have been tremendously increasing in the last four years,as shown in the analysis. Most critical, the total liabilities are less than the assets implying that the company has had no liquidity problems overtime. Besides, the report shows that funding of most of its activities is based on liabilities.  Thus, it can raise additional finances in case of a financial need by floating more shares in the market.

Table 2: Details of the Balance Sheet (Amazon, 2020)

Year	2016 Amount ($) ‘Millions.’	2017 Amount ($) ‘Millions’	2018 Amount ($) ‘Millions’	2019 Amount ($) ‘Millions’
Total assets	83,402	131,310	162,643	225,248
Total liabilities	64,117	103,601	119,099	163,188
Shareholders’ Equity	19,285	27,709	43,549	62,060

Source: Amazon.com, Inc. financial statements (2020)

Statement of Cash Flows

            Finally, the cash flow statements is a detailed report that magnifies cash in the balance sheet for a specified period by reconciling the cash balances at the beginning of the period with the closing balances. It shows cash used in or provided by operating, investing, and financing activities(Narayanaswamy, 2017). Table 3 below shows that the company’s cash and cash equivalents have been increasing in the last three years, from 2006 to 2008 compared to 2009. Additionally, the company has been investing heavily, as indicated in the massive amounts used in investment activities. However, the company is repaying debt finances, and this is why the vast amount is channeled towards financing activities, as shown in the tabulation.

Table 3: Table 3: Details of the cash flow statement (Amazon, 2020)

Year	2016 Amount ($) ‘Millions.’	2017 Amount ($) ‘Millions’	2018 Amount ($) ‘Millions’	2019 Amount ($) ‘Millions’
Cash atthe beginning of the period	16, 175	19,934	21,856	32,173
Operating activities	17, 203	18,365	30,723	38,514
Financing activities	(9, 516)	(27,084)	(12,369)	(24,281)
Investment activities	(3,716)	9,928	(7,686)	(10,066)
Cash at the end of the period	19,934	21, 856	32, 173	36, 410

Source: Amazon.com, Inc. financial statements (2020)

Trends in Amazon.com Inc.

            There are definite trends that have emerged from the accounting statements of the company. The company has grown tremendously in the last four years, with a massive increase in the items of the financial statements. The development is from various factors such as technological innovation, and customer-led innovation, risk-taking culture, continuous experiments, and improvements (Amazon, 2020). In conclusion, the primary potential weakness in the financial statements of Amazon.com Inc. is combining the amounts of significant segments of the company to a single quantity without providing adequate details. Hence, the users of the accounting reports may misinterpret the information which is condensed together.

References

Amazon. (2020). About Amazon.com, Inc. Retrieved from https://www.amazon.es/Acerca-Amazon-descubre-Nuestra-Empresa-Nuestra-Tecnologia/b?ie=UTF8&node=1323175031

Narayanaswamy, R. (2017). Financial accounting: a managerial perspective. PHI Learning Pvt. Ltd.