Amazon.com Inc (AMZN)
Solvency ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.08 | 0.09 | 0.10 | 0.11 | 0.11 | 0.13 | 0.13 | 0.14 | 0.15 | 0.14 | 0.14 | 0.12 | 0.12 | 0.13 | 0.14 | 0.10 | 0.10 | 0.12 | 0.13 | 0.11 |
| Debt-to-capital ratio | 0.16 | 0.17 | 0.19 | 0.21 | 0.22 | 0.25 | 0.27 | 0.30 | 0.31 | 0.30 | 0.31 | 0.26 | 0.26 | 0.29 | 0.30 | 0.24 | 0.25 | 0.28 | 0.31 | 0.26 |
| Debt-to-equity ratio | 0.18 | 0.21 | 0.23 | 0.27 | 0.29 | 0.33 | 0.37 | 0.43 | 0.46 | 0.43 | 0.44 | 0.35 | 0.35 | 0.42 | 0.44 | 0.31 | 0.34 | 0.40 | 0.45 | 0.36 |
| Financial leverage ratio | 2.19 | 2.26 | 2.35 | 2.45 | 2.61 | 2.66 | 2.83 | 3.01 | 3.17 | 3.12 | 3.19 | 3.07 | 3.04 | 3.17 | 3.14 | 3.13 | 3.44 | 3.41 | 3.50 | 3.39 |
The solvency ratios of Amazon.com Inc, as reflected in the provided data, indicate the company's ability to meet its long-term financial obligations. Here is a breakdown of the key solvency ratios over the reported periods:
1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets that are financed by debt. Amazon's debt-to-assets ratio fluctuated between 0.08 to 0.15 over the period analyzed, with a general upward trend in recent quarters. A lower ratio generally indicates a lower financial risk for the company, as it suggests a smaller reliance on debt to finance its operations.
2. Debt-to-capital ratio: This ratio shows the percentage of capital that is funded by debt. Amazon's debt-to-capital ratio ranged from 0.16 to 0.31 during the period examined. A decreasing trend in this ratio is observed, indicating that the company is reducing its debt relative to its total capital base.
3. Debt-to-equity ratio: This ratio compares the amount of debt to shareholders' equity and signifies the financial leverage of the company. Amazon's debt-to-equity ratio varied from 0.18 to 0.46 across the reported quarters. A lower ratio is generally preferred as it suggests a lower level of financial risk and less reliance on debt financing.
4. Financial leverage ratio: This ratio measures the extent to which a company uses debt to finance its operations compared to its equity. Amazon's financial leverage ratio ranged from 2.19 to 3.50 during the analyzed period. A decreasing trend in this ratio indicates that Amazon has been decreasing its reliance on debt to finance its operations in recent quarters.
Overall, the solvency ratios suggest that Amazon.com Inc has been managing its debt levels effectively and reducing its reliance on debt financing, which is generally considered a positive sign of financial health and stability.
Coverage ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 103.77 | 44.22 | 25.70 | 16.42 | 12.79 | 8.24 | 5.60 | 2.27 | -1.51 | 5.61 | 6.57 | 13.02 | 22.09 | 18.81 | 21.05 | 19.96 | 15.69 | 13.12 | 10.78 | 8.85 |
The interest coverage ratio measures a company's ability to meet its interest expenses with its operating income. A higher interest coverage ratio indicates that a company is more capable of covering its interest expenses.
Analyzing Amazon.com Inc's interest coverage ratio over the past years shows that it has experienced fluctuations. The interest coverage ratio increased steadily from March 2020 to December 2021, reaching its peak at 103.77 as of December 31, 2024. This indicates that Amazon had a substantial margin of safety to cover its interest expenses during this period.
However, starting from March 2022, the interest coverage ratio began to decline, dropping significantly to -1.51 by December 31, 2022. This negative ratio suggests that Amazon's operating income was insufficient to cover its interest expenses at that time.
Subsequently, Amazon managed to improve its interest coverage ratio, reaching a more stable level above 5 for the rest of 2023 and 2024. Although the ratio fluctuated, it remained above 5, indicating a sufficient ability to cover interest expenses.
Overall, Amazon's interest coverage ratio shows variability over time, highlighting the importance of monitoring the company's profitability and ability to generate income to cover its interest obligations.