Please trade your Business Communication Evaluation memo with someone in-class. Once you have a copy of your partner’s evaluation, I want you to find the bottom line of the document and to determine whether it’s a deductive structured or inductive structured. Also to do the same thing for each paragraph of the document I want you to find the topic sentence for each paragraph and to determine whether the paragraph deductive or inductive. Next, I want you to do a structured review of the assignment. Review the criteria and then from your interpretation of the document, I want you to provide a condition (describe his/her performance in relation to the criteria) along with providing a rating of strong, satisfactory, or weak. Note: Your rating should be corroborated by the description you made of your partner’s performance.Amazon & eBay
Date: May 31, 2016
To: Towson Cornerstone Group, LLC
From: ABC, Junior Analyst
Subject: Report Memorandum Comparing the financial strengths of Amazon & eBay.
The analysis is based on the comparison of Amazon and eBay, two competing companies
in the service sector. Both the companies are direct competitors in the Specialty Retail, other
industry and are considered to be two of the giants of the industry. Both the companies have
more than 10,000 employees, a market capitalization in billions of US dollars, and earn revenue
in billions of US dollars (Yahoo! Finance, 2016). Based on the analysis of the industry, it is
found that the two companies have a great proportion of the overall market capitalization.
The evaluation of the financial performance of Amazon is undertaken with the help of
comparing P/E ratio for Amazon and eBay. The analysis and evaluation are beneficial to
understand the company that outperformed in the industry for the fiscal year 2015. The
calculation for P/E ratio uses the price per share and dividing it by the earnings per share for both
Amazon and eBay (Hillstrom & Laurie, 2002). The use f P/E ratio can help to determine the
future perspective and growth of the stock and helps to draw conclusions from investor’s
perspective. The results show that the P/E ratio for Amazon is higher than eBay, and it means
that the investors would find the stock of the company more attractive in the long run.
The other indicators for evaluating performance are to analyze the net income, stock
prices, quick ratio, and earnings per share for both companies. Net income highlights the level of
financial health for the business and the comparison is beneficial if undertaken between
companies within the same industry. The analysis reveals that the net income for eBay is much
higher than Amazon. The in-depth analysis of Amazon and its net income reveals that the policy
of Amazon is to invest the earnings in other projects in enhancing future profitability. The
business operates in different fields and therefore, investments are required to enhance the
performance of weak operational units (Edwards, 2015). The stock price of Amazon is
consistently increasing over the past 12 months the market capitalization of the company is also
higher than the competitor (i.e. Amazon 337B and eBay 27.71B). The stock prices for the year
and the overall industry analysis reveal that the company is highly successful and reliable. The
Specialty Retail, another industry has faced a decrease in the overall return but the returns for
Amazon are consistent and positive that represents that the changes and fluctuations that have an
impact on the market do not have a major impact on the operations of Amazon. In the year 2015,
the overall prices of the stock increased with a total of 66.49% greater than that of eBay (i.e. a
decrease of 59.07%).
A quick ratio that is current ratio minus inventory for Amazon for the fiscal year 2015 is
.71 less than its direct competitor. eBay had a quick ratio of 2.98 and the major reason for the
increasing ratio is the absence of inventory. eBay does not have any inventory in its balance
sheet whereas, Amazon has a total inventory of $10,243,000. The results show that Amazon does
not maintain a satisfactory amount of quick assets to pay off the creditors. The results also show
that the businesses that are operational within the same industry do not majorly have same
financial heads in their financial statements. The quick ratio for Amazon has not specific, and
high-level impact on the performance and the company was able to succeed in their line of
operations in the fiscal year 2015. The future estimations and forecasts also show that the
business operations are satisfactory, and Amazon would lead the e-commerce business market in
the next year. On the other hand, eBay is also showing progression in the business line and
success and the company can advance its business processes and also has shown high levels of
Earnings per share (EPS) are also evaluated to compare the overall performance of
Amazon and eBay. The ratio is a useful indicator of profitability as it helps to determine the
amount of income per share. The total outstanding shares of Amazon and eBay are 2.4 million
and 4.1 million respectively. The results show that both the companies have positive EPS that is
$1.25 and $0.98 for Amazon and eBay respectively. The future speculations for 2016 show that
the EPS for Amazon is expected to increase in 2016 that is a positive sign. The overall
comparison of the EPS reveals that Amazon is in a much better position compared to eBay in the
year 2015. It means that Amazon can earn more on per share basis compared to eBay (Yahoo!
Finance, 2016). Amazon had a net income of $596,000 that was divided by 471 million shares
outstanding and on the other hand, eBay had a net income of $1,725,000 divided by 1.184 billion
Earnings Per Share
Price Per Share
The overall results show that Amazon is a much better business unit compared to eBay.
The conclusion is based on the analysis of stock prices, P/E ratio, Quick ratio, Earnings per
share, and Net income for both the businesses. Amazon has a lower net income, but it is a
strategic plan for the business to invest in another line of services. Also, quick ratio is lower, but
the main reason is the inclusion of inventory within the balance sheet of Amazon. The prices,
earnings per share, and P/E for Amazon are significantly high and help the business to attain a
competitive advantage over its competitor.
The financial position of the Amazon is satisfactory since the business can earn a profit in
the year 2015 and the balance sheet also provides an insight of future growth of the business. The
current position shows that the business has invested in short-term investments that are expected
to pay returns in the starting to mid of the fiscal year 2016. Property plant and equipment for
Amazon also show a significant increase that shows a higher level of investments in the business
operations (Yahoo! Finance, 2016).
The most important indices that helped to shape the overall analysis of the paper include
the P/E Ratio and EPS (Earnings per share). Out of the overall indices net income, quick ratio,
P/E ratio, EPS, and Stock Prices both P/E ratio and EPS shows the prospects of Amazon and
both are positive and comparatively high than eBay.
Edwards, J. (2015, January 30). Amazon’s profit shows how few people understand the way the
company works. Retrieved from http://www.businessinsider.com/analysts-wrong-aboutamazon-profit-2015-1
Hillstrom, K., & Laurie, C. H. (2002). Encyclopedia of Small Business: A-I. Michigan: Gale
Yahoo! Finance. (2016). AMZN Balance Sheet | Amazon.com, Inc. Stock – Yahoo! Finance.
Retrieved from http://finance.yahoo.com/q/bs?s=AMZN+Balance+Sheet&annual
Yahoo! Finance. (2016). AMZN Income Statement | Amazon.com, Inc. Stock – Yahoo! Finance.
Retrieved from https://finance.yahoo.com/q/is?s=AMZN%20Income%20Statement
Yahoo! Finance. (2016). EBAY Competitors | eBay Inc. Stock – Yahoo! Finance . Retrieved from
Workshop Your Writing
Print this document before class.
Structures the document based on
rhetorical situation: deductively or
Organizes document (parallel) and
provides transitions at all levels:
document, section, paragraph and
Structures document based on rhetorical situation
All paragraphs have leading topic sentences that are specific enough to foreshadow the logical
content and support that follows. To meet this criterion, the writer—
Uses deductive structure by placing the main idea/topic sentence toward the
beginning of the document/paragraph.
Uses inductive structure at times to downplay weak information/bad news.
Organizes document and provides transitions at all levels
Explicit transitions between paragraphs and sentences that contribute to the logical flow of
the document. To meet this criterion, the writer—
Adheres to the known-new contract by communicating what is already known
before introducing a new topic.
Uses consistent transitional words that cohesively links each sentence and
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