Question

Amazon.com, Inc.’s balance sheet (slightly modified) for December 31, 2011, contained the following items ($ in millions):
Property and equipment, net ........... $ 4,417
Accrued expenses and other ........... 3,751
Cash and cash equivalents .............. 5,269
Other noncurrent assets ............... 1,416
Inventories .................... 4,992
Other current assets .............. 351
Accounts payable ................ 11,145
Marketable securities, short-term .......... 4,307
Accounts receivable, net ............ ?
Goodwill .................. 1,955
Long-term liabilities ............... 2,625
Stockholders’ equity .............. 7,757
1. Prepare a December 31, 2011, classified balance sheet for Amazon.com. Include the correct amount for Accounts Receivable.
2. Compute the company’s working capital, current ratio, and quick ratio. Compute the quick ratio as (current assets – inventory) ÷ current liabilities.
3. Comment on the company’s current and quick ratios. In 2010, the current ratio was 1.33 and the quick ratio was 1.02.
4. During 2011, Amazon decreased its Marketable Securities by $678. Suppose the company had not decreased its Marketable Securities but had instead decreased long-term investments (classified as Other Noncurrent Assets) by $678. How would this have affected Amazon’s current ratio? How would it have affected the company’s liquidity?



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  • CreatedFebruary 20, 2015
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