Amazon.com Inc (AMZN)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 11.92 | 11.64 | 10.81 | 10.45 | 11.85 |
| Receivables turnover | 11.50 | 10.94 | 12.07 | 14.23 | 15.67 |
| Payables turnover | 4.32 | 4.56 | 4.67 | 4.34 | 3.89 |
| Working capital turnover | 55.75 | 76.90 | — | 24.23 | 60.56 |
Inventory turnover ratio measures how many times a company's inventory is sold and replaced over a period. In the case of Amazon.com Inc, the inventory turnover ratio has been consistently high over the years, ranging from 10.45 to 11.92, indicating efficient management of inventory levels and quick turnover of goods.
Receivables turnover ratio shows how effectively a company extends credit and collects debts on its sales. Amazon's receivables turnover has shown a decreasing trend from 15.67 to 11.50, which could suggest a slower collection of receivables over time. However, it is important to note that Amazon's business model relies heavily on online sales and digital payments, which may impact the interpretation of this ratio.
Payables turnover ratio evaluates how quickly a company pays its suppliers. Amazon's payables turnover has remained relatively stable, ranging from 3.89 to 4.67, indicating consistent payment practices with suppliers.
Working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales. It seems there was missing data for 2022, but the ratios for the other years varied significantly, with a peak in 2023 at 76.90 and a drop in 2021 to 24.23. This could indicate fluctuations in Amazon's ability to generate sales using its working capital efficiently.
Overall, based on the activity ratios provided for Amazon.com Inc, the company appears to effectively manage its inventory, maintain stable payment practices with suppliers, and generate sales efficiently through working capital, although some areas like receivables turnover may warrant further monitoring.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 30.63 | 31.36 | 33.75 | 34.93 | 30.81 |
| Days of sales outstanding (DSO) | days | 31.75 | 33.36 | 30.24 | 25.65 | 23.30 |
| Number of days of payables | days | 84.48 | 79.98 | 78.08 | 84.19 | 93.93 |
To analyze Amazon.com Inc's activity ratios, we will focus on three key ratios: Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.
1. Days of Inventory on Hand (DOH):
- The trend in DOH shows how many days it takes for Amazon to sell its inventory. The DOH increased from 30.81 days in 2020 to 34.93 days in 2021, and then slightly decreased to 33.75 days in 2022. It further declined to 31.36 days in 2023 and 30.63 days in 2024. A decreasing trend in DOH generally indicates efficient inventory management, allowing the company to sell inventory faster.
2. Days of Sales Outstanding (DSO):
- DSO measures how long it takes for Amazon to collect payments from its customers. The DSO increased from 23.30 days in 2020 to 25.65 days in 2021, then rose significantly to 30.24 days in 2022, and further to 33.36 days in 2023. It decreased slightly to 31.75 days in 2024. A higher DSO may indicate slower collections, impacting cash flow and liquidity.
3. Number of Days of Payables:
- This ratio estimates how long Amazon takes to pay its suppliers. The number of days of payables decreased from 93.93 days in 2020 to 84.19 days in 2021, then to 78.08 days in 2022, rose slightly to 79.98 days in 2023, and increased to 84.48 days in 2024. A longer period of payables suggests that the company may be taking longer to pay its suppliers, potentially preserving cash but also raising supplier relations concerns.
Overall, the trends in these activity ratios can provide insights into Amazon's operational efficiency, inventory management, collection practices, and supplier relationships, which are crucial factors in evaluating the company's financial health and performance.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.52 | 2.80 | 2.74 | 2.92 | 8.54 |
| Total asset turnover | 1.02 | 1.08 | 1.11 | 1.11 | 1.20 |
The fixed asset turnover ratio for Amazon.com Inc gradually decreased from 8.54 in 2020 to 2.52 in 2024. This indicates that the company generated $2.52 in revenue for every dollar invested in fixed assets by the end of 2024.
In comparison, the total asset turnover ratio also declined over the same period, from 1.20 in 2020 to 1.02 in 2024. This suggests that Amazon generated $1.02 in revenue for every dollar of total assets held by the company at the end of 2024.
The decreasing trend in both fixed asset turnover and total asset turnover ratios may indicate that Amazon's efficiency in utilizing its assets to generate sales has been reducing over the years. It could be a signal for further analysis into the company's operational efficiency and asset management strategies.