Question

This and similar cases in succeeding chapters are based on the consolidated financial statements of Amazon.com, Inc. As you work with Amazon.com, Inc., throughout this course, you will develop the ability to use the financial statements of actual companies.

Requirements
Refer to the Amazon.com, Inc., consolidated financial statements in Appendix A at the end of the book.
1. Read Part I, Item 1 (Business) of Amazon.com, Inc.’s annual report. What do you learn here and why is it important?
2. Name at least one of Amazon.com, Inc.’s competitors. Why is this information important in evaluating Amazon.com, Inc.’s financial performance?
3. Suppose you own stock in Amazon.com, Inc. If you could pick one item on the company’s Consolidated Statements of Operations to increase year after year, what would it be? Why is this item so important? Did this item increase or decrease during fiscal 2010? Is this good news or bad news for the company?
4. What was Amazon.com, Inc.’s largest expense each year? In your own words, explain the meaning of this item. Give specific examples of items that make up this expense. The chapter gives another title for this expense. What is it?
5. Use the Consolidated Balance Sheets of Amazon.com, Inc., in Appendix A to answer these questions: At the end of fiscal 2010, how much in total resources did Amazon.com, Inc., have to work with? How much did the company owe? How much of its assets did the company’s stockholders actually own? Use these amounts to write Amazon.com, Inc.’s accounting equation at December 31, 2010.
6. How much cash did Amazon.com, Inc., have at the beginning of the most recent year? How much cash did Amazon.com have at the end of the year?



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