Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Wal-Mart (WMT) is the largest retailer in the United States. Amazon and Wal-Mart compete in similar markets; however, Wal-Mart sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Earnings and common stock outstanding information was obtained from recent financial statements for both companies as follows (in millions):

a. Determine the earnings per share for each company. Neither company had preferred stock outstanding. Round to the nearest cent.
b. Which company appears more profitable from an earnings-per-share perspective?
c. The market price of Amazon common stock was $750 per share at a time when Wal-Mart€™s was $69 per share. How would you explain this difference in market price given the earnings per share computed in (a) for both companies?

Transcribed Image Text:

Amazon Wal-Mart $2,371 Net income Average number of common shares outstanding $14,694 3,207 474