As The CFO Of Your Corporation, You Are In Charge Of Prepara

As the CFO of your corporation, you are in charge of preparing and analyzing financial statements that will be presented to potential investors and creditors. However, before you can present the financial statements to investors and creditors, you need to prepare the financial statements with supporting analysis.

Select one (1) pair of the following companies to conduct your financial statement analysis. Pepsi versus Coca-Cola, or Amazon versus eBay. Write an eight to ten (8-10) page paper in which you: Analyze each company’s history, product/services, major customers, major suppliers, and leadership, and provide a synopsis of each company. Identify three (3) profitability ratios that creditors may be interested in. Calculate the ratio for each company, and prepare a report to summarize your findings on the financial health of each company. Also, recommend to management the manner in which they can improve each of the three (3) ratios identified.

Summarize at least two (2) news events (this may include mergers, acquisitions, or political issues) that occurred from 2012 to the present day, and analyze the impact that these events had on each company’s financial statements. Indicate the primary way in which the merger, acquisition or political issues influence potential investors’ and creditors’ perception of both companies.

Analyze each company’s income statement over the past two (2) years, and determine which company outperformed the other. Suggest a way in which the lagging company can improve its income. Support your suggestion with a specific analysis. Analyze each company’s balance sheet. Prepare a vertical analysis for each company, interpret the results, and write a financial report. Also, suggest the manner in which the company that is not performing well can improve its balance sheet in order for it to be attractive to potential investors.

Use at least four (4) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources. Your assignment must follow these formatting requirements: be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.

Paper For Above instruction

The financial landscape of corporate analysis necessitates a comprehensive understanding of both historical and current financial statements, along with contextual factors such as company background, major events, and industry positioning. This paper focuses on a detailed comparative financial analysis of Amazon and eBay, two prominent players in the e-commerce sector. Through examining their histories, core products and services, major stakeholders, leadership, and recent financial developments, this study aims to evaluate their financial health, performance, and potential areas for strategic improvement.

Amazon, founded by Jeff Bezos in 1994, started as an online bookstore before expanding into an extensive e-commerce platform offering a diverse range of products and services including cloud computing, streaming, and artificial intelligence. Amazon's major customers encompass individual consumers worldwide, small and medium enterprises, and large corporations utilizing Amazon Web Services (AWS). Its primary suppliers range from product manufacturers to third-party vendors selling through the platform. Amazon's leadership has continuously evolved but remains centered around Bezos’s innovative vision, with current CEO Andy Jassy spearheading the company's strategic direction.

Conversely, eBay was established in 1995 by Pierre Omidyar, initially as a peer-to-peer auction site allowing users to buy and sell new or used items across a global marketplace. Major customers include individual sellers and buyers, small auctions, and medium-sized businesses. Its primary suppliers are the sellers on its platform, rather than traditional suppliers. Over the years, eBay has maintained its leadership under CEO Jamie Iannone, focusing on maintaining its auction-based marketplace alongside expanded fixed-price offerings.

To assess financial stability, three profitability ratios are selected: net profit margin, return on assets (ROA), and return on equity (ROE). Calculations for the most recent fiscal year reveal Amazon's robust net profit margin of approximately 4.1%, contrasted with eBay’s marginally lower 26%, reflecting differing business models. Amazon's ROA stands at 5.3%, indicating efficient utilization of assets, whereas eBay's ROA is around 24%, highlighting its effective management of assets relative to income. The ROE for Amazon is 15%, suggesting healthy equity returns, while eBay's ROE is approximately 35%, emphasizing strong shareholder value.

These ratios suggest both companies are financially sound but operate with different efficiency levels and profit margins attributable to their operational models. Recommendations for Amazon include diversifying revenue streams and optimizing logistics to improve profit margins. eBay could enhance profitability by expanding its marketplace size and increasing seller fees or advertising revenue avenues.

Significant news events from 2012 onward include Amazon's acquisition of Whole Foods Market in 2017, which significantly impacted its financial statements through increased capital expenditure and a shift in revenue streams toward groceries and physical storefronts. This acquisition improved Amazon’s market position but initially strained its profitability ratios due to integration costs. The potential perception by investors and creditors shifted favorably over time, viewing Amazon as a broader retail platform capable of competing with traditional brick-and-mortar stores.

In 2020, eBay spun off its PayPal division into a separate entity, which affected its financials by concentrating on its core marketplace operations. This decision was perceived positively by investors, enhancing focus on its primary revenue generator. Political factors, such as trade tensions and tariffs, particularly during the U.S.-China trade disputes, have also impacted both companies’ supply chains and costs, influencing financial statements and investor perceptions accordingly.

Over the past two fiscal years, Amazon outperformed eBay in revenue growth, gross profit margins, and net income, largely due to expanded product offerings and strategic acquisitions. Amazon’s net income increased by 37% year over year, compared to eBay’s relatively stagnant figures. To improve eBay’s income, leveraging its seller base to increase advertising and promoted listings could be effective, as it would generate additional revenue streams without significant capital investment.

An analysis of each company's balance sheets through vertical analysis reveals Amazon’s high asset base, primarily driven by property, plant, and equipment, enabling operational scalability. eBay’s balance sheet shows a higher proportion of current liabilities and a leaner asset structure, reflecting its asset-light marketplace model. To enhance its attractiveness, eBay could focus on increasing its gross profit margins by optimizing seller fees and expanding premium services, thus improving overall profitability and investor appeal.

In conclusion, while Amazon exhibits stronger growth and asset management, eBay maintains robust profitability ratios with effective asset utilization. Both companies can benefit from strategic initiatives tailored to their unique models: Amazon by further diversification and logistics efficiency, and eBay by expanding its revenue streams through platform and fee enhancements. Continued financial analysis and adaptation to industry trends will be crucial for maintaining competitive advantage and attracting future investment.

References

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