Notes for students : 1. Electronic copy of assignment must be submitted through the Turnitin software. 2. This assignment will be marked electronically and results available online through Grademark in Turnitin within 3 weeks of the submission date. 3. 10% of marks are awarded for satisfactory use of language and/or good presentation. 4. 5% of marks are awarded for satisfactory referencing and/or presentation of a bibliography where either is required. Note that all referenced work should be obtained from credible sources. 5. Students should ensure that they comply with Glyndwr University’s plagiarism policy. 6. Students should make correct use of the Harvard referencing method.
Learning Outcomes Tested in this Assignment: Present critical insights of the finance functions in an organisation.Apply appropriate financial analysis and make recommendations on capital structures, business valuation and investment alternatives available to an organisation. 4) Critically evaluate financial performance of an organisation Help in Assignments
Mark (%)
Would students please note that achievement of the learning outcomes for this assessment is demonstrated against the assessment criteria shown below (which are not necessarily weighted equally). All marks/grades remain indicative until they have been considered and confirmed by the Assessment Board
Assignment 1
Amazons income statement, balance sheet, and cash flow statement are provided below for the years 2014, 2015, 2016 in Exhibit 1, 2 and 3 respectively. You are a financial analyst in Wall Street, and your manager has asked you to do the following;
Part a) Calculate financial ratios based on the financial statements of Amazon, and critically evaluate the trends, providing reasons as to why the ratios are changing. Secondly, Based on the ratios you calculated, explain how your calculated ratios could be improved, and how do they compare to competitor businesses?
(45 marks)
Part B) Model the income statement forward for the years 2017 and 2018. In your model, state the assumptions you have made, and provide graphs to show your projections. Finally, explain how you could improve your model. Cookery Assignments
(40 marks)
Exhibit 1. Amazon Income statement 2014-2016 ($ Millions)
2016
2015
2014
Net product Sales
94,665
79,268
70,080
Net service Sales
41,322
27,738
18,908
Total net sales
135,987
107,006
88,988
Operating expenses
Cost of sales
88,265
72,651
62,752
Fulfillment
17,619
13,410
10,766
Marketing
7,233
5,254
4,332
Technology and content
16,085
12,540
9,275
General and admin
2,432
1,747
1,552
Other operating expense
167
171
133
Total operating expense
131,801
104,773
88,810
Operating income
4,186
2,233
178
Interest income
100
50
39
Interest expense
(484)
(459)
(210)
Other income (expense)
90
(256)
(118)
Total non operating income
(294)
(665)
(289)
Income (loss) before income taxes
3,892
1,568
(111)
Provision for Income taxes
(1,425)
(950)
(167)
Equity method investment activity
(96)
(22)
37
Net income (loss)
2,371
596
(241)
Exhibit 2. Amazon Balance statement 2014-2016 ($ Millions)
2016
2015
2014
Current assets
Cash and cash equivalents
19,334
15,890
14,557
Marketable securities
6,647
3,918
2,859
Inventories
11,461
10,243
8,299
Accounts Receivable
8,339
5,654
5,612
Total current Assets
45,781
35,705
31,327
PP&E
29,114
21,838
16,967
Good Will
3,784
3,759
3,319
Other Assets
4,723
3,445
2,892
Total Assets
83,402
64,747
54,505
Current liabilities
Accounts payable
25,309
20,397
15,459
Accrued expenses
13,739
10,372
9,807
Unearned revenue
4,768
3,118
1,823
Total current liabilities
43,816
33,887
28,089
Long Term debt
7,694
8,227
8,265
Other long-term liabilities
12,607
9,249
7,410
Stockholders’ equity
Common stock
5
5
5
Treasury stock
(1,837)
(1,837)
(1,837)
Additional paid-in capital
17,186
13,394
11,135
Other comprehensive loss
(985)
(723)
(511)
Retained earnings
4,916
2,545
1,949
Total stockholder equity
19,285
13,384
10,741
Total liabilities and equity
83,402
64,747
54,505
Exhibit 3: Cash flow statement
2016
2015
2014
Cash and cash equivalents, beginning of period
94,665
79,268
70,080
Operating activities
Net income (loss)
2,371
596
(241)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation of PP&E
8,116
6,281
4,746
Stock-based compensation
2,976
2,119
1,497
Other operating expense
160
155
129
Other expense (income)
(20)
250
59
Deferred income taxes
(246)
81
(316)
Excess tax benefits from stock based compensation
(829)
(119)
(6)
Changes in operating assets and liabilities
Inventories
(1,426)
(2,187)
(1,193)
Accounts recievable
(3,367)
(1,755)
(1,039)
Accounts payable
5,030
4,294
1,759
Accured expenses
1,724
913
706
Additions to unearned revenue
11,931
7,401
4,433
Amortisation of unearned revenue
(9,976)
(6,109)
(3,692)
Net cash provided by operating activities
16,443
11,920
6,842
Investing activities
Purchases of PP&E
(6,737)
(4,589)
(4,893)
Acquisitions net of cash
(116)
(795)
(979)
Sales of marketable securities
4,733
3,025
3,349
Purchases of securities
(7,756)
(4,091)
(2,542)
Net cash provided by investing activities
(9,876)
(6,450)
(5,065)
Financing activities
Excess tax benefits from stock-based compensation
829
119
6
Proceeds of debt issuance
621
353
6,359
Repayment of long-term debt
(354)
(1,652)
(513)
Repayment of capital leases
(3,860)
(2,462)
(1,285)
Repayment of finance lease
(147)
(121)
(135)
Net cash provided by financing
(2,911)
(3,763)
4,432
Foreign currency effect on cash
(212)
(374)
(310)
Net increase (decrease) in cash and cash equivalents
3,444
1,333
5,899
Cash and cash Equivalents end of period
19,334
15,890
14,557
Assessment Criteria
Marks Awarded
Marks Available
1
Historical performance of Amazon
25
2
Identify and suggest strategies that would alleviate potential trends in Amazons data
20
3
Model the forward projection of Amazons statements
40
4
Wide ranging references with the correct use of the Harvard system
5
5
Quality of the written work. Clear structure to the work and correct spelling was used throughout.
10
Additional Comments from Second marker or External Examiner (if required) :
Marking Criteria for Level 7 Masters Programmes
No work has been submitted in the time allowed, or the work submitted demonstrates little or no understanding of the task or the subject matter. This may be evident where the work is substantially incoherent, irrelevant or lacking in factual content, or where these shortcomings are present in combination such that the work as a whole is unsound. Major errors of fact, or evidence of substantially poor cognitive or other relevant skills will also lead to a fail.
Fail: Marks below 30%
The work shows some knowledge and required skills are present to a degree. There may be appreciable error or omission of facts, poor structure, misdirection to the task, or poor conceptualisation or illustration of the work. Evidence of analysis and evaluation is weak. There will be indications in the work that the candidate is capable of improving it by further application to the task.
Fail: Marks in the range 30% – 39%
The work contains sufficient descriptive information. There is some analysis and explanation with appropriate illustration and example, and some attempt to evaluate. The work will generally be coherent and relevant, it will contain some useful proposals or solutions related to familiar solutions and there will be some attempt at originality. It will be communicated clearly.
Pass: Marks in the range of 40% – 49%
The work contains all the necessary contextual information. There will be adequate analysis, explanation and conceptualisation, with appropriate illustration and example, and sound attempts to evaluate and judge. The work will be substantially coherent and will contain relevant and feasible proposals or solutions related to familiar situations, some responses to uncertainty or ambiguity and some acknowledgements of the implications of change.
Pass: Marks in the range of 50% – 59%
The work will contain complete explanations using most available information. There will be substantial analysis; the ability to recognise evidence, use ideas, conceptualise, evaluate and judge in familiar situations will be clearly demonstrated. Proposals or solutions will be contextually relevant and useful, with substantial evidence of the skill necessary to operationalize them in a variety of situations, including those in which uncertainty, ambiguity or change are present. The work will provide evidence of originality and of useful knowledge transfer to novel situations. It will be coherent and convincing.
Pass: Marks in the range of 60% – 69%
The work will clearly demonstrate the ability to analyse accurately, reliably and fully, all relevant information; to use evidence; to conceptualise, evaluate and judge; to propose and operationalise effective solutions, and to show substantial originality and creativity in a variety of familiar situations or in the face of ambiguity, uncertainty or change. It will demonstrate valuable knowledge transfer and propose feasible solutions for a wide range of situations. Evidence of the ability to innovate will be present.