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Student Name:

Institution: Fitchburg State University

Course: MGMT - 9170

Professor: Dr. Louis Pereira

Date: 07/25/2021
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Introduction
Jeff Bezos established the world's most prominent online retailer Amazon, in 1994. Amazon,
based in Seattle, Washington, started as an online bookstore. A year later, the company decided to expand
its operations by offering multiple product lines ranging from multimedia products to electronics, toys,
and other household items. Amazon's foundation is laid on the business methodology that reads market
trends and adapts to them quickly.

Amazon has classified its operations into three segments, North America, international, and
AWS. This diversified business model shows over $280 billion in revenue, resulting in a net profit of
$11.5 billion for the year 2019. Most of the revenue is contributed by the online stores.
Financial Performance Analysis :
According to the Amazon 10K report, their net sale increased 38% in 2020 compared to the
previous year. Operating income reported an increase in all three parts of the operations compared to the
previous year. Total operating income increased from $14.5 billion to $22.9 billion from the year 2019 to
2020. Analyzing this part is crucial from an investment point because it does not take taxes and other one-
off items into consideration. Thus, calculating the revenue that will eventually turn into profit becomes
easy.

Revenue Growth: Amazon predicts their revenue growth may not be sustainable, and the
percentage of growth rate may decrease due to the apparent economic and pandemic condition
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worldwide. Consolidated Net sale of the year 2020 shows Amazon annual revenue went up 38% to $386
billion, a yearly increase of $100 billion. Revenue growth shows company growth from one period to
another.
Profit Margin: Amazon's record-breaking performance amid pandemic ramped up its profit to
84% compared to last year. Profit margin shows the amount of profit generated for each dollar of sale.
Consolidated revenue of Year 2020 was reported as $386,064 M with a cost of sale $233,307 M.
Resulting in a profit margin = [rev-cost] / rev total of $39.57 M dollars.
Current Ratio: The current ratio defines a liquidity ratio that measures a company's ability to
pay current or short-term liabilities with its current or short-term assets. As long as this ratio stays within
the 1.5% and 3% bracket, the business is considered healthy. As reported in Form 10K, current assets are
$132.73B, and current liabilities are $126.39B, resulting in a current ratio of 1.05%.
Control: Amazon has robust measures in place to control fraudulent activities related to
counterfeit products or suppliers. The seller program is designed to prevent payment collection in any
unethical event, which contributes to a positive image of Amazon.
Risk: The risk evaluation is based upon executive management's view of the possible
unpredictable incidents that could impact the company's future profitability. Amazon faces increasing
competition from its rival, risks related to newer market segments, especially to the global market
considering economic and political conditions, restrictions, or government regulations.
Ethics: Amazon's code of conduct and ethics align its employees to make the best judgment that
reflects the company's interest ("Corporate Governance: Code of Business Conduct and Ethics," 1996). It
is an equal opportunity employer that promotes a safe and healthy workplace free of harassment and
danger for all employees.
Conclusion:
Amazon seems to have a firm command over its money management. Sales and assets compared
to liability show continued growth for the years presented in their financial reports. This information is
beneficial for managers and investors to decided future investments based on the qualitative information
provided by the report. Looking at the last few year's performances, Amazon is a good choice for the
investors as it reported $15.79 in EPS for its first fiscal quarter of 2021 ("AMZN - EPS Earnings Per
Share"), a current ratio of 1.05%. Amazon will look to build on its successes by continuing to bring
innovation and customer service standards to the world market (Hook, 2016).
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Reference

"AMZN - EPS Earnings Per Share." TRADING ECONOMICS, July 2021,

Corporate Governance: Code of Business Conduct and Ethics. (1996). Retrieved June 3, 2016,
from Amazon.com, http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-govConduct

Hook, L. (2016, March 03). Amazon's Prime challenge is international growth. Financial Times.
Retrieved from http://www.ft.com/cms/s/0/6486476a-e122-11e5-8d9b-
e88a2a889797.html#axzz4B7k0Ie2t