Question

Amazon.com, Inc.’s financial statements are presented in Appendix D.

.

Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E.


(b) What conclusions concerning the management of cash can be drawn from free cash flow for each company?

AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Year Ended December 31, 2014 2015 8,658 $ 14,557 $ 2016 15,890 (241) 596 2,371 4,746 1,497 129 6.281 2,119 155 250 81 (119) 59 8,116 2.975 160 (20) (246) (829) (316) (1,193) (1,039) 1.759 706 4,433 (3.692) 6,842 (2,187) (1,755) 4.294 913 7,401 (6,109) 11,920 (1,426) (3.367) 5,030 1,724 11,931 (9.976) 16,443 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD OPERATING ACTIVITIES: Net income (loss) Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation of property and equipment, including internal-use software and website development, and other amortization, including capitalized content costs Stock-based compensation Other operating expense, net Other expense (income), net Deferred income taxes Excess tax benefits from stock-based compensation Changes in operating assets and liabilities: Inventories Accounts receivable, net and other Accounts payable Accrued expenses and other Additions to unearned revenue Amortization of previously unearned revenue Net cash provided by (used in) operating activities INVESTING ACTIVITIES: Purchases of property and equipment, including internal-use software and website development, net Acquisitions, net of cash acquired, and other Sales and maturities of marketable securities Purchases of marketable securities Net cash provided by (used in) investing activities FINANCING ACTIVITIES: Excess tax benefits from stock-based compensation Proceeds from long-term debt and other Repayments of long-term debt and other Principal repayments of capital lease obligations Principal repayments of finance lease obligations Net cash provided by (used in) financing activities Foreign currency effect on cash and cash equivalents Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS, END OF PERIOD SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest on long-term debt Cash paid for interest on capital and finance lease obligations Cash paid for income taxes, net of refunds Property and equipment acquired under capital leases Property and equipment acquired under build-to-suit leases (4.893) (979) 3,349 (2.542) (5,065) (4,589) (795) 3,025 (4.091) (6,450) (6,737) (116) 4,733 (7.756) (9,876) 6,359 (513) (1.285) (135) 4,432 (310) 5.899 14,557 $ 119 353 (1,652) (2.462) (121) (3.763) (374) 1,333 15,890 $ 829 621 (354) (3.860) (147) (2.911) (212) 3.444 19,334 91 $ $ 177 4,008 920 325 153 273 4,717 544 290 206 412 5,704 1,209 See accompanying notes to consolidated financial statements.

Answer 1

amazon.com .inc :

Conclusions regarding the management of cash :

From the above information we see that net product sales and service sales are gradually raising year after year which result in the raising of cash flow  
From the ratio analysis we can draw the conclusions we need .
cash ratio in 2015 was 0.585 that is quick assets / current liabilities (cash and cash equivalents that is assets that are easily convertible to cash)
cash ratio in 2016 was 0.593
normally if a company can pay off its current liabilities with its quick assets at least one time ( the ratio being 1) we could say that company manages its cash well.
Even though the company's cash ratio is increased still it is not enough the company can manage its cash in a better way

Wal-Mart stores inc :

as for as Wal-Mart stores Inc is concerned

cash ratio in 2016 is 0.135 which is low considering the liquidity of the company .
In 2017 cash ratio is 0.103 that is even more less
so the company should get the cash from its debtors as quick as possible to improve the liquidity position of the company