Amazon.com Inc (AMZN)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.08 | 0.11 | 0.15 | 0.12 | 0.10 |
| Debt-to-capital ratio | 0.16 | 0.22 | 0.31 | 0.26 | 0.25 |
| Debt-to-equity ratio | 0.18 | 0.29 | 0.46 | 0.35 | 0.34 |
| Financial leverage ratio | 2.19 | 2.61 | 3.17 | 3.04 | 3.44 |
Amazon.com Inc's solvency ratios, as indicated by its debt-related ratios, show a relatively stable financial position over the past five years. The Debt-to-assets ratio has slightly increased from 0.10 in 2020 to 0.08 in 2024, indicating that the company has efficiently managed its debt in relation to its total assets.
Similarly, the Debt-to-capital ratio has shown a decreasing trend from 0.25 in 2020 to 0.16 in 2024, suggesting that Amazon has reduced its reliance on debt financing in relation to its total capital.
The Debt-to-equity ratio has fluctuated but generally decreased from 0.34 in 2020 to 0.18 in 2024, indicating a decreasing reliance on debt in relation to shareholders' equity over the years.
The Financial leverage ratio has consistently decreased from 3.44 in 2020 to 2.19 in 2024, reflecting the company's ability to reduce its financial leverage and dependence on debt to generate earnings.
Overall, these solvency ratios demonstrate that Amazon.com Inc has maintained a healthy balance between debt and equity financing, indicating a solid financial position and effective management of its capital structure over the past five years.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | — | 12.79 | -1.51 | 22.09 | 15.69 |
Interest coverage is a key financial ratio that reflects a company's ability to meet its interest obligations on outstanding debt. In the case of Amazon.com Inc, the interest coverage ratio has shown fluctuations over the years.
As of December 31, 2020, the interest coverage ratio was 15.69, indicating that Amazon generated significant operating income relative to its interest expenses. This shows that the company had a comfortable cushion to cover its interest payments.
By December 31, 2021, the interest coverage ratio improved further to 22.09, suggesting an even stronger ability to fulfill its interest obligations. This indicates improved financial health and a reduced risk of default due to interest payment issues.
However, there was a significant decline in the interest coverage ratio to -1.51 as of December 31, 2022. A negative ratio implies that Amazon's operating income was insufficient to cover its interest expenses during that period. This may raise concerns about the company's ability to handle its debt obligations with its current level of profitability.
The interest coverage ratio rebounded to 12.79 by December 31, 2023, showing an improvement from the previous year but still below the levels seen in 2020 and 2021. This indicates that Amazon managed to enhance its ability to cover interest payments compared to the previous year but not yet back to its previous strong positions.
Unfortunately, data for December 31, 2024, is not available (denoted by '\u2014'), making it challenging to provide a current assessment of Amazon's interest coverage ratio for that year.
In conclusion, while Amazon.com Inc has demonstrated strong interest coverage ratios in certain years, the significant decline in 2022 suggests a period of financial challenge. It will be crucial for the company to consistently monitor and improve its interest coverage to ensure its financial stability and avoid potential liquidity issues in the future.