Analyze and compare

Amazon.com to Best Buy

Amazon.com, Inc. $($AMZN$)$ is one of the largest Internet retailers in the world. Best Buy, Co$.$ Inc. $($BBY$)$ is a leading retailer of consumer

electronics and media products in the United States. Amazon and Best Buy compete in similar markets; however, Best Buy sells through both

traditional retail stores and the Internet, while Amazon sells only through the Internet. Current asset and current liability information from

recent financial statements are as follows $($in millions$)$:

Amazon Best Buy

Current assets:

Required:

a$.$ Compute working capital for each company.

Amazon: $

million

Best Buy: $

milliong. Why are the results different between $($e$)$ and $($f$)?($Hint: Perform a vertical analysis of the current assets.$)$ Round your answers to one

decimal place. If an amount is zero, enter $"0".$

Amazon

Best Buy

Amazon has $,\%$ of its current assets consisting of cash and short$-$term investments, compared to $\%$ for Best Buy. This

difference will Amazon's quick ratio relative to Best Buy's. Best Buy has $61\mathrm{.}0\%$ of its current assets in inventory, while

Amazon only has $22\mathrm{.}9\%$ of current assets in inventory. This difference reflects Amazon's pure Internet strategy, which causes the current ratio

to be

than Best Buy's. It also causes the relationship between the current and quick ratios to diverge between the two

companies.b$.$ Compute the current ratio for each company. Round your answers to one decimal place.

Amazon:

Best Buy:

c$.$ Compute the quick ratio for each company. Round your answers to one decimal place.

Amazon:

Best Buy:

d$.$ Can the working capital be usefully compared between the two companies? Which of the following statements is correct.

e$.$ Which company has the greater debt$-$paying ability according to the current ratio?

f$.$ Which company has the greater short$-$term debt$-$paying ability according to the quick ratio?

g$.$ Why are the results different between $($e$)$ and $($f$)?($Hint: Perform a vertical analysis of the current assets.$)$ Round your answers to one

decimal place. If an amount is zero, enter $"0".$