Question

Finance

 

1. Amazon and Macy's are retailers.  By the end of May 22, 2019, the P/E ratio (Price/Earnings ratio) of Amazon is 77.64 but the P/E ratio of Macy's is only 6.16.  Why do the market investors give a very high P/E ratio to Amazon but give a low P/E ratio to Macy's?  Please explain.

2. There are four key financial statements for a company: Balance Sheet, Income Statement, Statement of Retained Earnings, and Statement of Cash Flows.  Based on your experience of learning accounting courses, which statement is easier for you to make?  Which statement is more difficult for you to make?  Please share your opinion and explain why.

 

What is managerial accounting and why are companies typicallt focus on their costing?

Answer the initial discussion in at least one paragrah of 4-6 sentences. More is better. 

Answer 1

1) Amazon’s increase in turnover is rapid in recent years and earning rate has been increased in recent years. Thus, the Amazon is under a heavy growth phase whereas Macy is having a stable towards declining phase. Therefore, market investors are giving a very high P/E ratio to Amazon and low P/E ratio to Macy.

2) For a Accountant, there is nothing easy and difficult to make any statement while making final accounts. There always exist complexities in drafting various statements. Out of four accounting statements, “Statement of Retained Earnings” is the easiest one after completing the Income Statement due to fewer transactions affecting the Statement. The Statement of Cash Flows brings more and highest complexities, so it takes a little more time to finish than any other statement.

3) Management accounting is the use of the financial and costing information to arrange the resources to the better use and make decisions for more profitability and control over various activities.

The companies use to focus on the costing for the better usage of the resources and higher profitability and growth of the organization. The optimization of the costing in the various fields of the management is essential so that the expenses are being controlled and prices can be made more and more competitive. Everything starts with cost or expenses and all costs are added to the prices which customer has to pay, so controlling the costs will enable the company to keep the prices of the products down.

=========================