ACC 557 Assign 2 You Are An Investment Analyst

Topics: Profit margin, Gross profit margin, Financial ratios Pages: 10 (993 words) Published: June 10, 2015


Week 10 Assignment 2: You Are an Investment Analyst (Amazon vs.eBay) Shirmere N. Gardner
Professor Pankaj Doshi
ACC 557: Financial Accounting
December 9, 2014

Analysis of Company
Amazon
eBay
Company’s History
Founded in 1994 by Jeff Bezos;
American international electronic commerce company; World’s largest internet company Founded in 1995 by Pierre Omidyar; American multinational person-to-person auction website; dot-com e-commerce

Products/services
Offers everything from toys to video games to MP3 downloads and collectible items (apparel, furniture, jewelry, food, DVDs, cosmetics, pet supplies, etc.) Helps consumers buy and sell collectibles and antiques as well as other goods normally sold through flea markets, antique stores, etc. Also sells home improvement items, motor vehicles, electronics, books, etc. Major customers

Divisions of banks, pharmaceutical companies, cellphone companies, FDA, etc. Provides online platforms, tools and services to help individuals and merchants around the globe engage in online and mobile commerce and payments and facilitates transactions; Target markets are online auctions and shopping communities Major suppliers

Wholesalers, retailers, (Proctor & Gamble, Kimberly Clark) are just a few Auctions, wholesalers, retailers,B2B marketplaces,etc.
Leadership
Jeffrey P. Bezos- Founder, President, CEO and Chairman of the Board Pierre M. Omidyar-Founder and Chairman
John J. Donahoe II-CEO, President and Director

May 15, 2007-IPO- $18.00
January 4, 2010- $125.41
January 3, 2011- $169.64
January 3, 2012- $194.44

September 24, 1998 (IPO)- Initially started at $18.00 but closed out on that day at $47.38 January 4, 2010- $23.02
January 3, 2011- $30.36
January 3, 2012- $31.60

*Based on the information provided you can see that there is a yearly upward flow on each graph outside of the day of the IPO of eBay. This may represent that the investors trust the company and it that it is in a good financial position. Some investors may focus on share price when looking at a stock, because it is the most visible number in the financial press. Investors should not get fixated on share price alone, because companies can change share prices dramatically through stock splits, reverse splits and stock dividends without changing fundamentals. Dig a little deeper when thinking about your next investment, and remember that a stock with a high price can go much higher under the right circumstances, just as a stock with a low price can sink even further if it’s not a really a good value.

News Events

Amazon
eBay
February 5, 2014- Acquired Double Helix Games LLC
December 13, 2013- Announced completion of acquisition of Braintree May 6,2014-Acquired Iconology Inc.
February 19, 2014- Acquired PhiSix Inc.
*Companies typically grow through acquisitions, however, studies have shown that the stock of the acquiring company usually goes down immediately following an acquisition announcement, while the stock of the target company, or company being acquired, tends to go up.* Financial Analysis and Key Characteristics for Investment

Ratios
Amazon 2013
Amazon 2012
eBay 2013
eBay 2012
Current ratio
1.07
1.12
1.84
1.96
Quick ratio
0.75
0.80
1.84
1.96
Gross profit margin
27.23%
24.75%
68.62%
70.04%
Net profit margin
0%
0%
18%
19%
Debt to assets ratio
0.76
0.75
0.43
0.44

Accuracy and Reliability of Data on Investment Decisions
Based upon the review of the financial data of both Amazon and eBay it can be safely assumed that all information is correct in that credible sources were used to collect the data including: Nasdaq.com

Finance.yahoo.com
All information was obtained from both company’s financial statements by both sites and compared for accuracy and consistency between reports provided. Both companies follow the guidelines of the FASB

Recommendation
As an investment analyst I would recommend eBay as the company to invest in because...

References: About Amazon. (n.d.) www.amazon.com. Retrieved November 25, 2014, from http://www.amazon.com/Careers-Homepage/b?ie=UTF8&node=239364011
Dunn, Ashley
Elmaleh, Michael Sack. (n.d.) The Reliability and Accuracy of Financial Statements. www.understand-accounting.net. Retrieved December 2, 2014, from http://www.understandaccounting.net/TheReliabilityandAccuracyoffinancialstatement. html
Hamel, Gregory
Hsiao, Aron (n.d.) How did eBay start?.http:ebay.about.com. Retrieved November 25, 2014, from http://ebay.about.com/od/ebaylifestyle/a/el_history.htm
Amazon.com Inc
AMZN Company Financials. (n.d.) www.nasdaq.com. Retrieved November 25, 2014, from http://www.nasdaq.com/symbol/amzn/financials?query
eBay Inc
EBAY Company Financials. (n.d.) www.nasdaq.com. Retrieved November 25, 2014, from http://www.nasdaq.com/symbol/ebay/financials?query
Historical Prices (n.d.) http://finance.yahoo.com
Historical Prices (n.d.) http://finance.yahoo.com. Retrieved December 2, 2014, from
http://finance.yahoo.com/q/hp?s=AMZN&a=11&b=1&c=2009&d=02&e=1&f=2012&g=m
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