Question

I choose Costco as my company. Select a fortune 500 company that interests you, visit this company’s home page, and read the information presented there. Post a paragraph describing what interests you with respect to the company you have chosen: what their main business interests are and what your initial feelings are with respect to the current financial success of the company. Also discuss the function and primary focus of financial accounting.

Answer 1

Let's choose the company as Amazon.

Amazon Business products:

• Prime Video
• Amazon Music
• Appstore for Android
• Echo & Alexa
• Fire Tablets
• Fire TV
• Kindle E-readers & Books
• E-commerce business

Financial success:

Amazon today reported earnings for its third fiscal quarter of 2019, including revenue of $70.0 billion, net income of $2.1 billion, and earnings per share of $4.23 (compared to revenue of $56.6 billion, net income of $2.9 billion, and earnings per share of $5.75 in Q3 2018). North American sales were up 24% to $42.6 billion, while international sales grew 18% to $18.3 billion.

Analysts had expected Amazon to earn $68.81 billion in revenue and report earnings per share of $4.62. The retail giant thus beat on revenue but missed on earnings per share. The company’s stock was up about 1% in regular trading, and down 7% in after-hours trading. Amazon gave fourth quarter revenue guidance in the range of $80.0 billion and $86.5 billion, compared to a consensus of $87.37 billion from analysts.

Amazon Web Services (AWS) continued to be the star of the show, growing 35% in sales to $9.0 billion. But the star isn’t shining as brightly as before. In Q2 2019, AWS growth fell to 37% — the first sub-40% growth rate since Amazon started breaking out AWS numbers. We know now that wasn’t a blip — AWS growth continues to slow down. Nonetheless, AWS still accounted for about 13% of Amazon’s total revenue for the quarter. AWS is the cloud computing market leader, ahead of Microsoft Azure and Google Cloud.

Subscription services were up 34% to $5.0 billion. That would mainly constitute Amazon Prime, which the company has expanded to offer deals at places like Whole Foods.

Amazon’s “other” category, which mostly covers the company’s advertising business, was up 44% to $3.6 billion in revenue. The company knows plenty about what its customers want to buy, or even don’t want to buy, and it’s increasingly leveraging that for its advertising business. “It’s still early and what we’re focused on really at this point is relevancy — making sure that the ads are relevant to our customers, helpful to our customers,” CFO Brian Olsavsky said on the earnings call. “And to do that we use machine learning, and it’s helping us to drive better relevancy” he added.

Financial Accounting primary function:

The primary function of financial accounting is to provide useful financial information to users external to the business enterprise. The focus of financial accounting is on the information needs of investors and creditors. These users make critical resource allocation decisions that affect the nation’s economy. The primary means of conveying financial information to investors, creditors, and other external users is through financial statements and related notes.
In this chapter you explore important topics such as the FASB’s conceptual framework that serve as a foundation for a more detailed study of financial statements, the way the elements of these statements are measured, and the concepts underlying these measurements and related disclosures.