Financial Accounting

A Comparative analysis of the

“E-commerce industry”

By Group 9
Aman Raj 36BM09
Dhiresh Sachdeva 36BM18
Vishal Kokane 36BM28
Alok Mishra 36BM37
Rupesh Kumar 36BM46
Utkrisht Mittal 36BM55
Companies selected for the
analysis

An e‐commerce firm is any business that
derives a substantial part of its total
revenue from internet transactions.
Additionally, a pure play firm would be
one that derives all of its revenue through
e‐commerce.
Introduction
The sector has experienced phenomenal
growth, breaking down old shopping
habits & inculcating new ones and
inspiring a new way for people to
transact. By 2030, it is expected to have
an annual gross merchandise value of
$350 Bn
In a matter of minutes, can literally shop E-commerce in India is now
from a wide range goods and services, from characterized by low pricing, fast
travel, movies, clothes, groceries, shipping and a multitude of options
pharmaceutical products, gadgets. The same to choose from with over 5000 E‐
goes for handymen services such as Commerce hubs dedicated
plumbers, electricians, etc. exclusively to exploiting the
burgeoning growth rate of this sector.
 Profitability ratios
• Return on Equity is a vital metric for evaluating a company's profitability and financial
performance.
• IndiaMart had a high Return on Equity (RoE) in FY 2019, which gradually decreased in the
following years while remaining positive.
• Amazon had a lower RoE in FY 2019, but it improved in FY 2020 and FY 2021, indicating
increased profitability. However, it experienced a negative RoE in FY 2022, suggesting a net loss
for that year.

• IndiaMART's Return on Assets varied over the years, with fluctuations but remained
positive. It had high RoA figures in some years, indicating efficient asset utilization for
profit. The assets increased from 2000 Cr to 3800 Cr, thus in FY2019, the return on assests
decreased significantly.
• Amazon had a generally lower RoA than IndiaMART, but it improved over the years until
FY 2022 when it turned negative, suggesting a net loss relative to its assets in that specific
year.
• IndiaMART experienced a substantial improvement in its EBITDA margin over the years,
transitioning from a negative margin in FY 2018 to a significantly positive margin in FY
2021 and FY 2022, indicating substantial profitability growth.

• Amazon maintained a consistently positive EBITDA margin, although it fluctuated within

a relatively narrow range during the specified years, indicating consistent but relatively
stable profitability.
 Solvency Ratios

Debt Equity Ratio

• IndiaMart has significantly reduced its debt/equity ratio over the years,
indicating a decrease in its reliance on debt financing, which is generally
positive for its financial stability.
• Amazon has maintained a consistently high debt/equity ratio, suggesting a
continued reliance on debt to finance its operations, potentially indicating
higher financial risk.
 Liquidity Ratios
Current Ratio
5.00 Current Ratio
4.41
4.50 • IndiaMART consistently maintained a healthy current ratio over
4.00
3.50 the years, indicating strong short-term liquidity.
3.00 • Amazon's current ratio was generally lower than IndiaMART's,
2.50
2.00 1.71 1.88 and it fell below 1 in FY 2022, which could raise concerns
1.50 1.21 about its ability to cover short-term obligations that year.
1.00 1.10 1.10 1.14
1.05
0.50
0.00
FY 2018 FY 2019 FY 2020 FY 2021

India Mart Amazon Series3

Cash Ratio
• IndiaMART consistently maintained a healthy cash ratio over
Cash Ratio the years, indicating a strong ability to cover short-term
4.50 4.24 liabilities with its cash reserves.
4.00
3.61 • Amazon had lower cash ratios than IndiaMART throughout the
3.50
years, and its cash ratio decreased in FY 2022, which may
3.00
2.50 indicate relatively less cash available to cover short-term
2.00 1.63
1.82 obligations in that specific year.
1.50 1.12
1.00 0.63 0.67 0.68
0.60 0.45
0.50
0.00
FY 2018 FY 2019 FY 2020 FY 2021 FY 2022

India Mart Amazon

Altman’s Z-score

• Both IndiaMART and Amazon generally had Z-Scores above the

threshold, indicating low bankruptcy risk.
• IndiaMART consistently maintained a high Z-Score, suggesting a
low risk of bankruptcy in all years.
• Amazon's Z-Score remained above the threshold in most years, but
it decreased in FY 2022, implying a relatively higher bankruptcy risk
compared to previous years.
• However, it still remained above 1, indicating a moderate level of
safety from a bankruptcy perspective.
 Altman’s Z-score
Trend Analysis
Amazon Line Fit Plot
IndiaMart Project Fit Plot
4.5
20.00

4
18.00 17.23
f(x) = − 0.727056574783378 x + 6.09720328581261
16.00 3.5

14.00 3

12.00
2.5
9.88416
India Mart

9.74709 9.79278 9.83847

Year
10.00
f(x) = 0.0456899999999999 x + 9.7014 8.83 2
8.08
8.00
1.5
6.00 5.12
1
4.00

0.5
2.00

0.00 0
0.5 1 1.5 2 2.5 3 3.5 4 4.5 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00 6.50

Year Amazon
 Cash Flow Ca sh from Ope ra t i ng Ac t i vi t i e s
Cash from Operating Activities 100%
• IndiaMART and Amazon both experienced significant growth in cash 80% 81%

generated from their core business operations over the specified years. 60%
• IndiaMART's figures, while smaller in absolute terms compared to 40% 42%
29%
Amazon, show a strong and consistent upward trend in cash generation, 20% 24% 25%
7%
indicating healthy business operations. 0%
FY 2019
2%
FY 2020 FY 2021 FY 2022
• Amazon consistently generated a substantial amount of cash from its -20%
-30%
core operations, with fluctuations in the absolute figures, but overall -40%
strong cash generation. India Mart Amazon

Cash Flow from Investing

• IndiaMART had cash outflows from investing activities over the Cash F l o w fro m In v est i n g Act i v it i es
600%
specified years, with the amount of cash used for investments increasing 500% 475%
in 400%
300%
some years. 200% 158%
• Amazon also had significant cash outflows from investing activities, 100%
0%
102%
67%
-3%
-16%
with the largest investments made in FY 2018 and FY 2020. In the -100% FY 2019 FY 2020 FY 2021 FY-31%
2022
-75%
-200%
later years, while still substantial, the cash outflows decreased somewhat.
India Mart Amazon

Cash from Financing activities

• IndiaMART had fluctuations in its cash from financing activities, with Cash fro m F i n an ci n g Act i v i ti es
both positive and negative cash flows over the specified years. 500%
35% 64%
• Amazon experienced significant cash outflows from financing 0%
FY-7%
2019
-88%
FY 2020 FY 2021 FY 2022
-106%
activities in FY 2018 and FY 2019, followed by positive cash flows in FY -500%
-463%
-669%
-1000%
2021 and FY 2022, indicating changes in its financing activities during -1500%
this period. -2000%
-2500% -2124%

India Mart Amazon

 Environmental,Social,Governance
• Both IndiaMART and Amazon have shown an
increasing commitment to ESG (Environmental, Social,
Governance) disclosure, with their ESG disclosure
scores improving over the years.
• Amazon consistently had higher scores across ESG,
environmental, social, and governance categories,
indicating a strong emphasis on transparency in these
areas.
• IndiaMART has also shown positive trends, with
notable improvements in environmental and social
disclosure scores.
• Both companies maintained a high and constant
governance disclosure score, suggesting strong and
consistent governance transparency.
 Profitability Ratio

FY 2020 FY 2021 FY 2022 FY 2023

Return on Common Equity -143.04 -18.46 -9.83 -5.40 -4.99-5.40-5.30
-10.00 -7.52
Return on Assets -74.98 -14.01 -9.83 -9.29-9.29-9.88 -4.99
Return on Capital -137.88 -14.01
-18.13 -14.97 -9.88 -5.30
Return on Invested Capital -138.47 -18.46 -18.13
-14.97 -14.0768 -7.52

-30.00

-50.00

-70.00

-74.98

-90.00

-110.00

-130.00

-137.88 -138.47
-143.04
-150.00

Return on Common Equity Return on Assets Return on Capital Return on Invested Capital
 %tage Change in Profitability Ratio

95%

89%
87%
85%
81%

75%

65%

55%

47% 46%
45% 45% 45%

35%
34%

25%

15%

5% 6%

FY 2021 FY 2022 FY 2023

%tage Change in Return on Common Equity 87% 47% 45%
%tage Change in Return on Assets 81% 34% 46%
%tage Change in Return on Capital 87% 45% 46%
%tage Change Return on Invested Capital 89% 6% 0.46597948397363

%tage Change in Return on Common Equity %tage Change in Return on Assets %tage Change in Return on Capital %tage Change Return on Invested Capital
 Altmen Z-Score

45.000 Due To high Share price on the stock Market

39.074

35.000

25.000

15.000

8.796
7.894

5.000

2019
-1.113 2020 2021 2022 2023
Z-score -1.113 -3.724 7.894 39.074 8.796
-3.724
-5.000

Z-score
Interesting Co-relations
Thank you very
much!