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In: Finance

Discuss and synthesized the specific types of financial risk that Amazon faces. Give an example of...

Discuss and synthesized the specific types of financial risk that Amazon faces. Give an example of each risk.

Solutions

Expert Solution

the various risk faced by amazon are as follows:

  • Credit risk since lot of people choose cod option they may refuse to accept the product & hence default in payment . eg: product delivered & customer refuses to pay by figuring out a fault in product .
  • liquidity risk as they dont have sufficient hand in cash. it is realised only when product is delivered & cash collected. eg: customer cancels product after ordering , so no cash in hand generated.
  • foreign exchange fluctuation risk since amazon has presence world wide . any change in prices affects the profitability.
  • profitability risk since the products sold have substitutes & many other market players. eg: flipkart , myntra offerig same products at same rate or at a discounted rate.
  • interest rate & monetary policy changes, economic changes may affect as cost of inputs, inventory , etc is affected.

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