Annual Report Project Instructions For this project, you will read and interpret

Question

Annual Report Project Instructions

For this project, you will read and interpret information from the annual report of a publicly traded company. You can copy and paste the answers from the website directly into this document. The company we will focus on is Amazon. To retrieve Amazon’s annual report please do the following:

Go to https://www.sec.gov/edgar/searchedgar/companysearch.html

In the Company Name box enter Amazon and click search

Go down to AMAZON COM INC (CIK: 0001018724) with SIC 5961. Click on the CIK number with the red link.

Find the 10-k filing (annual report) dated 2017-02-10 and click on Interactive Data

Notes to Financial Statements-Description of Business and Accounting Policies

Question 1: Please provide a description of Amazon’s business

Question 2: What inventory costing method does Amazon use?

Question 3: What depreciation method does Amazon use for Property Plant and Equipment?

Question 4: How does Amazon account for unearned revenue?

Question 5: How many internationally-focused websites does Amazon have and what countries are they for?

Notes to Financial Statements-Acquisitions, Goodwill, and Aquired Intangible Assets

Question 6: What business did Amazon purchase in September of 2014 and why?

Notes to Financial Statements-Long Term Debt

Question 7: What is the interest rate Amazon is paying on their Notes due Dec 5, 2044?

Question 8: As of Dec 31, 2016, what are the future principal payments due after 2021?

Notes to Financial Statements-Other Long Term Liabilities

Question 9: What types of other long term liabilities does Amazon have?

Notes to Financial Statements-Commitments and Contingencies

Question 10: Provide at least 2 paragraphs summarizing Amazon’s current legal proceedings

Notes to Financial Statements-Stockholder’s Equity

Question 11: Has Amazon issued both preferred and common stock? If so, how many shares of each are outstanding as of 12/31/16?

Question 12: How many shares of common stock are available for future issuance to employees as of 12/31/16?

Financial Statements

Consolidated Statements of Operations is the same as a Consolidated Income Statement

Question 13: What was the amount of Net Sales for the year ended 12/31/16?

Question 14: What was the amount of Net Sales for the year ended 12/31/15?

Question 15: What was the Cost of Sales (Cost of Goods Sold) for the year ended 12/31/16?

Question 16: What was the Cost of Sales (Cost of Goods Sold) for the year ended 12/31/15?

Question 17: Calculate: What would be Amazon’s gross profit for the year ended 12/31/16?

Question 18: What was Amazon’s basic earnings per share for 2016?

Question 19: What was Amazon’s basic earnings per share for 2015?

Question 20: What was Amazon’s Cash and Cash Equivalents as of 12/31/16?

Question 21: What was the amount of Inventory as of 12/31/16?

Question 22: What was the amount of Accounts Payable as of 12/31/16?

Question 23: What was the amount of Unearned Revenue as of 12/31/16?

Question 24: What was the amount of Retained Earnings as of 12/31/16?

Question 25: Based on what you learned about Amazon, would you invest in Amazon’s stock? Why or why not? Give a detailed explanation.

Explanation / Answer

Q1. Amazon.com opened its virtual doors on the World Wide Web in July 1995. They seek to be Earth’s most customer-centric company. In each of their segments, they serve their primary customer sets, consisting of consumers, sellers, developers, enterprises, and content creators. They serve consumers through their retail websites and focus on selection, price, and convenience. They also manufacture and sell electronic devices, and offer programs that enable sellers to sell their products on Amazon's websites and their own branded websites and to fulfill orders through Amazon, and programs that allow authors, musicians, filmmakers, app developers, and others to publish and sell content. Amazon serves developers and enterprises of all sizes through their AWS segment, which provides access to technology infrastructure that enables virtually any type of business. In addition, they provide services, such as advertising services and co-branded credit card agreements. They have organized their operations into three segments: North America, International, and AWS.

Q2. The inventory costing method used is FIFO, or First- in- First- out. The inventory is valued at the lower of cost or market value.

Q3. Amazon uses Straight line depreciation method on property, Plant and equipment, depreciating them over a period not exceeding 40 years.

Q4. Unearned revenue is recorded when payments are received in advance of performance of service obligations and is recognized over the service period.

Q5. Amazon has 13 internationally focussed websites, and they are for Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, the Netherlands, Spain, and the United Kingdom.

Q6. In September of 2014, Amazon acquired Twitch because of its user community and the live streaming experience it provides.

Q7. 4.95%

Q8. As of Dec 31, 2016, the future principal payments due after 2021 amount to $5250.

Q9. Long term capital lease obligations, long term finance lease obligations, construction liabilities, tax contingencies and long term deferred tax liabilities are some of the types of other long term liabilities of Amazon

Q11. Amazon has issued both Common and preferred stock. However, only common stock of 497 million is outstanding as on 31st December, 2016.

Q12. 123 million shares are available for issuance.

Q13. $135,987 million.

Q14. $107,006 million

Q15. $ 88,265 million

Q16. $71,651 million

Q17. Gross profit = Sales - Cost of Sales = 135,987 - 88265 = 47,722

Q18. $5.01

Q19. $1.28

Q 20. $19,334

Q21. $11,461

Q22. $25,309

Q23. $4768

Q24. $4916

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