Question - The incredible growth of Amazon has put fear into the hearts of traditional retailers. Amazon's stock price has soared to amazing levels. However, it is often pointed out in the financial press that it took the company several years to report its first profit.
Evaluate its ability to finance expansion from internally generated cash. Thus far, Amazon has avoided purchasing large warehouses. Instead, it has used those of others. It is possible, however, that in order to increase customer satisfaction, the company may have to build its own warehouses. If this happens:
- Describe how your impression of its ability to finance expansion change.
- Project any potential implications of the change in Amazon's cash provided by operations from the prior year to the current year.
- Describe how your impression of its ability to finance expansion change.