FIN 6060: Financial Decision Making

Module 1 - Company Analysis Worksheet

Complete this worksheet using the directions within to guide you. Submit your completed worksheet in the “Assignment and Grades”
tab in your course menu. When you have submitted this assignment for grading, please return to Module 1 for a module wrap-up.

Company Analysis
Directions: Obtain end-of-year financial statements (balance sheets and income statements) for the previous three years from Amazon and
Walmart. Conduct a ratio, horizontal, and vertical analysis for each company. Then answer the following questions.

How would you evaluate the financial strength of Amazon and Walmart?

Amazon:

Revenue Growth: Throughout the years, the revenue generated by Amazon has consistently increased, demonstrating its capacity to
broaden its customer base and provide a variety of goods and services outside of just online shopping, such as computing via the
cloud and broadcasting.

Earnings: Amazon prioritizes long-term development over immediate returns, which results in very low earnings margins in its retail
operations. However, its high-margin internet hosting dividing, amazon.com web services (AWS), greatly adds to its general
profitability.

Revenue Flow: A business's capacity to generate a profit depends on its cash flow from operations. Significant operating cash flows
have been continuously produced by Amazon, giving it freedom to make expenditures and grow.

Industry Presence: Amazon's substantial competitiveness and market dominance are demonstrated by its stronghold in online sales
and its expanding influence in various other industries.

Walmart

Income Stability: Walmart maintains steady streams of income despite shifting customer preferences and marketplace conditions
because to its extensive branch infrastructure and wide range of goods available.
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Module 1 - Company Analysis Worksheet

Earnings: Walmart makes substantial revenue despite having fewer profit margins than other retailers due to its size and operational
effectiveness.

Financial Resources: Walmart's substantial financial reserves enable it to engage in strategic projects, investments, and stock
repurchases while also acting as a buffer against recessions.

The International Reach: The activities of Walmart span several nations, providing business with a worldwide diversity that lessens
its reliance on any one market.

Expansion in E-commerce: Walmart's emphasis on growing its technology projects and the internet skills shows how flexible it is to
changing customer needs and how committed it is to being a competitive player in the market for online retailers.

Is Amazon in a strong or weak financial position?

Right now, Amazon is doing well financially. The previous several years have seen a notable increase in the organization's income
and profit. The company's robust economic growth can be attributed to its varied industries, which encompass the internet of things,
cloud computing, and advertising (Amazon.com, Inc. - Overview, 2020).

Is Walmart in a strong or weak financial position?

Walmart's 'AA' Long-Term IDR is indicative of its strong position in the worldwide retail sector's share, with $611 billion in income
expected in 2022, favorable comps, significant earnings, and a solid business plan that has led to EBITDAR leverage of about
2x.GuruFocus reports that Walmart's financial stability index is 7, showing durability against adversity, while the business's Altman-
Z score is 5.09, indicating healthy financial state. In publicly accessible financial records, Walmart has greater PE and P/B ratios
than its competitors, but its current ratios and return on equity are lower. Walmart's 6.7% revenue increase to $559 billion in 2020
suggests that the company is financially stable, but different comparisons may produce different results. Walmart's overall financial
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Module 1 - Company Analysis Worksheet

situation indicates that it has lost some of its once-dominant position (2024).

Which company (Amazon or Walmart) is in a better financial position? Explain how you know this.

When it comes to finances, Amazon is doing more well than Walmart. Amazon's internet-based computing capabilities and
leadership in e-commerce have contributed to its steady development in sales and earnings. Conversely, Walmart appears to be
operating well as well, but it has had trouble matching Amazon's online footprint. Moreover, Amazon's present ratio of 1.05 beats
Walmart's 0.85, indicating that it is better able to cover its financial obligations.

Would you use either Amazon or Walmart to establish benchmarks for the company you currently work for? Why?

I think it's helpful to use Amazon as a standard for the business I work for because of how much information is readily available to
the general public. Walmart's strong investment return on equity raises concerns about the company perhaps leaning on indebtedness
which is the main driving force for this decision. When it comes to total profitability, Amazon is unique. As success depends on
having rigorous requirements, it makes sense to use Amazon as a benchmark rather than Walmart in this case.

If you were the CEO of each company, what recommendations would you make to improve the company’s financial performance?

Recommendations for Amazon:

 Set worker requirements as a top priority to protect the reputation of the company and head off possible complaints.
 Reassess the viability of the global company, taking into account the divestiture of underperforming companies.
 Maintain a close eye on market trends to ensure that Amazon remains the top spot in the industry.

Recommendations for Walmart:

 FIN 6060: Financial Decision Making
Module 1 - Company Analysis Worksheet

Growth of E-Commerce and Digital Revolution:

Increase spending on technological advancement projects and e-commerce capabilities to gain a bigger portion of the expanding
online retail sector.
To increase online sales, improve the functioning of websites and applications for mobile devices, optimize the online purchasing
process, and spend money on digital advertisement.
Integration across channels:

In order to give customers flawless both digital and physical purchasing expertise, improve the coordination of online and offline
channels. Some examples of this include immediate delivery, in-store pickup choices, and clicking and picking up services.

Optimization of the Supply Chain:

Maintain a state of constant supply chain optimization to boost inventory control, cut expenses, and increase efficiency. Make use of
cutting-edge technology to improve visibility and optimize processes, such as RFID, automation, and data analytics.

Global Growth:

Examine prospective avenues for sustainable global growth in developing nations with room to grow, all the while concentrating on
enhancing

References
 FIN 6060: Financial Decision Making
Module 1 - Company Analysis Worksheet

Amazon.com, Inc. - Overview. (2020). Aboutamazon.com. https://ir.aboutamazon.com/overview/default.aspx

(2024). Fitchratings.com. https://www.fitchratings.com/research/corporate-finance/fitch-affirms-walmart-at-aa-f1-outlook-stable-

20-06-2023