Horizontal analysis
Amount In million dollars
| 2016 | 2017 | Increase or decrease | 2018 | Increase or decrease | |
| Revenue | 74452 | 88988 | 19.5% | 107006 | 20.2% |
| Cost of goods sold | 54181 | 62752 | 15.8% | 71651 | 20.6% |
| Gross profit | 20271 | 26236 | 29.4% | 35355 | 34.8% |
| Operating expenses | 73707 | 88810 | 20.5% | 104773 | 18.0% |
| Operating income | 745 | 178 | (76.1%) | 2233 | 1154.5% |
| Pretax income | 506 | (111) | (121.9%) | 1568 | 1512.6% |
| Income tax | 161 | 167 | 3.7% | 950 | 468.9% |
| Net income | 274 | (241) | (188.3%) | 596 | 347.3% |
Amazon has recorded a constant increase in the revenue for the last three years and coupled with the increase in the cost of goods sold, there is a continuous increase in the company’s gross profit (Macrotrends, 2018). Looking at the expenses side, Amazon has had a gradual increase in the operating expenses, which has led to a decrease in the operating income and fluctuations in the net income. Between 2017 and 2018, the net income of the company increases due to the addition of assets invested.
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Vertical analysis
| 2016 | 2017 | 2018 | |
| Revenue | 100.00% | 100.00% | 100.00% |
| Cost of goods sold | 72.77% | 70.52% | 66.96% |
| Gross profit | 27.23% | 29.48% | 33.04% |
| Operating expenses | 99.00% | 99.80% | 97.91% |
| Operating income | 1.00% | 0.20% | 2.09% |
| Pretax income | 0.68% | (0.12%) | 1.47% |
| Income taxes | 0.22% | 0.19% | 0.89% |
| Income after taxes | 0.46% | (0.31%) | 0.58% |
| Net income | 0.46% | (0.31%) | 0.58% |
An increase in the gross profit of the organization coupled with a reduction of the company is operating expenses leads to a decrease in the net income of the organization.
Horizontal and vertical analysis of the balance sheet for the company
Horizontal analysis
Amounts recorded in million US dollars.
| 2016 | 2017 | trend | 2018 | Trend | |
| Assets | |||||
| Total Current assets | 24625 | 31327 | 27.2% | 35705 | 14.0% |
| Total long term assets | 15534 | 23178 | 49.2% | 29042 | 25.3% |
| Total assets | 40159 | 54505 | 35.7% | 64747 | 18.8% |
| Liabilities | |||||
| Total current liabilities | 22980 | 28089 | 22.2% | 33887 | 20.6% |
| Total long term liabilities | 7433 | 15675 | 110.9% | 17476 | 11.5% |
| Shareholder’s equity | 9746 | 10741 | 10.2% | 13384 | 24.6% |
| Total liabilities and shareholder’s equity | 40159 | 54505 | 35.7% | 64747 | 18.8% |
Both current assets and long-term assets of the company have been increasing across the three fiscal years, which leads to the increment in the total assets of the organization (Macrotrends, 2018). The current liabilities as well as the current assets have been increasing over the three years, which raises the total shareholders’ equity and liabilities gradually.
Vertical analysis
| 2016 | 2017 | 2018 | |
| Assets | |||
| Total current assets | 61.32% | 57.48% | 55.15% |
| Total long term assets | 38.68% | 42.52% | 44.85% |
| Total assets | 100% | 100% | 100% |
| Liabilities | |||
| Total current liabilities | 57.22% | 51.53% | 52.34% |
| Total long term liabilities | 18.51% | 28.76% | 26.99% |
| Shareholder’s equity | 24.27% | 19.71% | 20.67% |
| Total liabilities and shareholder’s equity | 100% | 100% | 100% |
An increase in current assets and long-term assets of the company across the three financial years has an incremental effect on the total assets that the company owns (Macrotrends, 2018). The same happens to the changes in the current and long-term liabilities over the total liabilities that the company has.
Ratio Analysis
Fixed Assets turnover
| 2016 | 2017 | 2018 | |
| Etsy | -0.03 | -0.13 | -0.29 |
| Amazon | 0.02 | -0.01 | 0.02 |
The fixed assets turnover is a measure of how well a company utilizes its fixed assets to generate net sales (Macrotrends, 2018). Amazon has performed better than Etsy for the three fiscal years.
Assets turnover ratio
| 2016 | 2017 | 2018 | |
| Amazon | 0.01 | -0.00 | 0.01 |
| Etsy | 0.01 | -0.06 | -0.16 |
The assets turnover ratio is a measure of how both companies utilize their total assets to generate more net sales (Macrotrends, 2018). Over the three financial years, Amazon has utilized more of its total assets to generate net sales than Etsy.
Net profit margin
| 2016 | 2017 | 2018 | |
| Amazon | 0.00 | -0.00 | 0.01 |
| Etsy | -0.01 | -0.08 | -0.20 |
The net profit margin for Amazon has been more stable than that of Etsy, which suggests that the company has better utilization of the total revenue to generate income (Macrotrends, 2018).
Return on investments
The ROI of Etsy took a nosedive between the year 2016 and 2017 and then rose again while that of Amazon also had a drop in 2017 and then an increase in 2018 (Macrotrends, 2018). Both companies had a drop and then a rise of the ROI but Amazon’s was higher than that of Etsy.
Debt ratio
The debt ratio of Etsy over the three years had an increase all through while that of Amazon had increased between 2016 and 2017 while it decreased in 2018 (Macrotrends, 2018). Amazon had a greater debt ratio than Etsy.
Debt-to-equity ratio
The debt-to-ratio of Amazon increased between 2016 and 2017 and then dropped in 2018, which suggests that the debt of the company reduced (Macrotrends, 2018). That of Etsy had a constant reduction over the three years.
Current ratio
The current ratio of Amazon reduced between year the 2017 and 2018 while that of Etsy also behaved similarly.
Long-term debt ratio
The ration for Etsy was unstable for the three years while that of Amazon skyrocketed between the 2016 and 2017 and reduced across 2018.
References
Macrotrends. (2018). Etsy Income Statement 2012-2019 | ETSY . Retrieved from https://www.macrotrends.net/stocks/charts/ETSY/etsy/income-statement
Macrotrends. (2018). Amazon Balance Sheet 2005-2019 | AMZN . Retrieved from https://www.macrotrends.net/stocks/charts/AMZN/amazon/balance-sheet
Macrotrends. (2018). Amazon Income Statement 2005-2019 | AMZN . Retrieved from
https://www.macrotrends.net/stocks/charts/AMZN/amazon/income-statement
