Disclosure Analysis Paper

Disclosure Analysis Paper

July 29, 2013

In the business world, assets are the foundation of sustainability. A company's current assets are the components that fund day-to-day operations. Current assets generally include cash and cash equivalent, receivables, and inventories. Depending on the nature of the business, current assets can range from barrels of crude oil, to baked goods, to foreign currency ("Investopedia.com", 2013). Amazon.com specializes in merchandise, which means their current assets are vast. Publically traded companies such as Amazon include notes to consolidated financial statements to clarify some of the vastness involved in the current assets. This paper will analyze the disclosures contained within the notes to the financial statements related to the company's current assets.

Amazon's profile

Since its conception in 1994, Amazon has grown to be a Fortune 100 company. The company's mission: to seek to be Earth's most customer-centric company for four primary customer sets: consumers, sellers, enterprises, and content creators. Amazon has discovered how to bring books, music, movies, and products to hundreds of partner companies and consumers worldwide.

On May 15, 1997, the company went public. The initial public offering (IPO) was targeted at $18, but by the end of the day, public demand had pushed the share price to more than $24 per share. The company had raised $54 million ("eHow.com", 2013). Since becoming a publically traded company in 1997, Amazon has expanded globally, added popular consumer features, and teamed up with many companies to offer their products through the website. In January 2009, Amazon reported $6.7 billion in fourth quarter 2008 sales ("eHow.com", 2013). The current price per share far exceeds its initial offering by almost $300; therefore, it is no surprise that Amazon reported current assets, which included cash and cash equivalent, receivables, and inventories, of 21.3 million in 2012. The following paragraphs will explain how Amazon classifies their current assets.

Cash and cash equivalent

Amazon's consolidated balance sheet for 2012 reported cash and cash equivalent at $8,084 million, which is an increase of $2,815 million from 2011. Amazon's disclosure notes indicate that their cash and cash equivalent are derived from all highly liquid instruments with an original maturity of three months or less at the time of purchase. Such instruments include cash, money market funds, and equity securities. The company is required by a commitment and contingency clause (note 8) which restricts a portion