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Analyze and compare Amazon.com to Best Buy Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Best Buy, Co. Inc. (BBY) is a leading retailer of consumer electronics and media products in the United States. Amazon and Best Buy compete in similar markets, however, Best Buy sells through both traditional retail stores and the Internet, while Amazon sells only through the internet. Current asset and current liability information from recent financial statements are as follows (in millions): Amazon Best Buy Current assets: Cash $19,334 $ 1,976 Short-term investments 6,647 1,305 ho Accounts receivable 8,339 1,162 Inventories 11,461 5,051 Other current assets 392 Total current assets $45,781 $ 9,886 Current liabilities: Accounts payable $25,309 $ 4,450 Other current liabilities 18,507 2,475 Total current liabilities $43,816 $ 6,925 Required: a. Compute working capital for each company Update Available Amazon: s 1,965 A new version of Alexa for PC is no available Best Buy: 5 2,961 K % g. Why are the results different between (e) and (0)? (Hint: Perform a vertical analysis of the current assets. Round to one decimal place Amazon Best Buy Current assets: Cash 96 X % Short-term investments X % % Accounts receivable % 96 Inventories 96 Other current assets 96 Total current assets Amazon has % of its current assets consisting of cash and short-term investments, compared to % for Best Buy This difference will worsen X Amazon's quick ratio relative to Best Buy's. Best Buy has 51.1% of its current assets in inventory, while Amazon only has 25.0% of current assets in inventory. This difference reflects Amazon's pure Internet strategy, which causes the current ratio to be than Best Buy's. It also causes the relationship between the current and quick ratios to diverge between the two companies, 95 96 9 Feedback Analyze and compare Amazon.com to Best Buy Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Best Buy, Co. Inc. (BBY) is a leading retailer of consumer electronics and media products in the United States. Amazon and Best Buy compete in similar markets, however, Best Buy sells through both traditional retail stores and the Internet, while Amazon sells only through the internet. Current asset and current liability information from recent financial statements are as follows (in millions): Amazon Best Buy Current assets: Cash $19,334 $ 1,976 Short-term investments 6,647 1,305 ho Accounts receivable 8,339 1,162 Inventories 11,461 5,051 Other current assets 392 Total current assets $45,781 $ 9,886 Current liabilities: Accounts payable $25,309 $ 4,450 Other current liabilities 18,507 2,475 Total current liabilities $43,816 $ 6,925 Required: a. Compute working capital for each company Update Available Amazon: s 1,965 A new version of Alexa for PC is no available Best Buy: 5 2,961 K % g. Why are the results different between (e) and (0)? (Hint: Perform a vertical analysis of the current assets. Round to one decimal place Amazon Best Buy Current assets: Cash 96 X % Short-term investments X % % Accounts receivable % 96 Inventories 96 Other current assets 96 Total current assets Amazon has % of its current assets consisting of cash and short-term investments, compared to % for Best Buy This difference will worsen X Amazon's quick ratio relative to Best Buy's. Best Buy has 51.1% of its current assets in inventory, while Amazon only has 25.0% of current assets in inventory. This difference reflects Amazon's pure Internet strategy, which causes the current ratio to be than Best Buy's. It also causes the relationship between the current and quick ratios to diverge between the two companies, 95 96 9 Feedback

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