Stage 1 Essay Example | Topics and Well Written Essays - 250 words

Stage 1 - Essay Example Annual reports comprise the balance sheet, income statement, and statement of cash flows. This paper compares and contrasts the financial statements of Amazon, Apple, and eBay for the period of 2009-2013. Liquidity ratios are financial metrics used to determine a company’s ability to pay off its short-term debts obligations. A higher liquidity ratio indicates a company has a larger safety margin to cover short-term debts. The most widely used liquidity ratios are the quick ratio, current ratio, and the operating cash flow ratio. From the above analysis of the 2010-2013 financial statements of Amazon, Apple, and EBay, several comparisons on the performance of the firms can be deduced. Over the five-year period, all the three companies experience a dip in financial health. The current ratio of the three companies drops yearly from 1.33, 2.02, and 2.32 in 2009 to 1.07, 1.08, and 1.84 in 2013 for Amazon, Apple, and eBay respectively. EBay has the highest current ratio indicating that it is the financially strongest followed by Apple and then Amazon. The managers at Amazon are not generating enough returns on assets. This is indicated by the low return on assets over the five-year period. Managers at Apple are generating stable returns on assets with an average of 20% ROA over the five-year period. On the other hand, managers at eBay are generating unstable returns on assets as indicated by the volatile figures over the five-year period. Amazon’s average return on capital over the five-year period is 4% while Apple’s average return on capital is 33%. On the other hand, the average return on capital for eBay is 14%. From this figures, Apple managers at Apple are providing the highest return on capital followed by managers at eBay and finally managers at