Analyze and compare Amazon.com to Best Buy

Amazon.com, Inc. $($AMZN$)$ is one of the largest Internet retailers in the world. Best Buy, Co$.$ Inc. $($BBY$)$ is a leading retailer of consumer electronics and media products in the United States. Amazon and Best Buy compete in similar markets; however, Best Buy sells through both traditional retail stores and the Internet, while Amazon sells only through the Internet. Current asset and current liability information from recent financial statements are as follows $($in millions$)$:

Line Item DescriptionAmazonBest BuyCurrent assets:$$Cash $$31,750$

$$1,980$ Short$-$term investments $9,500$Accounts receivable $16,6771,015$ Inventories $17,1745,409$Other current assets$-466$Total current assets $$75,101$ $$8,870$ Current liabilities:$$Accounts payable$$38,192$ $$5,257$ Other current liabilities $30,1992,256$ Total current liabilities $$68,391$ $$7,513$

Required:

a$.$ Compute working capital for each company.

Amazon: fill in the blank $1$ of $10$$ million

Best Buy: fill in the blank $2$ of $10$$ million

b$.$ Compute the current ratio for each company. Round your answers to one decimal place.

Amazon: fill in the blank $3$ of $10$

Best Buy: fill in the blank $4$ of $10$

c$.$ Compute the quick ratio for each company. Round your answers to one decimal place.

Amazon: fill in the blank $5$ of $10$

Best Buy: fill in the blank $6$ of $10$

d$.$ Can the working capital be usefully compared between the two companies? Which of the following statements is correct.

Yes, working capital is a good measure for comparing the liquidity of two companies because both the companies belong to the same industry.No$,$ working capital is not a good measure. Amazon's current assets are over eight times larger than Best Buy's. Thus, the comparison is not very meaningful. Yes, working capital is a good measure. Amazon's current assets are equal to that of Best Buy's. Thus, the comparison is very meaningful. No$,$ the best measure for comparing the liquidity of two companies is to compare the profit and debt ratios.No$,$ working capital is not a good measure. Amazon's current assets are over eight times larger than Best Buy's. Thus, the comparison is not very meaningful.

e$.$ Which company has the greater debt$-$paying ability according to the current ratio?

Best BuyAmazonBest Buy

f$.$ Which company has the greater short$-$term debt$-$paying ability according to the quick ratio?

Best BuyAmazonAmazon

g$.$ Why are the results different between $($e$)$ and $($f$)?($Hint: Perform a vertical analysis of the current assets.$)$ Round your answers to one decimal place. If an amount is zero, enter $"0".$

Line Item DescriptionAmazonBest BuyCurrent assets:$$Cashfill in the blank $10\%$fill in the blank $11\%$Short$-$term investments fill in the blank $12\%$fill in the blank $13\%$Accounts receivable$-$fill in the blank $14\%$fill in the blank $15\%$Inventoriesfill in the blank $16\%$fill in the blank $17\%$Other current assets fill in the blank $18\%$fill in the blank $19\%$Total current assets fill in the blank $20\%$fill in the blank $21\%$

Amazon has fill in the blank $7$ of $10\%$ of its current assets consisting of cash and short$-$term investments, compared to fill in the blank $8$ of $10\%$ for Best Buy. This difference will fill in the blank $9$ of $10$

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Amazon$$s quick ratio relative to Best Buy$$s$.$ Best Buy has $61\mathrm{.}0\%$ of its current assets in inventory, while Amazon only has $22\mathrm{.}9\%$ of current assets in inventory. This difference reflects Amazon$$s pure Internet strategy, which causes the current ratio to be fill in the blank $10$ of $10$

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than Best Buy$$s$.$ It also causes the relationship between the current and quick ratios to diverge between the two companies.