Amazon in the Year 2000 Essay

910 Words Jan 21st, 2012 4 Pages
Assignment 3 in the year 2000

Syed T.A Zaidi 100285122 BUSI 3150 Financial Statement Analysis Prof. Jane Bowen March 14th, 2011

Long Term Viability of Amazon Amazon had a significant vision in terms of its long-term viability. This vision consisted of many strategies that allowed them to operate efficiently and effectively. Amazon primarily raised profits by the means of developing strong brand equity on a global scale, developing direct relationship with wholesalers allowing them to reduce inventory shipping/holding costs supported by an excellent logistic system, which permitted them to deliver any and every product fast. They also started up this venture when the Internet market was just emerging, therefore allowing
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Credit Risks associated with Amazon’s Bonds Some of the Credit Risks that Ravi Suriya identifies for Amazon are Increasing CAPEX, Inventory turn fall out, poor working capital management, negative operating cash flows in recent quarters, weak financials in terms of balance sheet performance (-1.19$ Billion in retained earnings) resulting in huge leverages. In regards to these identified credit risks, I would agree with Ravi Suriya, as the previous years CAPEX & FCF trends show that Amazon’s risk of halting is very high. Amazon is suffering huge cash outflows, and will not be able to sustain competitive advantage nor growth for the future.

Bond Market Response to Ravi Suria Ravi Suria being an outside Credit Analyst did not have any “inside” information or factual data, all was created externally. Since prices only react to new information, the patrons of the stock market now had access to Suria’s information, which turned out to be NOT in Amazon’s favor. Being a Credit Analyst he questioned all aspects of the company’s performance that was not so viable for Amazon’s going concern. Amazon had very strong protection in regards to its

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