The incredible growth of Amazon.com has put fear into the hearts of traditional retailers. Amazon.coms stock price
Question:
Instructions
(a) Calculate free cash flow for Amazon.com for 2003 and 2002, and discuss the companys ability to finance expansion from internally generated cash. Thus far, Amazon.com has avoided purchasing large warehouses. Instead, it has used those of others. It is possible, however, that in order to increase customer satisfaction the company may have to build its own warehouses. If this happens, how might your impression of its ability to finance expansion change?
(b) Discuss any potential implications of the change in Amazon.coms cash provided by operations from 2002 to 2003.
(c) Based on your findings in parts (a) and (b), can you conclude whether Amazon.coms amazing stock price isjustified?
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Free Cash Flow
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...
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Intermediate Accounting principles and analysis
ISBN: 978-0471737933
2nd Edition
Authors: Terry d. Warfield, jerry j. weygandt, Donald e. kieso