# Amazon

Posted: March 3rd, 2022

Amazon

Objective: Familiarize students with the application of ratio and trend analysis.
This project allows students the opportunity to perform critical thinking, by addressing specific financial trends and industry comparisons for a company of their choosing.  This project will be a comparison/contrast paper that shows a demonstration of the application of financial analysis and critical thinking in a large organization.  The student will be performing trend analysis and industry comparisons on 3-4 years worth of financial statement data (whatever tells the story).
Trend Analysis & Ratio Analysis
Ratio analysis uses percentage or decimal calculations of comparison to at least two different sets of financial data.  You are comparing how one relates (compares) to another.  Decision makers use ratios because they illuminate relationships between financial data taken from the company’s statements.
Although ratio analysis can be used to evaluate financial performance, the number, by itself, does not reveal the entire story.  To take the analysis to the next level, one must engage in trend analysis.  Trend analysis utilizes the aforementioned ratios and shows the changes in those ratios, over time.  Stakeholders can use trend analysis to not only compare “this year” to “last year” for this company, but can compare each year to the industry as a whole and even to the number one competitor for benchmarking purposes.
When you are setting up your paper, it would help to group your ratios and analysis together by content area (profitability, debt management, asset utilization, liquidity, and market value ratios).
Deliverables
Choose a publicly traded, publicly held, U.S. company.  This means you need to pick a company that is public and has stock that trades on the exchange.    You will use a variety of sites to find your financial data.  Start with either Yahoo! Finance site or www.reuters.com. These two sites will allow you to capture at least one year of data for each of the two companies you are going to review as well as the industry ratios you will need. You will need to acquire annual reports for the company sites for years older than the most current year. You will need to review three – five years of financial information on this company, more years of data will produce a more thorough analysis.
Specific areas of analysis are noting major ratio categories and identifying whether the trend is up or down, whether that is good or bad, and why.  Once the data are gathered, analyzed, and trends revealed; the student will acquire the same information for a competitor within the same industry.  The same ratio and trend analysis will be gathered for the competitor.  A comparison will ensue, identifying specific strengths and weaknesses of various components of the financial statements.   Upon completion of the original company trend analysis and the competitor’s trend analysis, an analysis and trend comparison with the industry is required.  This will allow the student to demonstrate an understanding of financial ratios and what trends are present between two different companies in one industry, as well as, being able to determine the position of the industry and be able to project future trends and how the company being evaluated can budget for changes in the industry.
​So . . . .what is required . . . .