Amazon, management ratio, Alibaba, Walmart, financial ratio, liquidity ratio, SWOT analysis, ratio, business, business competition
This report shows an overview of the financial performance of Amazon and two of its closest competitors over the previous three years (2021-2023). The following is an attempt to focus on various key financial ratios that would enable us to appreciate the finance department's strengths and weaknesses at Amazon. Additionally, we will compare these ratios with industry averages to provide further context.
[...] Amazon's Objectives for the Finance Section In finance, Amazon aims to maintain adequate inventory management, which has seen a high inventory turnover ratio. It also ensures optimization in cost management towards improved profitability margins and effective debt management to sustain its health with the capital structure. Additionally, Amazon aims to enhance its liquidity position to improve its ability to cover short-term liabilities. 4. Analysis of Strengths and Weaknesses On the other hand, Amazon has a high inventory turnover, which shows its efficiency in managing its inventory. The solid gross profit margin is the other part where Amazon shows its strength. [...]
[...] From the current ratio only moderate signs of liquidity are shown in Amazon's current ratio. Charles & Uford Comparatively, Amazon's quick ratio and cash ratio are much lower than Walmart and Alibaba, which depicts that Amazon has the most minor capability to other online marketplaces to cover short-term obligations with its most liquid assets. Asset Management Ratios Ratio Amazon Walmart Alibaba Industry Average Inventory Turnover 14.32 8.92 9.75 10.66 Accounts Receivable Turnover 8.21 11.45 5.78 8.15 Total Asset Turnover 1.54 2.32 0.91 1.92 Explanation: The asset management ratios measure how efficiently the company can use its assets to generate revenue. [...]
[...] With insight into these financial metrics, the company could further improve its financial performance and objective in the finance section. References Amazon's Fundamental And Technical Strengths Signal A Strong Buy. (n.d.). Www.linkedin.com. Retrieved April from https://www.linkedin.com/pulse/amazons-fundamental-technical-strengths-signal-strongbuy-chul-choi/ Charles, I., & Uford, I. (2023). COMPARATIVE ANALYSIS AND EVALUATION OF BUSINESS AND FINANCIAL PERFORMANCE OF AMAZON.COM: THREE YEARS CRITICAL REVIEW OF EXCEPTIONAL SUCCESS. European Journal of Business, Economics and Accountancy, 11(2). https://www.idpublications.org/wp-content/uploads/2023/07/Full-Paper-COMPARATIVE-ANALYSIS-AND-EVALUATION-OF-BUSINESS-AND-FINANCIAL-PERFORMANCE-OF-AMAZON.com_.pdf Darcy, L. G. [...]
[...] (2023, June 30). Equity valuation: Amazon.com Inc. Repositorio. up. Pt. https://repositorio.ucp.pt/handle/10400.14/42612 meta-20221231. (n.d.). Www.sec.gov. [...]
[...] Profitability Ratios Ratio Amazon Walmart Alibaba Industry Average Gross Profit Margin 41.28% 24.51% 45.79% 37.86% Operating Profit Margin 6.82% 5.91% 15.23% 9.32% Net Profit Margin 5.68% 3.28% 12.18% 7.82% Explanation: Profitability ratios examine the company's ability to profit from revenue, assets, or equity. In this case, Amazon depicts a higher gross profit margin than Walmart but lower than that of Alibaba, signaling a good barometer of efficient revenue-generating costs. Its operating profit margin and net profit margin stand lower than those of Alibaba. It may allude to the fact that Amazon may have higher operating costs or taxes regarding its income than Alibaba does. [...]
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