Look up Amazon (AMZN) and Ali Baba Group (BABA) stocks on yahoo finance and answ

Question

Look up Amazon (AMZN) and Ali Baba Group (BABA) stocks on yahoo finance and answer the following a. Which one is more liquid? Explain. b. What is the enterprise value for both companies? c. Luke wants to own enough stock of Amazon to be able to control their decisions. How much money does he need to come up with? Note that in order have control, he needs to have 51% ownership. d. Jason is sitting on the board of Amazon and wants to avoid a take-over by Luke. What suggestions do you have for him?

Explanation / Answer

a) Amazon current ratio = 1.09, ALibaba current ratio = 2.58

Alibaba is more liquid.

b) AMazon enterprise value = 351.35B, ALibaba enterprise value = 197.14B

c) Money required: = 358.03B*51% = 182.6B

d) SUggestion:

1. To increase treasury stock holding by purchase from market so sufficient shares are not available in the market to enable takeover

2. Jason can bring more stock issue to dilute shareholding of Luke.

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