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Amazon.com , inc. Nick Romjue. overview. Disaggregate Return on Net Enterprise Assets Enterprise profit margin Enterprise asset turnover Parsimonious Forecast Industry Analysis Free Cash Flow Valuation. The Catalog & mail order house industry Comparable companies.

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Amazon com inc

Amazon.com,inc

Nick Romjue


Overview

overview

  • Disaggregate Return on Net Enterprise Assets

    • Enterprise profit margin

    • Enterprise asset turnover

  • Parsimonious Forecast

  • Industry Analysis

  • Free Cash Flow Valuation


Amazon com inc

The Catalog & mail order house industry Comparable companies


Amazon return on net enterprise assets

Amazon return on net enterprise assets


Breaking apart rnea

Breaking apart rnea


Sales growth

Sales growth

Assume: 25%


Epm from sales

Epm (from sales)

Assume: 1%


Amazon com inc

eato

Assume: 50


Parsimonious assumptions

Parsimonious assumptions

  • Sales growth rate:25.00%

  • Enterprise profit margin:1.00%

  • Enterprise asset turnover:50


Parsimonious forecast

Parsimonious forecast


Industry analysis

Industry analysis

  • The comparable companies were not helpful in this analysis

  • Outside of comparing sales growth to eBay, none of them had financial figures similar to Amazon

  • These companies may be in the same industry, but they are at different life cycle stages and are each managed differently


Free cash flow

Free cash flow

FCF = EPAT – Increase in NEA


Present value of fcf

Present value of fcf


Present value of fcf with continuing value

Present value of fcf with continuing value


Questions

Questions?


Sources

Sources

  • Amazon.comInc 10K for fiscal years 2010-2013


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