Total Word Count : 2000

Amazons income statement, balance sheet, and cash flow statement are provided below for the years 2014, 2015, 2016 in Exhibit 1, 2 and 3 respectively. You are a financial analyst in Wall Street, and your manager has asked you to do the following;

Part a) Calculate financial ratios based on the financial statements of Amazon, and critically evaluate the trends, providing reasons as to why the ratios are changing. Secondly, Based on the ratios you calculated, explain how your calculated ratios could be improved, and how do they compare to competitor businesses? (45 marks)

Part B) Model the income statement forward for the years 2017 and 2018. In your model, state the assumptions you have made, and provide graphs to show your projections. Finally, explain how you could improve your model.

Exhibit 1. Amazon Income statement 2014-2016 ($ Millions)

Exhibit 2. Amazon Balance statement 2014-2016 ($ Millions)

Exhibit 3: Cash flow statement