Acc-345-Amazon-business-valuation-report-milestone-two

School: Southern New Hampshire University - Course: ACC 345 - Subject: Accounting

Studocu is not sponsored or endorsed by any college or university ACC 345 Business Valuation Report Milestone Two Financial Statement Analysis/Business Valuation (Southern New Hampshire University) Studocu is not sponsored or endorsed by any college or university

INTRODUCTION Descripton of the Assignment This is a business valuaton report of the business Amazon.com. It's created for the purpose of the sale of a minority stake in the company. This report includes a fnancial health summary, a future performance estmate, and an estmated valuaton of the company. Standard of Value This business is a going concern, and the standard of value is fair market value. This valuaton will consider the 16% ownership by Jef Bezos and MacKenzie Scot Bezos. 3 Downloaded by Amber Cross ([email protected])lOMoARcPSD|11677056

Amazon.com, Inc. Brief History/Overview Jef Bezos founded and incorporated Amazon.com as an online bookstore in July of 1994 in Washington state. Although the company was originally touted as an online bookseller, Bezos had already realized the vast potental of internet retail. Originally called Cadabra, he changed the name to Amazon afer someone misheard "cadaver". He purposely chose company name that would not box him in to any one single good or service (History.com). He did beta testng in April of 1994 and opened to the public in July of the same year afer getng positve feedback from his beta testers, who were mostly friends and family. In 1996 Amazon was reincorporated in Delaware. By the end of 1996 Amazon had revenues of $15.7 million. Bezos took Amazon public in 1997 and raised $54 million according to CompaniesHistories.com. Although the company's slow growth plan worried stakeholders, it proved to be necessary to survive the burstng of the dot- com bubble in 1995, and Amazon turned its frst proft in the frst quarter of 2001. Amazon originally operated out of Jef Bezos garage in Washington state, but they expanded and opened its second distributon center in 1997 in Delaware. This gave then coast to coast reach and enabled quicker shipping to customers who were located farther away from the original distributon center. By 1998 Amazon was in operaton in Europe and added online video sales to its inventory. Amazon has a large quantty of tangible assets, such as buildings, equipment, and land in multple locatons. They also hold a large quantty of intangible assets such as copyrights, trademarks, and intellectual property. Amazon Prime could be considered one of its most important assets, with the subscripton service promotng customer loyalty and incentvizing customers to spend more. Amazon has ofered many services that are key to helping them stay at the top of their game. On top of Amazon Prime, the company has a patented "I-click" technology that allows for easier purchasing (cnn.com) and Amazon web services, which give customers opton in cloud-based storage, along with computer rental optons and computatons. The introducton of the Kindle e-reader in 2007, along with the purchase of Audible in 2008, made the company a top-notch supplier of digital books and magazines. According to BRM, "Amazon organizatonal structure can be classifed as hierarchical. Senior management team include three CEOs and three senior vice presidents responsible for various vital aspects of the business reportng directly to CEO Andy Jassy." When Amazon was frst incorporated, they began with a fat organizatonal structure, but as they grew, so did the need to set up a hierarchy that required multple heads reportng to managers with global functonal and geographical based divisions.