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Amazon

Common Size Analysis

	2014	2015	2016
Net product sales	100.00%	100.00%	100.00%
Net service sales	26.98%	34.99%	43.65%
Total net sales	126.98%	134.99%	143.65%
Cost of sales	89.54%	90.39%	93.24%
Fulfillment	15.36%	16.92%	18.61%
Marketing	6.18%	6.63%	7.64%
Technology and content	13.23%	15.82%	16.99%
General and administrative	2.21%	2.20%	2.57%
Other operating expense, net	0.19%	0.22%	0.18%
Total operating expenses	126.73%	132.18%	139.23%
Operating income	0.25%	2.82%	4.42%
Interest income	0.06%	0.06%	0.11%
Interest expense	-0.30%	-0.58%	-0.51%
Other income (expense), net	-0.17%	-0.32%	0.10%
Total non-operating income (expense)	-0.41%	-0.84%	-0.31%
Income (loss) before income taxes	-0.16%	1.98%	4.11%
Provision for income taxes	-0.24%	-1.20%	-1.51%
Equity-method investment activity, net	0.05%	-0.03%	-0.10%
of tax	0.00%	0.00%	0.00%
Net income (loss)	-0.34%	0.75%	2.50%
Basic earnings per share	0.00%	0.00%	0.01%
Diluted earnings per share	0.00%	0.00%	0.01%
Basic	0.66%	0.59%	0.50%
Diluted	0.66%	0.60%	0.51%

 

eBay

eBay Inc.
	December 31,	December 31,	Common Size
	2015	2014	2015	2014
ASSETS
Current assets:
Cash and cash equivalents	$ 1,832	$ 4,105	10.3%	9.1%
Short-term investments	4,299	3,730	24.2%	8.3%
Accounts receivable, net	619	600	3.5%	1.3%
Other current assets	1,154	1,048	6.5%	2.3%
Current assets of discontinued operations	–	17,048	0.0%	37.8%
Total current assets	7,904	26,531	44.4%	58.8%
Long-term investments	3,391	5,736	19.1%	12.7%
Property and equipment, net	1,554	1,486	8.7%	3.3%
Goodwill	4,451	4,671	25.0%	10.3%
Intangible assets, net	90	133	0.5%	0.3%
Other assets	395	207	2.2%	0.5%
Long-term assets of discontinued operations	–	6,368	0.0%	14.1%
Total assets	$ 17,785	$ 45,132	100.0%	100.0%
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$ –	$ 850	0.00%	4.78%
Accounts payable	349	107	1.96%	0.60%
Accrued expenses and other current liabilities	1,736	3,830	9.76%	21.54%
Deferred revenue	106	108	0.60%	0.61%
Income taxes payable	72	125	0.40%	0.70%
Current liabilities of discontinued operations	–	12,511	0.00%	70.35%
Total current liabilities	2,263	17,531	12.72%	98.57%
Deferred and other tax liabilities, net	2,092	522	11.76%	2.94%
Long-term debt	6,779	6,777	38.12%	38.11%
Other liabilities	75	79	0.42%	0.44%
Long-term liabilities of discontinued operations	–	317	0.00%	1.78%
Total liabilities	11,209	25,226	63.03%	141.84%
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, $0.001 par value; 3,580 shares authorized;
1,184 and 1,224 shares outstanding	2	2	0.01%	0.01%
Additional paid-in capital	14,538	13,887	81.74%	78.08%
Treasury stock at cost, 443 and 384 shares	-16,203	-14,054	-91.10%	-79.02%
Retained earnings	7,713	18,900	43.37%	106.27%
Accumulated other comprehensive income	526	1,171	2.96%	6.58%
Total stockholders’ equity	6,576	19,906	36.97%	111.93%
Total liabilities and stockholders’ equity	$ 17,785	$ 45,132	100.00%	253.76%

 

Amazon

	December 31,
	2015.00	2016.00	Average	Common Size
ASSETS
Current assets:
Cash and cash equivalents	$15,890	$19,334	$17,612	25%	23%
Marketable securities	3,918	6,647	$5,283	6%	8%
Inventories	10,243	11,461	$10,852	16%	14%
Accounts receivable, net and other	5,654	8,339	$6,997	9%	10%
Total current assets	35,705	45,781	$40,743	55%	55%
Property and equipment, net	21,838	29,114	$25,476	34%	35%
Goodwill	3,759	3,784	$3,772	6%	5%
Other assets	3,445	4,723	$4,084	5%	6%
Total assets	$64,747	$83,402	$74,075	100%	100%
LIABILITIES AND STOCKHOLDERS? EQUITY
Current liabilities:
Accounts payable	$20,397	$25,309	$22,853	32%	30%
Accrued expenses and other	10,372	13,739	$12,056	16%	16%
Unearned revenue	3,118	4,768	$3,943	5%	6%
Total current liabilities	33,887	43,816	$38,852	52%	53%
Long-term debt	8,227	7,694	$7,961	13%	9%
Other long-term liabilities	9,249	12,607	$10,928	14%	15%
Outstanding shares ? 471 and 477	5	5	$5	0%	0%
Treasury stock, at cost	(1,837)	(1,837)	($1,837)	-3%	-2%
Additional paid-in capital	13,394	17,186	$15,290	21%	21%
Accumulated other comprehensive loss	(723)	(985)	($854)	-1%	-1%
Retained earnings	2,545	4,916	$3,731	4%	6%
Total stockholders? equity	13,384	19,285	$16,335	21%	23%
Total liabilities and stockholders? equity	$64,747	$83,402	$74,075	100%	100%

 

	2014.00	2015.00	2016.00	2014	2015	2016
Net product sales	$70,080	$79,268	$94,665	100.00%	100.00%	100.00%
Net service sales	18,908	27,738	41,322	26.98%	34.99%	43.65%
Total net sales	88,988	1,07,006	1,35,987	126.98%	134.99%	143.65%
Operating expenses:				#VALUE!	#VALUE!	#VALUE!
Cost of sales	62,752	71,651	88,265	89.54%	90.39%	93.24%
Fulfillment	10,766	13,410	17,619	15.36%	16.92%	18.61%
Marketing	4,332	5,254	7,233	6.18%	6.63%	7.64%
Technology and content	9,275	12,540	16,085	13.23%	15.82%	16.99%
General and administrative	1,552	1,747	2,432	2.21%	2.20%	2.57%
Other operating expense, net	133	171	167	0.19%	0.22%	0.18%
Total operating expenses	88,810	1,04,773	1,31,801	126.73%	132.18%	139.23%
Operating income	178	2,233	4,186	0.25%	2.82%	4.42%
Interest income	39	50	100	0.06%	0.06%	0.11%
Interest expense	(210)	(459)	(484)	-0.30%	-0.58%	-0.51%
Other income (expense), net	(118)	(256)	90	-0.17%	-0.32%	0.10%
Total non-operating income (expense)	(289)	(665)	(294)	-0.41%	-0.84%	-0.31%
Income (loss) before income taxes	(111)	1,568	3,892	-0.16%	1.98%	4.11%
Provision for income taxes	(167)	(950)	(1,425)	-0.24%	-1.20%	-1.51%
Equity-method investment activity, net	37	(22)	(96)	0.05%	-0.03%	-0.10%
of tax				0.00%	0.00%	0.00%
Net income (loss)	($241)	$596	$2,371	-0.34%	0.75%	2.50%
Basic earnings per share	($0.52)	$1.28	$5.01	0.00%	0.00%	0.01%
Diluted earnings per share	($0.52)	$1.25	$4.90	0.00%	0.00%	0.01%
Weighted-average shares used in computation				#VALUE!	#VALUE!	#VALUE!
of earnings per share:				0.00%	0.00%	0.00%
Basic	462	467	474	0.66%	0.59%	0.50%
Diluted	462	477	484	0.66%	0.60%	0.51%

 

10 ratios

	2015	2016	2015	2014
Current	1.053649	1.044847	3.492709	1.513376
Quick	0.75138	0.783276	3.492709	1.513376
Gross Margin	33%	0.067607	79%	81%
Net Margin	1%	0.025046	20%	1%
RoA	-0.37%	0.71%	9.70%	0.10%
RoE	-1.80%	3.09%	9.70%	0.10%
Debt/Equity	0.61	0.40	0.38	0.17
Debt/Asset	0.13	0.09	0.38	0.17
Debt/Capital	0.72	0.29	0.28	0.14
Operating Margin	2%	0.044219	26%	28%

 

Gross Margin: the gross part offers a signal of all the salary that the company has earned in a specific time span through perfuming an esteem expansion practice on the on hand crude substances. The business enterprise must purchase all the crude substances required with the aid of them, change over them into completed merchandise and after that at remaining pitching it to the clients.

Operating Margin: Operation side is a technique to demonstrate earnings earned with the aid of the employer with the assistance of its but it suggests how plenty operational quality does the business enterprise has.

Net income Margin: net pay edge is given as internet wage partitioned by way of upload as much as deIts. It is a pointer to the pay which has been earned by the corporation and has been credited to the buyers of the enterprise.

Liquidity Ratios

Current Ratio: the computation of current share ought to be feasible by separating comprehensive cutting-edge resources of the company with the aid of its aggregate present day liabilities for a given cash associated yThe. The existing sources are the only that may get exchanged interior a year of the day and age. The present percentage offers a sign of the manner that agency is satisfactorily talented to satisfy its fleeting commitments with the help of cutting-edge resources that they’ve. This means a company has its hands on these benefits which have liquidation span of a yr.

Quick Ratio: the figuring of snappy proportion has to be possible through keeping apart the aggregate current assets with contemporary liabilities for an organisation in a given time per here, we have to kill all the stock from the present sources previously the depend. The explanation for this is here we are making use of liquid assets and inventory is something which cannot be sold so unexpectedly. This change into an extreme problem for the organisations who as of now have some liquidity issues. Right here, the liquidity function as a long way as fluid resources aren’t always up to the test as the share is below 1. this means the organisation is not sufficiently gifted to manage all of the fleeting commitments with its fluid sources.

Debt to equity Ratio: the estimation of responsibility to price proportion have to be viable by taking a share of the responsibility and price. The responsibility of the corporation incorporates both right here and now and moreover lengthy haul responsibility. The segments that are incorporated into fee are held profit, issued capital and shops.

Debt Ratio: the figuring of duty share ought to be feasible using partitioning the combination responsibility that corporation has with the aggregate sum of benefits that it holds. The obligation proportion gives a sign of the sum that organisation has applied as responsibility with a selected stop aim to aid its benefOns. on the off hazard that the estimation of share comes high, at that factor it approaches that excessive risk within the commercial enterprise. That that is since if there need to get up a prevalence of default, there may be liquidation of benefits and the considerable majority of the techniques might visit the holders of obligation, and therefore a subsequent to no choose up could be accounted for through the cost holders.

Stock Turnover: the rely upon inventory turnover share have to be feasible via taking a share of everyday COGS and the mixture inventory of the corporation. The stock turnover is a marker of the quantity for which organisation is adequately gifted to rollover its inventory. If the estimation of this percentage comes excessive, at that point this is the sign that there’s the proper management of inventory is finished by using the business enterprise.

Fixed Asset Turnover: settled turnover share can be ascertained as the share of mixture earnings earned by way of the agency and its combination settled resources. This proportion offers a signal that organisation can apply its resolved sources legitimately to create incomes. On the occasion that the estimation of settled useful resource turnover percentage comes excessive that it gives a sign that organisation is adequately capable of using its benefits efficiently.

B

Comparison of ratio

Profitability	2012-12	2013-12	2014-12	2015-12	2016-12	2017-12
Tax Rate %	78.68	31.82		60.59	36.61	20.2
Net Margin %	-0.06	0.37	-0.27	0.56	1.74	1.71
Asset Turnover (Average)	2.11	2.05	1.88	1.78	1.83	1.66
Return on Assets %	-0.13	0.75	-0.51	0.99	3.19	2.83
Financial Leverage (Average)	3.97	4.12	5.07	4.89	4.32	4.74
Return on Equity %	-0.49	3.06	-2.35	4.94	14.52	12.91
Return on Invested Capital %	-0.05	2.55	-0.68	3.31	8.42	7.09
Interest Coverage	6.91	4.59	0.47	4.42	9.04	5.49

 

Liquidity/Financial Health	2012-12	2013-12	2014-12	2015-12	2016-12	2017-12
Current Ratio	1.12	1.07	1.12	1.08	1.04	1.04
Quick Ratio	0.78	0.75	0.82	0.77	0.78	0.76
Financial Leverage	3.97	4.12	5.07	4.89	4.32	4.74
Debt/Equity	0.47	0.53	1.16	1.06	0.79	1.37

 

Efficiency	2012-12	2013-12	2014-12	2015-12	2016-12	2017-12
Days Sales Outstanding	17.73	19.93	21.29	20.53	19.81	22.06
Days Inventory	38.4	39.08	39	39.78	37.41	36.59
Payables Period	85.22	82.72	78.42	79.08	78.78	79.72
Cash Conversion Cycle	-29.09	-23.71	-18.14	-18.77	-21.56	-21.06
Receivables Turnover	20.59	18.31	17.15	17.78	18.42	16.54
Inventory Turnover	9.51	9.34	9.36	9.18	9.76	9.97
Fixed Assets Turnover	10.65	8.27	6.38	5.52	5.34	4.56
Asset Turnover	2.11	2.05	1.88	1.78	1.83	1.66

 

For e-bay

Profitability	2012-12	2013-12	2014-12	2015-12	2016-12	2017-12
Tax Rate %	15.4	17.6	98.7	19.08		144.46
Net Margin %	18.54	17.8	0.26	20.08	80.92	-10.62
Asset Turnover (Average)	0.44	0.41	0.41	0.27	0.43	0.38
Return on Assets %	8.1	7.27	0.11	5.48	34.91	-4.08
Financial Leverage (Average)	1.78	1.75	2.27	2.7	2.26	3.22
Return on Equity %	13.45	12.83	0.21	13.03	84.91	-10.92
Return on Invested Capital %	11.23	10.71	0.14	8.81	42.71	-5.04
Interest Coverage	49.95	35.66	29.71	17.71	17.23	8.79

 

Liquidity/Financial Health	2012-12	2013-12	2014-12	2015-12	2016-12	2017-12
Current Ratio	1.96	1.84	1.51	3.49	2.3	2.19
Quick Ratio	1.91	1.84	1.51	3.49	2.3	2.04
Financial Leverage	1.78	1.75	2.27	2.7	2.26	3.22

 

Efficiency	2012-12	2013-12	2014-12	2015-12	2016-12	2017-12
Days Sales Outstanding	19.5	19.57	17.29	30.08	24.61	24.55
Days Inventory
Payables Period	25.28	22.11	22.61	77.29	57.47	50.35
Cash Conversion Cycle
Receivables Turnover	18.72	18.65	21.11	12.14	14.83	14.87
Inventory Turnover
Fixed Assets Turnover	6.28	6.11	6.32	3.86	5.85	6.15
Asset Turnover	0.44	0.41	0.41	0.27	0.43	0.38

 

Comparison of profitability

Both the companies can be said to have weak profitability owing to less than 2% profit margins however Amazon has better profitability than e-bay. E-bay had posted losses last year hence had negative margins. The return ratios were also weak for e-bay as it had posted losses.

Comparison of liquidity

e-bay has better liquidity than Amazon for the reason that it has better current and quick ratio than Amazon. This can be attributed to the fact that e-bay has very asset light model hence it doesn’t require much investment in current asset however Amazon has a model where working capital requirement is higher.

Comparison of efficiency

This ratio is difficult to compare for the reason that both the companies are not operating in same business model. This can be seen from the fact that Amazon has inventory while e-bay doesn’t have the same hence the comparison is meaningless.

Challenges in accounting

• One of the biggest challenge faced here is there are several standards such as IFRS, GAAP and both the companies are present in several countries hence they have to decide which standards to be use.
• The second issues were related to recording of assets such as brands and software and so on.
• The third major issues in comparison as well as accounting has been different business model of entities. One entity here is technological platform while the other one is multi filed company.

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