Essay on Amazon.com: Global Retail Giant with Millions of Products and Services

Introduction

Amazon.com is a multinational corporation founded by Jeff Bezos in 1994. The corporation commenced active operation and started as a books store (Kelley et al., 2010). However, as time elapsed through technological advancement and desire to grow, the corporation expanded its scope of operation and sales. In the contemporary business environment, Amazon.com now operates across the globe and offers millions of different products and services, including storage and database services. Moreover, the corporation provides different platforms to other corporations and people to market their products and service (Kelley et al., 2010). For instance, the organization also offers kindle platform, which was launched in 2006 to rival Bares and noble and Apple versions of tablets and e-readers. Notably, in 2015, the corporation moved from Forbes 500 list and also ranked fourth on the global most lucrative corporation (Kelley et al., 2010). Therefore, it seems though Amazon.com has grown significantly over a span of 20 years, the past two financial years have not been different. For instance, between the 2013 and 2014 financial year, Amazon.com's net sales have increased by $ 14530 million (Kelley et al., 2010). Therefore, the paper aims to analyze the corporation's statement of financial position or the balance sheet.

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Balance sheet and Strategy for Investment

The balance sheet of Amazon would provide viable information to the investors on the corporation's current and maturing obligation and the corporation assets and financial position. On the other hand, strategy for investment would provide significant forecast into the future that can give the corporation a competitive advantage above other organizations in the same industry (Kelley et al., 2010). A significant line in the balance sheet of Amazon.com is critical, including cash and short-term investment from a period of 2015 to 2019. The corporation cash position as of 2015 financial year ended at $ 15.8 billion (Kelley et al., 2010).

In the subsequent five financial years, the corporation has doubled the figure to $ 36 billion (Misch & Galantine, 2009). This move has created huge cash flow to the corporation, implying that the corporation is fully optimizing its current assets. Therefore, a better strategy for the organization would be increasing its short-term investments, or the corporation can use the cash to buy back its stocks for a more lucrative financial position. Another recommendation or strategy would be paying the dividend to its shareholders in the absence of adequate operational opportunities. Notably, holding too much cash can impact negatively on the organization. With the implementations of this strategy, the corporation would continue in existence for the foreseeable future. In reference to short term investment, Amzon.com ended the 2015 financial year with $ 3.9 billion short term investments. However, in the next five financial years, the corporation has reported a total of $ 18.9 billion short term investment (Misch & Galantine, 2009).

Strength and Weaknesses

In reference to the balance sheet analysis, Amazon has got a huge stockpile of cash flow, and thus its current investment should be higher above reported $ 18.9. This is a weakness to the organization, and they should take advantage of the opportunity and increase its short investment. The inability to increase short term investment despite huge cash flow is a significant weakness. On the other hand, the corporation has such strength, including the ability to attract more investors due to stable cash flow. The strength is significant to the organization has it can save the organization from debt financing, which can help save the cost of financial related cost like interest.

References

Kelley, T., Hora, J. A., & Margheim, L. (2010). A financial analysis case of Amazon. com and Barnes & Noble with emphasis on the impact of ROE versus EPS: accounting case and instructor notes. Journal of Business Case Studies (JBCS), 6(3). https://doi.org/10.1002/9781119201489.ch2

Misch, M. B., & Galantine, C. A. (2009). A financial statement analysis project for introductory financial accounting. Global Perspectives on Accounting Education, 6(1), 5. https://doi.org/10.1007/978-981-10-4385-7_