Amazon.com Financial Statement and Financial Ratios Analysis

Amazon.com Inc. Financial Statements and Financial Ratios Analyzed

Welcome, everyone!

Thank you for visiting my page dedicated to the Amazon.com Financial Report. Here, you'll find preliminary information about Amazon's financial performance, historical data, and trends.

To delve deeper into Amazon's financial performance, I offer two comprehensive reports: "A Beginner's Guide to Amazon.com Financial Analysis" and "Amazon.com Financial Report by Paul Borosky, MBA." As the author of these reports, I bring my expertise as an MBA holder, Doctoral Candidate, and published author to provide valuable insights.

These reports include:

  • Summarized income statements for the past 5 years.
  • Summarized balance sheets for the past 5 years.
  • Analysis of over twenty common financial ratios, complete with formulas, calculations, and tips for each ratio.
  • Line-by-line descriptions, explanations, and analysis tips for most financial statement line items and financial ratios.
  • Professional advice on conducting your financial analysis.
  • Simplified explanations in the "in other words" sections make complex concepts easier to understand.

For a more comprehensive review of Amazon's financial statements and ratios, I highly recommend purchasing the "Amazon.com Financial Report." This report goes beyond the preliminary information and offers a professional financial analysis of important income statements, balance sheets, and financial ratio trends. It assigns a "Letter Grade" to most line items and ratios, providing a clear understanding of the overall trends over the past 5 years. Additionally, you'll find an overall financial analysis summary for the company.

I hope you find the preliminary information valuable, and if you're seeking a more detailed analysis, don't hesitate to purchase the comprehensive financial report.

Sincerely,

Paul, MBA

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Amazon.com 2022 Beginner's Guide to Financial Analysis by Paul Borosky, MBA.

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Amazon.com Financial Report 2021 by Paul Borosky, MBA.

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Sample Financial Report

Sample Financial Report by Paul Borosky, MBA.
Financial Report Sample 2

Amazon.com: Concise Overview

Headquartered in Seattle, Washington, Amazon.com operates in the consumer cyclical sector, specifically within the internet retail segment.  With an extensive workforce of approximately 1.2 million employees, the company serves consumers and commercial businesses across North America and internationally.  Amazon.com comprises three primary business segments: North America, International, and Amazon Web Services (AWS).  The company retails products and subscriptions, reselling external products and offering its lines of devices such as Kindle, Fire tablets, Fire TVs, Rings, Echo, and more.

From a financial analysis perspective, as of January 26th, 2022, Amazon.com stock is trading at $2799.72.  The organization’s market capitalization is $1.4 trillion, and its beta value is currently 1.1, indicating a slightly higher risk than the overall market.  The stock’s range falls between $2,707 and $3,773.  It is noteworthy that, according to our research, Amazon.com has not yet issued dividends to its shareholders, suggesting the company is still in a growth phase.

Amazon.com Financial Report Sources

The report titled “Amazon.com 2021 Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was authored by Paul Borosky, MBA, and owner of Quality Business Plan.  To gather information for this summarized report, the author extensively researched Amazon.com’s 10k reports from various years, including Amazon.com’s 10k annual reports for 2019, 2016, 2020, and 2014.  These reports served as the primary sources for data collection and analysis.

Upon collecting Amazon.com’s 10k annual statements, the author utilized a customized financial template to organize and present the company’s income statement and balance sheet information.  The financial template allowed for a structured analysis of Amazon.com’s financial statements, facilitating the identification of key financial ratios and trends.

By combining comprehensive research, relevant 10k reports, and a customized financial template, the report provides readers with a detailed examination and analysis of Amazon.com’s financial statements and financial ratios over five years.  This comprehensive approach ensures a thorough understanding of Amazon.com’s financial performance and positions the report as a valuable resource for investors, analysts, and individuals seeking insights into the company’s financial health.

Section 1: Amazon.com Income Statement Analyzed

This section comprehensively explains the income statement, highlighting its significance in financial analysis.  The author defines and elaborates on specific line items within the income statement, including revenues, gross profits, and more, delving into the details of each item.  After thoroughly discussing and defining each line item, the author offers a summary analysis of the crucial income statement line item trends specific to Amazon.com in most instances.

By presenting a broad definition of the income statement and its importance, readers gain a fundamental understanding of this financial statement’s role.  The subsequent focus on individual line items allows a deeper comprehension of the components contributing to Amazon.com’s financial performance.  Through the summary analysis, readers are provided with an overview of the trends within the income statement, enabling them to grasp key patterns and changes over time.

Overall, this section provides readers with a comprehensive breakdown of the income statement, its line items, and a concise analysis of Amazon.com’s income statement trends.  This detailed approach equips individuals with the knowledge and insights to assess Amazon.com’s financial performance.

Importance of Understanding Amazon.com’s Income Statement for Financial Analysis

Understanding Amazon.com’s income statement is crucial for conducting a comprehensive financial analysis.  The income statement summarizes the company’s revenues, expenses, and net income over a specific period.  By analyzing Amazon.com’s income statement, analysts can assess its profitability, revenue growth, and cost management.  Key components such as gross profit margins, operating expenses, and net income reveal insights into the company’s operational efficiency and financial performance.  Understanding the income statement enables analysts to evaluate Amazon.com’s ability to generate profits, identify trends, and compare its performance to industry benchmarks.  This understanding is essential for making informed decisions, assessing investment potential, and evaluating the company’s financial viability.

Revenue Growth:

In the last five years, Amazon’s revenues have grown, on average, about 27.7% annually.  Its most significant growth year in the last five years was 2020, which had a growth rate of 37.6%.  Unfortunately, the organization’s growth has declined to 21.7% last year.  Granted, a 21% growth rate is pretty astounding.  But it is not as good as its previous year or in 2018.  Overall, an exceptional job was done.

Analyst Grade: A+

Amazon.com 2022 Income Statement Summarized

Column1 2022 2021 2020 2019 2018
Revenues                  513,983                  469,822                  386,064                  280,522                    232,887
COGS                  288,831                  272,344                  233,307                  165,536                    139,156
Gross Profit                  225,152                  197,478                  152,757                  114,986                      93,731
 
SG&A                    11,891                      8,823                      6,668                      5,203                        4,336
Depreciation                    41,921                    34,433                    25,180                    21,789                      15,341
R & D                    73,213                    56,052                    42,740                    35,931                      28,837
Other                            -                            -                            -                            -                             -
Total Operating Expenses                  501,735                  444,943                  363,165                  265,981                    220,466
EBIT                    12,248                    24,879                    22,899                    14,541                      12,421
Other Income                            -                            -                            -                             -
Interest Expense                      2,367                      1,809                      1,647                      1,600                        1,417
EBT                     (5,936)                    38,151                    24,178                    13,976                      11,261
Taxes                      3,217                      4,791                      2,863                      2,374                        1,197
Net Income                   (2,722)                   33,364                   21,331                   11,588                    10,073

 

Section 2: Amazon.com Balance Sheet Analyzed

In the section dedicated to Amazon.com’s balance sheet, a thorough examination of each significant line item is conducted.  The author takes the time to define and elaborate on essential line items found within Amazon.com’s balance sheet, such as cash, property, plant and equipment, and liabilities.  Through these definitions, readers gain a clear understanding of the specific components that make up Amazon.com’s balance sheet.

Following the definition and discussion of each line item, the author analyzes the crucial line items within Amazon.com’s balance sheet.  This analysis offers valuable insights into the financial position and strength of the company.  By examining these essential line items, readers can evaluate the company’s liquidity, asset composition, and overall financial stability.

By addressing each line item individually and providing analysis, readers can comprehend the intricate details of Amazon.com’s balance sheet.  This approach enhances the reader’s ability to assess the financial health and position of the company.  The analysis serves as a valuable tool for understanding the significance of each line item and its impact on Amazon.com’s overall financial standing.

Importance of Understanding Amazon.com Balance Sheet for Financial Analysis

Understanding Amazon.com’s balance sheet is paramount for conducting a thorough financial analysis.  The balance sheet provides a snapshot of the company’s financial position at a specific time, showcasing its assets, liabilities, and shareholders’ equity.  By examining Amazon.com’s balance sheet, analysts can assess its liquidity, solvency, and overall financial health.  Key elements such as cash reserves, debt levels, and retained earnings offer insights into the company’s ability to meet short-term obligations, manage long-term debt, and fund future growth.  Understanding the balance sheet enables analysts to make informed decisions, identify potential risks, and evaluate Amazon.com’s financial stability and performance within the broader market.

Amazon.com Cash: 

Amazon’s cash holdings have continually increased from 2017, which was $20.5 billion, to $42.1 billion in 2020.  Fortunately, the organization’s cash holding will decrease slightly to $36.2 billion in 2021.  This decrease may indicate that the organization is shifting its cash to other, more profitable areas of its business, such as short-term investments.  If it holds, it is an excellent trend, and my assumption is correct.

Analyst Grade: A

Amazon.com 2022 Summarized Balance Sheets

Column1 2021 2020 2019 2018 2017
Cash                      53,888                  36,220                  42,122                  36,092                  31,750
Short Term Investment                      16,138                  59,829                  42,274                  18,929                    9,500
Account Receivable                      42,360                  32,891                  24,542                  20,816                  16,677
Inventory                      34,405                  32,640                  23,795                  20,497                  17,174
Other                         -                         -                         -                         -
Current Assets                  146,791              161,580              132,733                96,334                75,101
Net PPE                    186,715                160,281                113,114                  72,705                  61,797
Goodwill                      20,288                  15,371                  15,017                  14,754                  14,548
Other                         -                         -                         -                         -
Total Assets                  462,675              420,549              321,195              225,248              162,648
Accounts Payable                      79,600                  78,664                  72,539                  47,183                  38,192
Accrued Expense                      62,566                  51,775                  44,138                  32,439                  23,663
Accrued Taxes                              -                         -                         -                         -                         -
Notes Payable                              -                         -                         -                         -                         -
LT Debt - Current                              -                         -                         -                         -                         -
Other                              -                         -                         -                         -
Total Current Liabilities                    155,393                142,266                126,385                  87,812                  68,391
LT Debt                      67,150                  48,744                  31,816                  23,414                  23,495
Other                         -                         -                         -                         -
Total Liabilities                  316,632              282,304              227,791              163,188              119,099
Common Stock                      75,066                  55,543                  42,870                  33,663                  26,796
Treasury                        7,837                    1,837                    1,837                    1,837                    1,837
Retained Earnings                      83,193                  85,915                  52,551                  31,220                  19,625
Other                              -                         -                         -                         -                         -
Total Equity                  146,043              138,245                93,404                62,060                43,549
Total Equity & Liability                  462,675              420,549              321,195              225,248              162,648

 

Section 3: Amazon.com Financial Ratios Analyzed

In the concluding section, the author selects approximately 12 different financial ratios and proceeds to review and discuss some essential financial ratios specific to Amazon.com.  The author begins by providing explicit definitions for each financial ratio, ensuring readers understand its purpose and relevance in financial analysis.  Next, the author supplies the financial formulas for calculating each specific ratio, equipping readers with the tools to perform their ratio analysis.

After presenting the definitions and formulas, a concise analysis of the critical financial ratios is provided.  This analysis offers valuable insights into Amazon.com’s financial performance and position of Amazon.com, allowing readers to evaluate the company’s profitability, liquidity, solvency, and other critical aspects of its financial health.  By assessing these essential financial ratios, readers gain a comprehensive overview of Amazon.com’s financial strength and efficiency.

This section offers readers a well-rounded understanding of the significance and implications of financial ratios on Amazon.com by addressing a range of financial ratios, providing formulas, and offering brief analyses.  The information presented enables readers to interpret and evaluate the company’s financial performance more confidently and precisely.

Amazon.com’s Current Ratio:

Amazon’s current ratio in 2021 was 1.14, slightly above 1.0, the gold standard in finance.  This indicates that the organization is slightly mismanaging its short-term assets.  A better scenario would be to reduce its current ratio to about 1.0, if not slightly under.

Analyst Grade: B

Importance of Understanding Amazon.com’s current ratio

Understanding Amazon.com’s current ratio is paramount when conducting financial analysis for the company.  The current ratio is a crucial liquidity ratio that measures a company’s ability to meet its short-term obligations with its current assets.  For Amazon.com, a high current ratio indicates a strong ability to cover short-term liabilities, signifying financial stability and solvency.  Conversely, a low current ratio may indicate potential liquidity challenges.  By examining Amazon.com’s current ratio, analysts can assess its liquidity position, evaluate its short-term financial health, and make informed decisions regarding investment strategies or financial planning.

Amazon.com’s Total Asset Turnover:

In the last four years, Amazon’s total asset turnover has continually fallen from 1.4 in 2018 to 1.12 in 2021.  This means the firm generates fewer revenues using the organization’s total assets.  To mitigate this problem, the company could start paying dividends to its shareholders.

Analyst Grade: C+

Importance of Understanding Amazon.com’s Totat Asset Turnover in Financial Analysis

Understanding Amazon.com’s total asset turnover is crucial when conducting a financial analysis for the company.  The total asset turnover ratio measures how efficiently a company utilizes its assets to generate sales.  For Amazon.com, a high total asset turnover ratio indicates effective asset management and the ability to generate substantial revenue from its asset base.  This ratio provides insights into the company’s operational efficiency, resource allocation, and productivity.  Analysts can use the total asset turnover ratio to assess Amazon.com’s ability to generate sales relative to its asset investment and compare it to industry benchmarks.  A higher ratio suggests better utilization of assets, while a lower ratio may indicate room for improvement in optimizing asset performance.