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Amazon vs. Walmart: Using Financial Ratios to Compare Companies

Mitchell Stein, Vaughan S. Radcliffe, Vineet Yagnik

Product #:W36678_P
Supplier:Ivey
Discipline:Accounting, Finance
Setting:United States, 2021
Details:Case (PDF) • 12 pages • 2024-03-12

Subjects:

Finance and investingAccounting

Industries:

Goods, trade, and consumer services

Geography:

North AmericaUnited States
Your Price:$9.71

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In 2021, an investment management firm analyst needed to convince his portfolio manager that technology companies such as Amazon.com Inc. (Amazon) could have a strong investment thesis since they improved upon existing business models. To make his argument, he used financial ratio analysis to compare one of the portfolio manager's favourite companies, Walmart Inc. (Walmart), with a more technologically focused competitor in the retail space, Amazon. By analyzing the two companies using ratio analysis to highlight their similarities, the analyst sought to show his portfolio manager that Amazon was not only a technology company, but a better version of Walmart.

Learning Objectives

This case can be used in an introductory accounting or finance course at either the undergraduate or graduate level. Students should have a basic understanding of financial statements, mainly in interpreting numbers on the income statement, balance sheet, and cash flows. The case allows students to not only calculate and interpret financial statement ratios, but also understand how they relate to specific business strategies. After working through the case and assignment questions, students will be able to do the following:
  • Calculate a wide variety of financial ratios.
  • Analyze and understand the implications of these financial ratios.
  • Understand why certain ratios use specific calculations.
  • Relate a company’s strategy and business plan to its financial ratios.
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Case Study: Amazon vs. Walmart: Using Financial Ratios to Compare Companies | Ivey Publishing