Analysis Of Amazon And Alibaba

Introduction. Financial analysis of Amazon and Alibaba. Amazon and Alibaba ratio analysis. The assessment of the fair market value of the shares of the company. Conclusion. Annexes. No2. AMAZON Financial Statements. No2. alibaba financial statements.

Alibaba was founded in 1999 and provides business to business(B2B), business to consumer(B2C) and consumer to consumer(C2C) sales services. They have about 101958(2019) employees and focus on e-commerce, retail, Internet, and technology. 

It will be interesting to see how finance performance differs by two same industry companies.

In this chapter, we will look at Amazon and Alibaba’s changes in operations, cash flow statements - their operating, investing, and financing activities, also how to profit from the company changes during the years.  We will look deeper at how companies are operating, investing and financing their activities.

Let’s look at the major changes in Operating activities from the year 2016 to 2017. Looking at 2017, profits have increased by 21,8%. Talking more about changes in working capital from this year, we see that the current receivables have decreased by 29,5% and accounts payable increased about $2B. Amazon’s current liabilities decreased more than twice which means they have a long - term debt or have a lot of accounts payable, or other debt. From the investing activities part, capital expenditures (on fixed assets) have decreased by almost 50%, which means that the company purchases fewer buildings or warehouses. However, their sale of investments increased, and the purchase of investment has decreased by half. From financing activities, we see that change in Long - term debt has increased more than 10B dollars! This means that the company will have more responsibility for talking about the long term period. 

In conclusion, we see that Amazon profits are increasing and so are the cash and cash equivalents at the end of every financial year. What’s more, the biggest cash flow from current operations was in 2018, which means they generated a lot of cash from their operations. They spend the biggest amount on financing activities also in 2018. As for investment activities, the peak was in 2017.

Further, we can also see and touch one of the problems of operating activities. Talking about this, it could be bad handling of inventory. Highest numbers every year of Alibaba operating activities means an increase in trade and other payables. Cash flow from investing activities measures a company’s investment in itself. Long-term expenditures and investments intended to produce profits in the future. Alibaba’s net cash used in investing activities strongly grew– in 2016 net cash used in investing activities was $1,71B and in 2018 it was $4.5B. These 2 years 38% growth in investing activities means that the company was investing big in global logistics, and in warehouses in Europe and the US to improve delivery speeds. Moreover, we see that Alibaba’s investments in purchase or sale fluctuated during 2016 and 2018, but finally, it also grows into 2018.