Publicly traded companies, including those specializing ine-commerce, are required to file financial data with the Securitiesand Exchange Commission. By analyzing this information, you candetermine the profitability of an e-commerce company and theviability of its business model.
Pick on e-commerce company on the Internet, for example,Buy.com, Yahoo.com, or Priceline.com. Study the web pages thatdescribe the company and explain its purpose and structure. Use theweb to find articles that comment on the company. Then visit theSecurities and Exchange Commission’s web site at www.sec.gov (Linksto an external site.) and select Filings and Forms to access thecompany’s 10-K (annual report) form showing income statements andbalance sheets. Select only the sections of the 10-K formcontaining the desired portions of financial statements that youneed to examine, and download into your spreadsheet. Createsimplified spreadsheets of the company’s balance sheets and incomestatements for the past two years. Create some graphs for quickreference to the data.
Is the company a dot-com success, borderline business, orfailure? What information forms the basis of your decision? Why?When answering these questions, pay special attention to thecompany’s two-year trends in revenues, cost of sales, grossmargins, operating expenses, and net margins.
