Amazon.com, Inc.’s financial statements are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. (Use Wal-Mart’s January 31, 2014, financial statements for comparative purposes.) Instructions for accessing and using the complete annual reports of Amazon and Wal-Mart, including the notes to the financial statements, are also provided in Appendices D and E, respectively.

Instructions

(a) Based on the information contained in these financial statements, determine each of the following for each company. Use Amazon’s net product sales to compute gross profit information.

(1) Gross profit for 2013.

(2) Gross profit rate for 2013.

(3) Operating income for 2013.

(4) Percentage change in operating income from 2012 to 2013.

(b) What conclusions concerning the relative profitability of the two companies can you draw from these data?