Analyzing a balance sheet and measuring profitability

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Amazon.com's financial statements in Appendix A at the end of this book reveal some interesting relationships. Answer these questions about Amazon.com:

1) What is most unusual about the balance sheet?

2) Compute trend percentages for net sales and net income. Use 2003 as the base year. Which trend percentage looks strange? Explain your answer.

3) Compute inventory turnover for 2005 and 2004. The inventory balance at December 31, 2003 was $ 294 million. Do the trend of net income from 2004 to 2005 and the change in the rate of inventory turnover tell the same story or a different story? Explain your answer.

Reference no: EM13151703

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