Amazon.com, Inc. is one of the largest Internet retailers in

Amazon.com, Inc. is one of the largest Internet retailers in the world. Walmart is the largest retailer in the United States. Amazon and Walmart compete in similar markets; however, Walmart 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):

                                                                                   Amazon         Walmart  
Net income (loss)                                                        $(241)            $16,363
Average number of common shares outstanding        462                3,230

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 $437 per share at a time when Walmart’s was $72 per share. How would you explain this difference in market price given the earnings per share computed in (A) for both companies?

Related Book For answer-question

Financial and Managerial Accounting

14th edition

Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac

ISBN: 978-1337119207

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