Financial Statement Analysis of Amazon.Com

1708 words 7 pages
Financial Statement Analysis of Amazon.com, Inc.
Introduction
The purpose of this essay is to perform financial statement analysis on Amazon.com, Inc. (NASDAQ: AMZN ). We start with an introduction of Amazon and its industry. We then evaluate the company’s financial position, liquidity, operating capability and financial flexibility using different ratios. To evaluate the financial performance of Amazon.com, Inc we disclose recurring NICO and do full ROE disaggregation.

Amazon.com’s stock price increased from $44.29 per share at the end of fiscal year 2004 to $134.52 per share at the end of fiscal year 2009. Earnings per share increased from $0.63 to $2.06. The stock closed at $118.87 on 02/01/2010.

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Amazon.com is
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Overall, Amazon.com has good operating capability, high liquidity and high financial flexibility. One thing to note is that in the current economy environment, while a lot of companies are seeking for credit yet they could not find it, Amazon.com is using cash to paying off its debt. This shows that the company’s operation is healthy and the management team is confident about the future growth of the company. | | Amazon.com | | | eBay | | 2009 | 2008 | 2007 | 2006 | 2005 | 2009 | 2008 | Financial Leverage | 2.8 | 3.8 | 6.7 | 11.9 | 365.5 | 1.4 | | Debt to Assets | 1% | 5% | 20% | 29% | 41% | 0% | 0% | Debt to Equity | 2% | 15% | 107% | 289% | 618% | 0% | 0% | Debt to Capital | 2% | 13% | 52% | 74% | 86% | 0% | 0% | Liabilities to Equity | 1.63 | 2.11 | 4.42 | 9.12 | 14.02 | 0.34 | 0.41 | Liabilities to Assets | 62% | 68% | 82% | 90% | 93% | 25% | 29% | | | | Table 3 | | | |

Operations and Profitability

As shown in Table 4, we reconciled Amazon’s NICO as reported to “recurring NICO” for 2004 – 2009. The diluted net earnings per common share – as reported and “recurring NICO” per common share are included too. We also included similar reconciliation for Ebay’s fiscal year 2009. Table 5 shows the complete disaggregation of profit margin and return on equity.

From the ROE disaggregation we can see that between

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