Amazon working capital and valuation data

For my professional assignment purpose, my choice of the company would be Amazon Company.

Amazon’s current working capital ratio is 1.11. Its WC ratio in the past five years is as follows; In Dec2014 WC=1.12, in Dec2015 WC=1.05, in Dec2016 WC=1.04, in Dec2017 WC=1.04, and Dec2018 WC=1.10. Amazon's current ratio gives a sense of effectiveness for the operating cycle of any company. Firms that can run into liquidity problems due to the inability to alleviate their obligations are those that have high inventory turnovers or have trouble getting paid off on their receivables. It is always good to make comparisons for companies within the same industry since operations of businesses differ in each sector. Working capital ratios range from 1, and 3 for good businesses hence vary from industry to industry.

Amazon’s stock value: the market value of Amazon as of 30^th September 2019 is $1738.30, and real value per share alternates. When high is $1753.70 and when low is $1722.71. Combining the discounted terminal value with the cash flows for the next ten years that result in Total Equity Value gives us the total stock value. Intrinsic value per share = total equity value divided by several shares outstanding.

Conclusion

Working capital helps in measuring the financial health status of businesses by companies. Organizations will run smoothly with regular checks of the WC every business cycle. Also, firms with policies on working capital always have good operational performances compared to those that don’t have. Continuous operations of business require enough money in place hence the need for periodic assessments of working capital value over time to ensure no occurrence of devaluation. Amazon's current ratio gives a sense of effectiveness for the operating cycle of any company. A company can fund its daily operations more efficiently with a higher market capital ratio. That means a company may subsidize the growth of its business without taking any debts. Firms that can run into liquidity problems due to the inability to alleviate their obligations are those that have high inventory turnovers or have trouble getting paid off on their receivables. It is always good to make comparisons for companies within the same industry since operations of businesses differ in each sector. Working capital ratios range from 1, and 3 for good businesses hence vary from industry to industry.