Keller Graduate School of Management
July 24, 2015
Thanks to technology people can now shop from the comfort of their own homes and purchase virtually anything. This trend has become so profitable that many companies have started to shut down their big chain stores and move to online stores to increase profits and decrease expenses. Amazon is a company that has taken it to new heights in terms of how they perform business. Their prices are low due to the fact that they do not have very much inventory. They work with other companies to help provide them exposure for their business in exchange for lower prices for their ...view middle of the document...
in this case company is going to left some portion of revenue after pay for debt, interest or other payments.
Net Profit Margin
26.28%= $3.45 billion/ $18.10 billion -.27%= 241M/88.99B
This figure is one of the first that investors look at before throwing money towards a company for investing. Amazons is negative where Google has a much higher positive which will attract investors. Investing in Google is more profitable than investing in Amazon.
Interest Coverage Ratios
319M/111M=2.87% 0/210M=0 %
Interest coverage ratio arises because how easily a company can pay interest on outstanding debt. In this case Amazon makes their place safe because they don’t have to pay any interest. Google is close by only a small fraction however when dealing in millions of dollars or even billions of dollars 2.87% can be a lot of money.
*EBITDA= Sales-Expenses (Excluded tax, interest, depreciation & amortization)
Because of EBITDA consider a company’s profitability of its interest paying ability. Both companies are close but Amazons is higher.
Market to book ratio is important for investors to know how much are they paying for each dollar in net assets. In her we are calculate the total book value of its assets and its current market value. That’s why we can say that they have enough assets for make them strong in future.
66,001,000/130,426=.506% 88.99B/ 54.50B=1.63%
The asset turnover ratio is an efficiency ratio that measures a company's ability to generate sales from its assets by comparing net sales with average total assets. In assets turnover ratio analysis, Amazons ability to generate revenue more efficiently than the Google is noticed by the above numbers. In here measures the number of dollars of revenue generated by 1.63 dollar of the Amazon’s assets. That’s why we can say that amazon uses their asset better than Google do in consideration of sales.
Return on Equity...