On May 15, 2017, Amazon.com celebrated the 20th anniversary of its initial public offering (IPO). The company’s first twenty years was a period of remarkable growth but with very little to show in terms of accounting earnings. This reflected Amazon’s strategy of investing in expansion and research and development with the idea that sacrificing profitability in the short-term would allow the company to create value over the long-term. Relatedly, and perhaps not surprisingly, Amazon’s voluntary non-GAAP disclosures emphasized cash flow performance measures, not accounting earnings. Students are asked to contemplate potential pathways to dramatically higher profitability for Amazon.
To understand the layout and terminology of the cash flow statement as well as how the cash flow statement and income statement relate to one another.
Appropriate for the Following Course(s)
*An educator (non-watermarked) copy of this case is available only to individuals who hold teaching positions at academic institutions and want to use the case in a course.
THIS CASE HAS A TEACHING NOTE.