It is the presentation of our Study on cost effectiveness and leverage analysis of Alibaba in comparison with its major western competitors like amazon and E-bay.

1. Arijeet|Akash|Aman|Dhruv|Konark|Monica

2. WHY ALIBABA?
 Only big Non-U.S. E-commerce giant
 Fastest growing e-commerce Company in the world
 One of the biggest innovators in cutting cost.
 Competitors Amazon, eBay

3. 80%Of China’s online
market is dominated by
Alibaba
WHY ALIBABA?

5. VS VS
• Founded in 1995, Campbell,
California, United States
• Released IPO at a valuation of USD
$63 Million in 1998
• Online platform for sale of goods
and services for and by individuals
• PayPal, Skype, Craiglist are
subsidiaries.
• Founded in 1999, Hangzhou,
China
• Released IPO in September
2014 in US at a valuation of
USD $21.8 Billion
• Acts as middleman between
buyers and sellers through its
network of websites
• Taobao.com, Tmall, Alipay
• No Inventory
• Founded in 1994, Bellevue,
Washington, United States
• Released IPO at a valuation of USD
$54 Million in May, 1997
• Indulges in both direct selling of goods
and provides online platform for other
retailers to sell products
• Kindle, e-book are other sources of
revenues
• Has its large network of warehouses
for inventory

6. *sources NASDAQ and NYSE

7. Profitability
Amazon Ebay Alibaba
USD million $
Dec'14 Dec'13 Dec'12 Dec'14 Dec'13 Dec'12 march'14 March'13 March'12
Gross Profit 26236 20271 15122 12170 11011 9856 39135 24798 13471
Net Sales 88988 74452 61093 17902 16047 14072 52504 34517 20025
Gross Profit Margin 29.48% 27.23% 24.75% 67.98% 68.62% 70.04% 74.54% 71.84% 67.27%
Income From Operations 178 745 676 3514 3371 2888 24801 10506 4944
Operating Profit Margin 0.20% 1.00% 1.11% 19.63% 21.01% 20.52% 47.24% 30.44% 24.69%
Net Income -241 274 -39 46 2856 2609 23315 8532 4228
Total Stock holders equity 10741 9746 8192 19906 23647 20865 39739 10509 31518
ROE -2.24% 2.81% -0.48% 0.23% 12.08% 12.50% 58.67% 81.19% 13.41%
Total Assets 54505 40159 32555 45132 41488 37074 111549 63786 47210
ROA -0.44% 0.68% -0.12% 0.10% 6.88% 7.04% 20.90% 13.38% 8.96%
Interest 210 141 92 0 0 0 358.53 250.28 10.66
EBIT 99 647 636 3531 3466 3084 5658 4663 1880
Degree of Financial leverage -0.89 1.28 1.17 1.00 1.00 1.00 1.01 1.02 1.00
% Change in EBIT -84.70% 1.73% 1.88% 12.39% 21.34% 148.03%
% Change in Sales 19.52% 21.87% 11.56% 14.03% 52.11% 72.37%
Degree of Operating Leverage -4.34 0.08 0.16 0.88 0.41 2.05
Combined Leverage 3.87 0.10 0.16 0.88 0.42 2.10
COMPARING PROFITABILITY AND LEVERAGES:

8. 74.54
71.84
67.27
67.98
68.62
70.04
29.48
27.23
24.75
2014 2013 2012
GROSS PROFIT
MARGIN
Alibaba Ebay Amazon
0
20
40
60
2012 2013 2014
OPERATING PROFIT
MARGIN
Alibaba Ebay Amazon

9. FINDINGS:
• Alibaba have higher gross profit margins, operating profit margin , ROA and ROE,
thus it is more profitable than EBay an Amazon.
• It is primarily due to high profits they make by their business.
• The interesting fact is that Amazon net revenue is more than Alibaba’s but still their
profit margins are low.
• If we see leverage, then also Alibaba is the least risky company among the three.
• By 2017 Alibaba would take over Amazon in revenue too.
22.82%
15.45
%
56.54%

10. INVENTORY
TURNOVER
AVERAGE COLLECTION
AND PAYMENT PERIOD
OPERATING
EXPENSE RATIOCost Efficiency

11. 10.72
10.05 10.13
9.63
2011 2012 2013 2014
AMAZON'S INVENTORY TURNOVER
DAYS
INVENTORY TURNOVER
INVENTORY TURNOVER

12. AVERAGE CASH
COLLECTION
DAYS
80.84
AVERAGE CASH
COLLECTION
DAYS
21.99
AVERAGE CASH
PAYMENT DAYS
19.84
AVERAGE CASH
PAYMENT DAYS
103.12
6.41%
95.90%
78.23%
69.02%
2.94%
6.27% 6.96%
14.03%
2011 2012 2013 2014
PERCENTAGE OF DEBT
ALIBABA AMAZON

13. 0.753108614
0.695628241
0.52763599
0.701905412
0.982070429 0.988934903 0.989993553 0.99799973
0.789508782 0.794769756 0.789929582 0.803709083
2011 2012 2013 2014
ALIBABA AMAZON ebay
OPERATING EXPENSE RATIO

14. Cost
effectivenes
s should be
a priority
Good
inventory
managemen
t can make
the
difference
High
leverage
high risk
KEY LEARNINGS