UGBA 10 Lecture Notes - Lecture 5: Earnings Yield, Dupont Analysis, Accounts Payable
23 May 2018
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Fiacial Aalysis of Aazo February 1
I. Amazon stocks
• The stok share is’t as iportat as the earigs yield ho uh are e payig for a
dollar of earnings); the future earnings per share estimate is also important
• PE ratio = price/earnings
• Earnings/price = earnings yield
• DuPont Formula
o Gets at the root causes of good or bad performance
II. Amazon analysis
• Has low net income compared to Google because of its low profit margin: a key issue for
Amazon and their investors
• Amazon has a higher financial leverage
• Aouts payale is the est type of liaility eause there is’t a iterest rate
• Balance sheet is pretty well-strutured; hoeer ash ad arketale seurities are’t
as high, which can lead to bankruptcy
III. What happened after Aazo’s earigs?
• Earnings = revenues – expenses
• Aazo’s profits are depedet o the holiday seasos ie: Christas
• Stock price reaction to Amazon was harsh
o Best perspective is the long-term perspective of a company and where their
stock is going, seeing if they meet, beat, or miss expectations
IV. Company news: how does the market respond to the company news?
• )ooig i o Aazo’s uderperforae
o Earnings per share is one factor: measure of how much profit the company has
per share of company outstanding; how much net income from one share
V. Earnings per share
• EPS = net income/number of shares
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