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Amazon Final Paper
Amazon Final Paper
Gillis
Amazon
Financial
Analysis
2012
1.12
.425
.78
2011
1.17
.35
.81
Industry Average
1.54
.82
Mary
Gillis
Amazon
Financial
Analysis
2012
8.3 times
43.98 days
24%
20.6 times
2011
9.1 times
40 days
22.4%
23.13 times
Industry Average
4.8 times
75.42 days
33.55%
10.11 times
17.7 days
15.78 days
36.11 days
Mary
Gillis
Amazon
Financial
Analysis
doesnt cause too much concern, however if it continues to drop like it did this last year it would
be cause for more concern and could become a greater risk.
Ratio
Debt Ratio
Debt to Equity Ratio
Times interest Earned Ratio
2012
75%
2.97
5.23 times
2011
69%
2.25
15.18 times
Industry Average
34%
52%
5.33 times
Profitability
In 2011 Amazon made 22.4% of every dollar in sales but that went down to a -.06 which means
they are not making any money off of their sales, they are actually losing money which is risky
for both investors and creditors. It is bad for investors because the less net income Amazon gets
means that the investors get less money or have to end up paying for the loss and it is bad for
creditors because Amazon could potentially not be able to pay their debts. One thing that is
really good though is the asset turnover ratio is higher than the average which is good because
they are able to turn their assets into income. What could help is for Amazon to cut expenses
and stick to a budget so that the profit margin ratio will go back up and they will be able to make
a profit.
Ratio
Profit Margin Ratio
Assets Turnover Ratio
Rate of Return on CS Equity
Earnings Per Share
2012
-.06%
2.11 times
-.48%
-.09
2011
22.4%
2.18 times
8.63%
-.09
Industry Average
2.87%
1.66 times
11.39%
Mary
Gillis
Amazon
Financial
Analysis
Ratio
Price/Earning Share
2012
-2,854.7
2011
131.37
Industry Average
47.17
In general 2012 was a difficult year for Amazon in terms of earning money. Amazon had
no problem making sales and having income however the expenses they had took more money
than they were bringing in. With 2012 and 2011 having big differences in most of the numbers I
wonder if this could simply be more of a transition year. They may not be profitable in some
areas and more of a risk they are still selling and able to get inventory in and out quickly, if
Amazon was to cut back on some of the expenses and cut back on debt they would make a
considerable profit and be a wise investment. To get a better idea of if this a good investment we
would need to take these 5 areas and look at them in a 5-10 year period so we could see if it is
just a down year or if it is consistently declining.