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Answered 25 days AfterSep 20, 2022

Answer To: I just want to get a quote

Nitish Lath answered on Sep 30 2022
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ACC 345 Business Valuation Report Template
Valuation and financial analysis of Amazon Inc.
Company ABC, Inc.
Report Date, 20XX
Contents
INTRODUCTION    3
Analysis of financial statements    5
ECONOMIC OUTLOOK    7
VALUATION of business    8
Premiums and discounts    11
FINAL value calculation    12
reference    13
INTRODUCTION
Particulars about the assignment
The report has been prepared with an objective of analysis of financial performance of Amazon Inc. The report has also incorporated various other aspects such as horizontal analysis, ratio analysis, prospective analysis and valuation summary.
Standard of Value
We have considered growth rate of 12% in revenue and gross profit margin as 13% based on previous years performance and the discount for
lack of materiality has been considered 25%. Further, the operating expenses of the entity are considered as 7% of gross revenue and the other income is 0.1% of total sales revenue during the projected period from 2022 to 2026.
Amazon Inc.
Introduction
Amazon Inc is a listed entity in USA which is mainly concentrating on artificial intelligence, e-commerce and digital streaming. The company is having corporate office at Seattle, Washington and is headed by Mr. Jeff Bezos. The major shareholders of the group are Jeff Bezos, Andrew Jassy and Jeffery Blackburn and the institutional shareholders are Advisor Group Inc., Vanguard group Inc and Blackrock Inc. Amazon Inc is listed on NASDAQ stock exchange and was founded in 1994. Amazon Inc. has earned reputation in terms of technological innovation and aggressive reinvestment of profits into capital expenditures. Amazon was the largest online retailer and marketplace in year 2021 and is also the second largest private employer in United states. The company has grown multifold over the period of years due to various acquisitions and the company went public in 1997. The entity also purchased Whole Foods Market superchain in year 2017 which was one of the major acquisitions of Amazon Inc.
4
    
Analysis of financial statements
Financial Analysis Overview
The financial performance of the entity has been improved significantly over the last 5 years are as below and detailed horizontal analysis over last 5 years are as below:
Balance Sheets
Assets
There are no significant changes in current assets of the organization and are ranging between 37% to 46%. The PPE of the entity is 37% of total assets and the working capital management of the entity is also strong due to higher liquidity ratios.
Liabilities
The total assets are financed approx 68% from liabilities which shows that the entity is having lower equity base and the debt obligations have been increased significantly.
Stockholder’s Equity
The total assets are financed approx 32% from equity which shows that the entity is having lower equity base and equity base has also been declined with slight margin in current year.
Income Statements
The profitability position over 5 years of the entity are as below:
The net income of the entity has been increased significantly over last 5 years which is a positive financial performance indicator for the organization.
ECONOMIC OUTLOOK
Industry Analysis
Amazon Inc, is the largest entity in terms of e-commerce in USA and holds significant market share in retail industry. The industry is technology based because most of the businesses are driven online and based on technology and logistic industry is the backbone for e-commerce industry.
General Economic Analysis
Due to increase in interest rates, the additional financial burden has been increased on the entity and out of total GDP of USA 20.94 lakhs crore, the e-commerce industry is contributing 0.06% and monetary policies in the industry are also very flexible.
Economic output and consumption
The e-commerce spending as a percentage of US GDP attained a value of 0.06% in the year 2020 and historical growth recorded of 11% between the year 2017 to 2020 and the same has been further increased by 4.98% in year 2021. The estimated growth rate in e-commerce industry is 6.01% between the year 2022 to 2025. The consumption and output of e-commerce industry has been increased to significant extent especially during global pandemic times. The e-commerce spendings shows the consumer spending on e-commerce platforms as a percentage of GDP in the region and the same is expected to increase by 6.01% between year 2022 to 2025.
Current monetary and trade policy
The Federal Trade Commission (FTC) was established to protect the consumer for the transactions which are traded on internet. There is no omnibus law in USA to regulate internet business but the laws related to brick and mortar businesses are applied to internet business. Further, there are various regulatory authorities which regulate retail industry laws and Federal Communication Commission (FCC) is the federal regulator for internet carriage. The current trade policy in e-commerce sector are liberal and there are no stringent rules applicable to e-commerce market. The current trade policy also includes digitization mechanism in which the products are also transformed in dematerialized form and various laws have been enacted related to IT and cyber crime as well.
Relationship of policies and regulations on company’s sales
The policies and regulations are having direct relationship with the company’s sales and such laws have significantly contributed to increase in growth of the entity. In the year 2021, the foreign sales of the entity is more than 31% of consolidated revenue of Amazon Inc and the business of the entity is majorly exposed to foreign exchange rules and regulations. The profitability and cash flows are heavily dependent on foreign exchange rules and policies. If the policies are favorable then the profit and cash flows will also be favorable and vice versa. The tax policies are also having direct relationship with profitability of business because in year 2017 the US government has introduced Internet taxation and due to which Amazon cash outflows increased significantly. Thus, the policies and regulations are having direct implication on sales and earnings of the entity.
Industry analysis
Supply and demand
Amazon Inc. is one of the largest e-commerce operator across the globe and the supply and demand is one of the major problem for Amazon Inc. The 94% of the businesses on Amazon faced the supply demand related problems and it includes 94% of large brands selling products on Amazon, 74% of small and third party Amazon businesses and 93% of e-commerce brand management agencies. The demand for the products were too high and majority of the inventory was delayed 2 months or more. The major supply and demand related challenges were related to out of stock products due to quantity unavailability, impact on existing inventory management and high cost of logistic.
Market share and competitive landscape
In the year 2017, the market share for Amazon Inc was 37% approximately of US e-commerce retail market and it was increased between 5% to 12% in year 2021. The market value of Amazon Inc was $1400 billion in year 2020 and the retail revenue of the group was $140 billion. The entity is also having various competitive landscape advantages as compared to its competitors because the company is having strong brand image in the market and most of the customers of the entity are old and repeat customers. Further, the average ratings provided by the customer of the entity are also higher and better as compared to its...
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