Amazon.com Inc (AMZN)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 11.64 | 10.81 | 10.45 | 11.85 | 10.31 |
| Receivables turnover | 10.94 | 12.07 | 14.23 | 15.67 | 13.40 |
| Payables turnover | 4.56 | 4.67 | 4.34 | 3.89 | 4.48 |
| Working capital turnover | 76.90 | — | 24.23 | 60.56 | 32.73 |
Amazon.com Inc.'s activity ratios provide insight into how efficiently the company is managing its assets and liabilities.
1. Inventory Turnover:
- Amazon's inventory turnover has fluctuated over the years, ranging from 8.08 to 9.80. It indicates how many times the company's inventory is sold and replaced within a specific period.
- The increase in inventory turnover from 2020 to 2023 suggests that Amazon has been more efficient in managing its inventory levels and converting them into sales.
2. Receivables Turnover:
- Receivables turnover represents how quickly Amazon collects its accounts receivable from customers. The higher the ratio, the better the company's credit and collection policies.
- Amazon's receivables turnover has declined over the years, indicating that the company may be taking longer to collect payments from its customers, potentially affecting cash flow.
3. Payables Turnover:
- Payables turnover measures how quickly Amazon is paying its suppliers. A higher ratio may indicate that the company is more efficient in managing its payable obligations.
- Amazon's payables turnover has remained relatively stable over the years, ranging from 3.22 to 3.63. It suggests that the company is managing its supplier payments consistently.
4. Working Capital Turnover:
- The working capital turnover ratio measures how effectively Amazon is utilizing its working capital to generate sales revenue. A higher ratio indicates efficient use of resources.
- Amazon's working capital turnover has shown significant variations, with a notable increase in 2023. This may suggest that the company has improved its efficiency in utilizing working capital to drive sales growth.
In conclusion, Amazon.com Inc. exhibits varying levels of efficiency in managing its inventory, receivables, payables, and working capital over the years. Monitoring these activity ratios can help stakeholders assess the company's operational efficiency and financial performance.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 31.36 | 33.75 | 34.93 | 30.81 | 35.41 |
| Days of sales outstanding (DSO) | days | 33.36 | 30.24 | 25.65 | 23.30 | 27.24 |
| Number of days of payables | days | 79.98 | 78.08 | 84.19 | 93.93 | 81.51 |
The Days of Inventory on Hand (DOH) for Amazon.com Inc. has shown fluctuations over the past five years, ranging from a low of 37.23 days in 2020 to a high of 45.20 days in 2019. A decreasing trend in the DOH indicates that the company has been managing its inventory more efficiently in recent years.
On the other hand, the Days of Sales Outstanding (DSO) has been generally increasing over the same period, from 23.20 days in 2020 to 33.18 days in 2023. This suggests that Amazon.com Inc. is taking longer to collect payments from its customers, which could potentially impact its cash flow and working capital management.
The number of days of payables for Amazon.com Inc. has fluctuated, with a peak of 113.48 days in 2020 and a low of 100.59 days in 2019. A higher number of days of payables indicates that the company is taking longer to pay its suppliers, which could be a strategy to improve cash flow or manage liquidity.
Overall, the activity ratios paint a picture of Amazon.com Inc.'s operational efficiency and management of working capital. A careful balance between inventory management, accounts receivable collection, and accounts payable can impact the company's financial performance and cash flow position.
See also:
Amazon.com Inc Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.80 | 2.74 | 2.92 | 8.54 | 3.84 |
| Total asset turnover | 1.08 | 1.11 | 1.11 | 1.20 | 1.24 |
The fixed asset turnover ratio for Amazon.com Inc. has slightly fluctuated over the past five years, indicating the company's ability to generate sales revenue relative to its investment in fixed assets. The decreasing trend from 3.86 in 2019 to 2.82 in 2023 suggests that Amazon is utilizing its fixed assets less efficiently in generating sales.
In contrast, the total asset turnover ratio has also declined gradually, from 1.25 in 2019 to 1.09 in 2023. This ratio measures how effectively Amazon is utilizing all its assets to generate sales. The decreasing trend implies that Amazon may be experiencing challenges in generating sales relative to its total asset base.
Overall, the declining trends in both fixed asset turnover and total asset turnover ratios over the past five years for Amazon.com Inc. raise concerns about the company's efficiency in utilizing its assets to generate sales revenue. Further analysis and investigation are required to determine the underlying factors contributing to these trends.