Week 4 Shareholder Analysis Assignment Content 1 537672

5wk 4 Shareholder Analysisassignment Content1 Continue Your Work

Continue your work with the company (Amazon) you selected in Week 2. Research Amazon’s financial reports for 2017. Complete a 2- to 3-page FAQ/Shareholder Analysis. Evaluate economic conditions that influence the company’s performance, including political, environmental, currency (money), global economics, and government influences. Compare market conditions with Amazon’s performance for 2017 and conclude how these market conditions, such as interest rates and Federal Reserve Bank monetary policy changes, influenced Amazon’s performance. Analyze year-over-year performance from 2016 to 2017, focusing on key metrics or ratios like trailing PE ratio, forward PE ratio, price to book, return on assets, and return on equity. Support your analysis with APA citations.

Paper For Above instruction

Amazon.com Inc., founded in 1994 by Jeff Bezos, has emerged as one of the most influential and innovative companies in the global technology and retail sectors. Analyzing Amazon’s financial performance for 2017 reveals insights into how macroeconomic and market conditions influenced its growth trajectory and shareholder value. This analysis aims to examine Amazon’s financial metrics, economic influences, and market dynamics during 2017, providing shareholders and investors with a comprehensive understanding of the company’s positioning within the broader economic landscape.

Financial Overview of Amazon in 2017

In 2017, Amazon’s financial reports indicated substantial growth, with revenues reaching approximately $177.9 billion, representing a 31% increase from the previous year (Amazon, 2018). The company’s net income also rose substantially to about $3 billion, reflecting its expanding dominance in e-commerce, cloud computing, and digital content. Key financial ratios such as the Price-to-Earnings (PE) ratio, Return on Assets (ROA), and Return on Equity (ROE) demonstrated Amazon’s strong valuation and profitability, highlighting the confidence of shareholders and market analysts (Amazon, 2018).

Economic Conditions Influencing Amazon’s Performance

Multiple macroeconomic factors impacted Amazon’s performance in 2017. Politically, the global environment was relatively stable, fostering consumer confidence and enabling sustained retail growth. Environmental policies and sustainability concerns also played a role, with Amazon investing in more energy-efficient data centers and logistics to meet environmental standards (Amazon, 2017). Currency fluctuations, particularly the strengthening of the US dollar, affected Amazon’s international sales margins, as a stronger dollar made exports more expensive for foreign customers (Federal Reserve, 2018).

Global economic conditions, including moderate growth in key markets like North America, Europe, and Asia, supported Amazon’s expansion. The global increase in internet penetration and mobile device usage contributed to higher online sales, aligning with Amazon’s core business strategy. Conversely, trade tensions and potential tariffs, especially involving China and the US, introduced some uncertainty, impacting supply chain costs and pricing strategies.

Market Conditions and Their Impact on Amazon in 2017

During 2017, market conditions such as low interest rates and Federal Reserve monetary policy played a significant role in Amazon’s performance. The Federal Reserve maintained a cautious approach, gradually increasing interest rates but keeping them low overall to support economic growth (Federal Reserve, 2017). These conditions lowered borrowing costs for Amazon, facilitating investments in infrastructure, technology, and logistics networks (Hale & Balin, 2017). The stock market experienced considerable bullishness, with major indices reaching record highs, positively affecting Amazon’s stock valuation and investor sentiment.

Moreover, the market’s focus on tech innovation and e-commerce growth aligned with Amazon’s strategic initiatives. Investor confidence spurred by robust earnings reports and continuous innovation in services such as Amazon Web Services (AWS) also contributed to a favorable market environment. Overall, these market conditions created an environment conducive to Amazon’s sustained growth and increased shareholder value.

Year-over-Year Performance Analysis: 2016 vs. 2017

Comparing Amazon’s financial performance from 2016 to 2017 reveals notable improvements across several key metrics. The trailing PE ratio increased from approximately 319 in 2016 to 135 in 2017, reflecting a more attractive valuation as the company’s growth stabilized and profits increased (Yahoo Finance, 2018). The forward PE ratio decreased, indicating market expectations of sustained future earnings growth. The price-to-book ratio moved upward, signaling strong market confidence in Amazon’s asset base and growth prospects.

Return on Assets (ROA) improved from 1.4% in 2016 to 3% in 2017, while Return on Equity (ROE) increased from 6.7% to 13.3%, illustrating the company’s increased profitability and efficiency in generating shareholder returns (S&P Capital IQ, 2018). These improvements underline Amazon’s successful expansion and strategic investments, including its cloud services division AWS, which boasted significant revenue growth and profitability (Amazon, 2018).

Conclusion

The analysis of Amazon’s 2017 financial reports through the lens of macroeconomic and market conditions demonstrates how external factors significantly influenced its performance. Stable political conditions, favorable global economic growth, and low-interest rates created a supportive environment for Amazon’s expansion. The company’s strategic investments and operational efficiencies translated into improved financial ratios and shareholder value.

Furthermore, fluctuations in currency exchange rates and trade policies introduced challenges alongside opportunities. The positive market environment, driven by investor confidence in tech stocks and continuous innovation, supported Amazon’s growth trajectory. The year-over-year comparison confirms that Amazon capitalized on these conditions effectively, resulting in strong financial health and sustained investor confidence as reflected in key metrics and ratios.

In conclusion, Amazon’s 2017 performance was heavily influenced by macroeconomic stability and favorable market conditions, which created an optimal environment for its strategic growth initiatives. Continued vigilance on economic and geopolitical developments remains essential for long-term sustainability and shareholder value maximization.

References

  • Amazon. (2018). Amazon.com, Inc. Annual Report 2017. Retrieved from https://www.sec.gov/Archives/edgar/data/0001018724/000101872418000012/amzn-20171231x10k.htm
  • Federal Reserve. (2017). Monetary Policy Report. Retrieved from https://www.federalreserve.gov/monetarypolicy.htm
  • Federal Reserve. (2018). Economic Projections. Retrieved from https://www.federalreserve.gov/monetarypolicy.htm
  • Hale, J., & Balin, P. (2017). The impact of Federal Reserve policies on corporate investments. Journal of Economic Perspectives, 31(3), 89-112.
  • S&P Capital IQ. (2018). Amazon Financial Metrics. Retrieved from https://www.capitaliq.com
  • Yahoo Finance. (2018). Amazon Stock Data and Ratios. Retrieved from https://finance.yahoo.com/quote/AMZN
  • Amazon. (2017). Sustainability Initiatives. Retrieved from https://www.aboutamazon.com/sustainability
  • International Monetary Fund. (2017). World Economic Outlook. Retrieved from https://www.imf.org/en/Publications/WEO
  • OECD. (2017). Economic Outlook. Retrieved from https://www.oecd.org/economic-outlook/
  • World Bank. (2017). Global Economic Prospects. Retrieved from https://www.worldbank.org/en/publication/global-economic-prospects

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