What effect does this have on investing cash flow

Assignment Help Financial Accounting

Reference no: EM133337148

Questions:

1. Graph the financial statement items in Exhibit 1 and familiarize yourself with the 1997 and 2010 financial statements (Exhibits 4-6 and 7-9). Using your judgment, identify time periods of similar characteristics and classify them using the following life cycle terms: introduction, growth, maturity, or decline (see Exhibit 10 for definitions). For each period labeled, provide support for your classification. Specifically discuss the patterns observed (e.g., in revenue, income, operating cash flow, investing cash flow, and financing cash flow) and how they indicate where Amazon.com is in the life cycle.

2. Comment on the general trend in total investment in Exhibit 3 (cash and stock) over time (excluding marketable securities). Provide possible explanations for the variation observed.

3. What factors do you think influence Amazon.com's decision to use cash versus stock in its acquisitions? Comment on trends observed over time in the relative amount of cash versus stock acquisitions in Exhibit 3.

4. Why do you think Amazon.com invests in marketable securities? What effect does this have on investing cash flow (CFI)?

5. What are the largest adjustments listed in the operating section of the cash flow statement for 1997 (Exhibit 4)? Provide an interpretation and discuss whether they should be of concern to investors.

6. In 2009 Amazon.com acquired Zappos.com in a stock acquisition valued at more than $1 billion. Assume that in the acquisition, the value of Zappos.com's inventory was $200 million, and that the acquisition happened on the last day of the fiscal year.

a. Discuss the effect of the inventory acquired from Zappos on Amazon.com's balance sheet.

b. Discuss the effect on the statement of cash flows.

c. How does your answer to part b change if this were a cash acquisition instead?

Reference no: EM133337148

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