Question

ANALYSIS each line1 to 5

RATIOSANALYSIS

Profitability Ratios (%)	E. commerce	Amazon	EBay
1)Gross Margin	43%	41.27%	77.37%
2)EBITD Margin	0	28.79%	31.48%
3)Operating Margin	9.41%	5.96%	22.17%
4)Pretax Margin	22.33%	5.57%	24.38%
5) Effective Tax Rate	21%	0%	6.99%

Answer 1

	RATIOS ANALYSIS
	Profitability Ratios (%)	E. commerce	Amazon	EBay
	1)Gross Margin	43%	41.27%	77.37%
	2)EBITD Margin	0	28.79%	31.48%
	3)Operating Margin	9.41%	5.96%	22.17%
	4)Pretax Margin	22.33%	5.57%	24.38%
	5) Effective Tax Rate	21%	0%	6.99%
1	Gross Margin of E.Commerce and Amazon are quite similar. However EBAY's Gross Margin are significantly higher. This shows that Ebay is selling higher margin products while other two companies are selling products with lower margin. It may also be because of higher efficiency at Ebay.
2	Despite similar gross margins for E. Commerce and Amazon, Amazon's EBITD margin are significantly higher that E. Commerce. Similarly Despite having excellent gross margins, EBITD margin of Ebay are similar to Amazon. This shows that Amazon's selling marketing and general expenses are better managed than other two companies
3	E Commerce's EBITD is nil while operating margin is 9.41%. It seems to have negative depreciation which could be because of write up of value of assets. Amazon operating margin is 5.6% compared to EBITD of 28.79 % which means it has significant fixed assets and hence huge depreciation expense.
4	E.commerce's operating margin is 9.41% while pretax margin is 22.33% which means it has significant non operating or exceptional income during the year. Amazon's operating and pretax income is largely same. There could be small amount of interest expense. Ebay is also having around 2% of non operating or one time incomes
5	E. Commerce's effective tax rate is highest while Amazon's tax rate is lowest. It could be impact of better tax planning by Amazon and Ebay, or could be impact of one of tax expense