Financial Analysis on Amazon PLC
Name
FINA – 5320 Managerial Finance
06/25/2022
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ABSTRACT
Basically, organizations tend to relay favorable and positive information regarding their
performances in a bid to attract more investors from the public. However, while the reporting tends
to reflect the economic position, most times there are some hidden factors that tend to cover up on
any weaknesses or loopholes noted within the business model. Therefore, this report uses financial
analytical tools to assess the current performance noted, historical performance, financial health
and make projections based on this analysis. Additionally, an understanding into the strategic
financial planning is equally important in this process since it shows whether strategies align with
financial goals. Hence, with context to Amazon PLC, the analysis highlights the way large
corporations, especially those reliant on technological infrastructure (digital platforms) tend to
have better cost composition that allows it to make higher margins in profits. Also, the impact
covid19 had on companies such as Amazon was positive as the company realized increase in sales
and, profits at a time where most industries were at recession. This, notwithstanding, the analysis
plays a critical role in highlighting the fiscal policies in play and explains whether they are
effective.
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Table of Contents
Introduction ……………………………………………………………………………………………………………………. 4
Empirical Analysis ………………………………………………………………………………………………………….. 4
Current Performance ……………………………………………………………………………………………………. 4
Organizational performance with Historical Data ……………………………………………………………. 5
Financial Projections ……………………………………………………………………………………………………. 7
Amazon’s Financial Health and Status …………………………………………………………………………… 9
Results from the Regression Analysis …………………………………………………………………………… 12
Integrating Financial Goals with Strategy ……………………………………………………………………… 13
Recommendations and Conclusions ………………………………………………………………………………… 14
References ……………………………………………………………………………………………………………………. 15
Appendices …………………………………………………………………………………………………………………… 17
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Financial Analysis on Amazon PLC
Introduction
The covid19 pandemic highlighted the impact social changes and trends can have on different
organizations and industries as safety measures and restriction on movement affected multiple
parts of individuals daily interactions. Notably, companies that had their infrastructure based on a
digital platform enjoyed huge strides as most consumers spent their money online and made orders
through digital platforms (Frias, 2017). Accordingly, this research seeks to focus on Amazon PLC,
which is publicly held company with multiple subsidiaries and products under its ownership
(Bezos, 2020). This selection is motivated by the positive impact that most observers deemed on
digital based platforms/ businesses during the pandemic, which ought to have given them a boost
in their industries and corporate landscape. Therefore, the analysis seeks to evaluate Amazon’s
recent financial statements, analyze the organization’s performance based on historical data,
develop financial projections for the next three years (2022, 2023, 2024), assess the financial health
through ratio analysis and, integrate the financial goals with strategy.
Empirical Analysis
Current Performance
Essentially, an organization’s financial statement tends to highlight some of the key areas it draws
its revenues, expenditures and overall profitability to the shareholders. Therefore, the first
assessment would be on the reported Income statement and Balance sheet with a view of noting
the trend in the asset base, profitability, expenditure and revenues over the last two financial years.
Based on the income statement, the first notable aspect would be the increase in revenue between
the years 2020 and 2021 as the company had $386,064,000,000 and $469,822,000,000
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respectively, which had saw an increase of $83,758,000,000 (Amazon, 2021). Additionally, the
operating expenses also increased by $81,778,000,000 from 2020 to 2021, while cost of goods
sold increased by $39,037,000,000, which highlight the active nature and high sales the company
was able to achieve during this period (Amazon, 2021). Subsequently, the net income during the
period increased by $12,033,000,000 between 2020 and 2021. From this view, it is evident that
Amazon was able to capitalize on the pandemic period as other industries were in recession (2020)
and recovery (2021).
The next phase of the current performance would be based on the trends noted from the balance
sheet, which is also critical in highlighting whether a company’s fiscal policies are effective and
feasible. First off, the current assets increased by $28,847,000,000 as the asset base increased by
$99,354,000 between 2020 and 2021. These increments coincide with the impressive income and
