Amazon’s continued expansion for development will require external financing for continued growth for the company. From the 2015 annual balance sheet and reports, the reports reflect financing through long-term credit which reported at $8.235 million. The capital lease obligation has slightly lowered from the previous year at $5.95 billion. Furthermore, the external factor of finance for 2015 was $11.35 million for Amazon. The overall external finance increased at a rate of 12.25% from 2014 to 2015.
Step 6 – Target Sources of Finance
Large and growing companies utilize current banking systems and other external modes of financial stability by utilizing loans. In addition to loans, organization can be granted long term debts for necessary funding. Other options of funding to Amazon may include equity or debt financing options. The parameters and considerations include sharing ownership and control of the company. These two modes or methods of finance can help raise additional funding for an organization, but like with all finance options it can include various inherited risks associated with advantages and disadvantages.
The first method of funding is called equity financing or shared capital. “Equity financing takes the form of money obtained from investors in exchange for an ownership share in business” ("Debt vs. Equity Financing - advantages, company, disadvantages, business, debt financing," n.d.). These funds may be contributed by friends, relatives, angel investors, or venture capitalist. In a company’s infancy stage high profile investors can add value by credibility to a company. With established companies, equity investors usually are looking for both a partnership ...
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...uired to “pledge assets” in debt finance. Although regardless of a company’s great credit rating, specific assets maybe include in terms by negotiating parties until final payment of loan is completed. Debt finance may be an alternative financial route for a company, but it does involve risks of liability.
In conclusion, Amazon will measure the needs of the organization when it requires added financial capital. The two principles may include equity or debt financial methodologies. Both financing obligations result in certain parameters meet by potential investors, market, and overall health of the organization. The company must commit to a long term strategy and plan to sustain capital growth in today’s economy. A solid forecast or analysis will allow the company creditability in a specific industry to determine the advantages and disadvantages in a volatile market.
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