EXHIBIT 5 AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Y
ID: 2427829 • Letter: E
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EXHIBIT 5
AMAZON.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Year Ended December 31,
2014
2013
2012
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
$
8,658
$
8,084
$
5,269
OPERATING ACTIVITIES:
Net income (loss)
(241
)
274
(39
)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation of property and equipment, including internal-use software and website development, and other amortization
4,746
3,253
2,159
Stock-based compensation
1,497
1,134
833
Other operating expense (income), net
129
114
154
Losses (gains) on sales of marketable securities, net
(3
)
1
(9
)
Other expense (income), net
62
166
253
Deferred income taxes
(316
)
(156
)
(265
)
Excess tax benefits from stock-based compensation
(6
)
(78
)
(429
)
Changes in operating assets and liabilities:
Inventories
(1,193
)
(1,410
)
(999
)
Accounts receivable, net and other
(1,039
)
(846
)
(861
)
Accounts payable
1,759
1,888
2,070
Accrued expenses and other
706
736
1,038
Additions to unearned revenue
4,433
2,691
1,796
Amortization of previously unearned revenue
(3,692
)
(2,292
)
(1,521
)
Net cash provided by (used in) operating activities
6,842
5,475
4,180
INVESTING ACTIVITIES:
Purchases of property and equipment, including internal-use software and website development
(4,893
)
(3,444
)
(3,785
)
Acquisitions, net of cash acquired, and other
(979
)
(312
)
(745
)
Sales and maturities of marketable securities and other investments
3,349
2,306
4,237
Purchases of marketable securities and other investments
(2,542
)
(2,826
)
(3,302
)
Net cash provided by (used in) investing activities
(5,065
)
(4,276
)
(3,595
)
FINANCING ACTIVITIES:
Excess tax benefits from stock-based compensation
6
78
429
Common stock repurchased
—
—
(960
)
Proceeds from long-term debt and other
6,359
394
3,378
Repayments of long-term debt
(513
)
(231
)
(82
)
Principal repayments of capital lease obligations
(1,285
)
(775
)
(486
)
Principal repayments of finance lease obligations
(135
)
(5
)
(20
)
Net cash provided by (used in) financing activities
4,432
(539
)
2,259
Foreign-currency effect on cash and cash equivalents
(310
)
(86
)
(29
)
Net increase (decrease) in cash and cash equivalents
5,899
574
2,815
CASH AND CASH EQUIVALENTS, END OF PERIOD
$
14,557
$
8,658
$
8,084
EXHIBIT 6
AMAZON.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
Year Ended December 31,
2014
2013
2012
Net product sales
$
70,080
$
60,903
$
51,733
Net service sales
18,908
13,549
9,360
Total net sales
88,988
74,452
61,093
Operating expenses:
Cost of sales
62,752
54,181
45,971
Fulfillment
10,766
8,585
6,419
Marketing
4,332
3,133
2,408
Technology and content
9,275
6,565
4,564
General and administrative
1,552
1,129
896
Other operating expense (income), net
133
114
159
Total operating expenses
88,810
73,707
60,417
Income from operations
178
745
676
Interest income
39
38
40
Interest expense
(210
)
(141
)
(92
)
Other income (expense), net
(118
)
(136
)
(80
)
Total non-operating income (expense)
(289
)
(239
)
(132
)
Income (loss) before income taxes
(111
)
506
544
Provision for income taxes
(167
)
(161
)
(428
)
Equity-method investment activity, net of tax
37
(71
)
(155
)
Net income (loss)
$
(241
)
$
274
$
(39
)
Basic earnings per share
$
(0.52
)
$
0.60
$
(0.09
)
Diluted earnings per share
$
(0.52
)
$
0.59
$
(0.09
)
Weighted average shares used in computation of earnings per share:
Basic
462
457
453
Diluted
462
465
453
Cash Flows at Amazon.com
Case Questions:
Graph the financial statement items in Exhibit 1. Graph revenue and COGS separate from the other items in Exhibit 1 because of their magnitude (i.e., make two graphs).
Using the graphs above, identify time periods of similar characteristics and classify them using the following life cycle terms: introduction, growth, maturity, or decline (see Exhibit 4 for definitions). For each period labeled, provide support for your classification. Specifically, briefly discuss the patterns observed (e.g., in revenue, income, operating cash flow, investing cash flow, and financing cash flow) and how they indicate where Amazon.com is in the life cycle.
What is the general trend in cash flows from investing activities in Exhibit 3 from 1995 to 2010? Discuss both the net cash flows from investing activities (CFI) and the components of CFI.
Why did Amazon.com invest in marketable securities (Exhibit 3, net change in securities)?
Analyze Amazon.com’s performance for fiscal year ended December 31, 2014 using its Consolidated Statements of Cash Flows (Exhibit 5) and Consolidated Statement of Operations (Exhibit 6). Specifically, answer the following questions:
(a) What are Amazon.com’s net income or loss over the three years? Comment on the company’s profitability.
(b) Comment on Amazon.com’s performance using cash flows from operating, investing and financing activities over the three-year period.
(c) How do you reconcile the large discrepancy between a net loss of $241 million and net cash from operating activities of $6,842 million for fiscal year ended December 31, 2014?
I need all of these answered thouroughly!!! Like as best as possible with as much explanation! I could not fit intoi one post so the others 2 post before this are related!!! Thank you!
Year Ended December 31,
2014
2013
2012
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
$
8,658
$
8,084
$
5,269
OPERATING ACTIVITIES:
Net income (loss)
(241
)
274
(39
)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation of property and equipment, including internal-use software and website development, and other amortization
4,746
3,253
2,159
Stock-based compensation
1,497
1,134
833
Other operating expense (income), net
129
114
154
Losses (gains) on sales of marketable securities, net
(3
)
1
(9
)
Other expense (income), net
62
166
253
Deferred income taxes
(316
)
(156
)
(265
)
Excess tax benefits from stock-based compensation
(6
)
(78
)
(429
)
Changes in operating assets and liabilities:
Inventories
(1,193
)
(1,410
)
(999
)
Accounts receivable, net and other
(1,039
)
(846
)
(861
)
Accounts payable
1,759
1,888
2,070
Accrued expenses and other
706
736
1,038
Additions to unearned revenue
4,433
2,691
1,796
Amortization of previously unearned revenue
(3,692
)
(2,292
)
(1,521
)
Net cash provided by (used in) operating activities
6,842
5,475
4,180
INVESTING ACTIVITIES:
Purchases of property and equipment, including internal-use software and website development
(4,893
)
(3,444
)
(3,785
)
Acquisitions, net of cash acquired, and other
(979
)
(312
)
(745
)
Sales and maturities of marketable securities and other investments
3,349
2,306
4,237
Purchases of marketable securities and other investments
(2,542
)
(2,826
)
(3,302
)
Net cash provided by (used in) investing activities
(5,065
)
(4,276
)
(3,595
)
FINANCING ACTIVITIES:
Excess tax benefits from stock-based compensation
6
78
429
Common stock repurchased
—
—
(960
)
Proceeds from long-term debt and other
6,359
394
3,378
Repayments of long-term debt
(513
)
(231
)
(82
)
Principal repayments of capital lease obligations
(1,285
)
(775
)
(486
)
Principal repayments of finance lease obligations
(135
)
(5
)
(20
)
Net cash provided by (used in) financing activities
4,432
(539
)
2,259
Foreign-currency effect on cash and cash equivalents
(310
)
(86
)
(29
)
Net increase (decrease) in cash and cash equivalents
5,899
574
2,815
CASH AND CASH EQUIVALENTS, END OF PERIOD
$
14,557
$
8,658
$
8,084
Explanation / Answer
Answer to (a):
Amazon.com’s net income or loss over the three years are:
In millions
As year ended December 31, 2014 $ (241)
As year ended December 31, 2013 $ 274
As year ended December 31, 2012 $ (39)
The profitability of the Amazon.com’s in too much fluctuatioin and co. perform net loss year by year but it is not by the operating activities of the company, it is because of interest burden on the company due to heavy long term debts.
Answer to (b):
Comment on Amazon.com’s performance using cash flows from operating, investing and financing activities over the three-year period.
- Cash Flow from operating activities for the three years $ 4180, $ 5475 and $ 6842 millions respectively.
It means in operating activities company performance increasing year by year.
-Cash used in the investing activities for the three years $ (3595), $ (4276) and $ (5065) millions respectively.
It means company continous made the huge investment in Fixed Assets and Invetments year by year that's why company's cash used in Investing activities.
-Cash Flow and used in the Financing Activities for three years $ 2259, $ (539) and $ 4432 millions respectively.
As per company's financing activities result over the years it has been seen that fluctution in financing activities due to Long term debts. Company raise their fund from Long term debts year by year.
Answer to (c):
The large discrepancy between a net loss of $241 million and net cash from operating activities of $6,842 million for fiscal year ended December 31, 2014 is all from Non- operating expenses (as interest expenses and other expenses) and from Non- cash Expenses Like Depreciation etc.
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