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Financial Statement Case
This case, based on the balance sheet of above at the end of the book, will familiarize you with some of the assets and liabilities of that company. Use the Amazon balance sheet ABOVE to answer the following questions.
Using a balance sheet
Requirements
1. Which balance sheet format does use?
2. Name the company’s largest current asset and largest current liability at December 31, 2005.
3. Compute Amazon’s current ratios at December 31, 2005 and 2004. Did the current ratio improve, worsen, or hold steady during 2005?
4. Under what category does Amazon report furniture, fixtures, and equipment?
5. What was the cost of the company’s fixed assets at December 31, 2005? What was the amount of accumulated depreciation? What was the book value of the fixed assets? See Note 3 for the data.
(Horngren. Accounting, 7th Edition. Pearson Learning Solutions 8.15.3).
Req. 1 Report format of balance sheet (all amounts in millions)
Req. 2 Largest current asset = Cash and cash equivalents
($1,013)
Largest current liability = Accounts Payable ($1,366)
Req. 3 Current ratio:
| | |December 31, 2005 | |December 31, 2004 |
| | | | | | | | | |
|Total current assets |= |$2,929 |= |1.52 | |$2,539 |= |1.57 |
|Total current liabilities | |$1,929 | | | |$1,620 | | |
The current ratio worsened.
Req. 4 Fixed assets
Req. 5
|Cost…………………………………………………. |$571 |
|Less: Accumulated depreciation…………...... | (223) |
|Book value………………………………………… |$348 |
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