I need 3 slides for the profitability of amazon

fI need 3 slides over previous years for the profitability of Amazon. I’m also going to add an example of a power point. Only look at the profitability section. Thank you

PROFITABILITY

You will use the income statement as your primary source for this section. Simply tell me how the company has performed over the years, with emphasis on the last two fiscal years. You start at the top line (revenue/sales) and work you way down to the bottom line (net income). Remember, a number is just a number; you have to use it as your starting point to understand the story behind that number. Compare the company’s prior year income statement to get an idea if things are going up or down. Also compare it competitor’s performance.

Make full use of ratios you learn in chapter. Explain the underlying reasons behind the trend of numbers. Why did sales go down? Why did expenses go up? A good starting point is the Management’s Discussion and Analysis of Financial Condition and Results of Operationsin the annual report. This is a government required section in the annual report, where the management must tell you what has happened to the company and why. But they are paid to put a good spin on things, so don’t just take management’s word for it. Do your own research to support your conclusion. Remember, most of the time you will not be able to find a conclusive answer. Don’t be discouraged. As an analyst you must come up with a conclusion based on limited information provided. Tell me why do you think, based on some supporting information, revenue and expenses went up or down. Present data on major line item figures and compare them to at least one of their major competitor’s performance.

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Table of
Contents
01
COMPANY INTRODUCTION
02
COMPANY INTRODUCTION
03
FINANCIALS
04
Profitability
05
Profitability – Comparisons from Year to Year
06
Profitability – Comparisons to Competitors
07
08
Profitability – Explanation of Trends
Cash Flow & Liquidity
09
Cash Flow & Liquidity – State $ OP, INV, FIN CASH FLOWS
10
Cash Flow & Liquidity – EoT & Uses of Cash
11
Capital Structure
12
Capital Structure – List Sources of Debt
13
Capital Structure – List Capital Structure
14
Selected Financial Data (END)
15
Selected Financial Data (END) – Tables with Selected Data
16
Selected Financial Data (END) – Key Ratios
17
Conclusion
18
Conclusion – Summary of Findings
19
Conclusion – Recommendations
20
Conclusion – 3rd Party Ratings
21
Thank You
22
Peer Review
Company
Introduction
Amazon: Investment is Strongly Advised
●
You should Invest in Amazon Today.
●
Company Name: Amazon.com, Inc.
●
Headquarters: Seattle, Washington, United States
●
Year founded: 1994
●
Most Recent Stock Price: $102.18
●
52 week High/Low price: $170.83/ $81.43 (after split)
●
Number of Outstanding Shares: 10,247,259,757
●
Market Capitalization: $1.04 trillion
●
Number of Employees: 1,468,000
Founder
JEFF BEZOS
Amazon: Outlook and Updates
●
●
●
●
Name: Amazon Inc.
Facts: Amazon is one of the world’s largest and most
profitable companies, operating in various sectors
including e-commerce, cloud computing, advertising,
logistics, entertainment and now artificial intelligence.
Positive Outlook: Amazon has seen significant growth in
recent years, driven by the continued shift towards online
shopping and the expansion of its Amazon Web Services
(AWS) cloud computing department and services.
Liquidity: Amazon has a strong financial position, with
large cash reserves and steady revenue growth. Even with
recent changes in leadership, Amazon remains strong.
Current CEO
Andy Jassy, 2021
Amazon: Competitive Landscape
●
●
●
Name: Amazon Inc.
Diversity: Amazon operates in many different sectors,
making it hard to paint a clear picture of direct
competitors.
Competitors:
a. ECommerce Sector: Walmart, Target, Alibaba, eBay
b. Cloud Computing Sector: Microsoft’s Azure, Google
Cloud, Alibaba Cloud
c. Advertising Sector: Google, Facebook
d. Logistics Sector: USPS, UPS, FedEx, DHL
Amazon
Competitors
Amazon: Competitive Landscape
Name: Amazon Inc.
●
Combatting Competitors:
a. ECommerce Sector: Expanding Product Offerings and
Investing in New Technologies
b. Cloud Computing Sector: Expanding Service Offerings by
investing in data centers and other infrastructure
Advertising Sector: Collecting vast amounts of
consumer data to provide targeted advertising
opportunities to businesses
c. Logistics Sector: Providing franchise fleet service and
wholesale warehousing for merchants to improve
speeds.
● Environment Outlook: Favorable due to strong diversification
●
Amazon
Competitors
Financials
● Profitability
Profitability: Year over Year
In 2019, Amazon’s
revenue was $280.5
billion, an increase of
20.45% over the prior
year. The company’s
operating income for
2019 was $14.541B, a
17.07% increase from
2018. The company’s net
income was $11.6 billion,
an increase of 8.7% over
the prior year.
2019
Fig 1: Net Income
In 2020, Amazon’s annual
revenue was $386.1
Billion, a 37.62% increase
from 2019. The
company’s operating
income for 2020 was
$22.9 Billion, a 57.48%
increase from 2019. The
company’s net income for
2020 was $21.3 Billion, an
84.08% increase from
2019.
2020
In 2021, Amazon’s
revenue was $469.9
billion, an increase of 22%
over the prior year. The
company’s operating
income was $24.879
Billion, an 8.65% increase
over the prior year. The
company’s net income
was $33.364 billion, a
56.41% increase over the
prior year.
2021
In 2022, Amazon’s
revenue was $514
Billion, a 9.7% increase
from 2021. The
company’s operating
income was $12.248
Billion, a 49% decrease
over the prior year.
The company reported
2.722 Billion loss.
2022
Profitability: Explain the Trends
Recessions Cut Costs
2022
The recent recession like inflation has
discouraged consumers from spending,
which has forced consumers and large
retailers and tech companies to become
more frugal and cost cutting.
Covid-19
2019-?
Covid-19 presented an opportunity to explore
at home delivery services, robots and AI, and
other entertainment service options, which cut
down on the brick and mortar operations
costs for Amazon. Many factories and offices
were closed as a result.
Expanding Services
Lay-offs
PRIME USERS
Capital Efficiency
Offering expanded services to Prime
Amazon is taking a capital efficient approach,
users has been an exploration for
which unfortunately means that they are
Amazon. Adjusting the price model there
getting rid of all non-essential personnel that
means focusing less on product sales
were acquired after the last few years of
and more on customer data, meaning big
incredible growth and performance.
spending for information and marketing
efforts.
Profitability: Compare Competitors
Walmart
Apple
Covid-19 panic remission has put Walmart on
Apple reported a net income for the twelve
the rebound because of their brick and mortar
months ending September 30, 2022 of
retail style. Walmart reported a net income for
$99.8B, a 5.41% increase year-over-year.
the twelve months ending October 31, 2022 of
This is very small as compared to 2021,
$8.967B, a 11.81% increase year-over-year.
which saw a 64.92% increase from 2020.
Google
eBay
Google Cloud reports revenue of $6.86
EBay reported a net income for the twelve
billion, up 28% from $4.99 billion in 2021. Its
months ending September 30, 2022 of
net income losses widened though, with
approx. $28M, a 99.78% decline year-over-
Operating and Net income down by around
year. EBay had an annual net income for
$4 billion and $5 billion, respectively.
2021 of $13.7B, a 140%
increase from 2020.
Financials
● Cash Flow & Liquidity
Cash flow information
Year Ended December 31, in millions
Net cash provided by (used in) operating activities
2021
2022
$46,327
$46,752
Purchases of property and equipment, net of
proceeds from sales and incentives
$(55,396) $(58,321)
Free cash flow
$(9,069)
Net cash provided by (used in) investing activities
$(58,154) $(37,601)
Net cash provided by (used in) financing activities
$6,291
$(11,569)
$9,718
Operating Activities
As of December 31, 2022, Amazon reported 46.8 billion generated by
Operating activities. The increase in operating cash flow in 2022,
compared to the prior year (46.3 billion), was primarily due to the
increase in net income, excluding non-cash expenses, partially offset by
changes in working capital. Sales increased 9% in 2022, compared to
the prior year. Changes in foreign currency exchange rates reduced net
sales by 15.5 billion in 2022.
Investing Activities
Cash (used in) investing activities was (58.2) billion and (37.6) billion in
2021 and 2022. Changes were caused by purchases, sales, and maturities
of marketable securities. Cash capital expenditures were 55.4 billion, and
58.3 billion in 2021 and 2022. This reflects investments in technology
infrastructure (the majority of which is to support AWS business growth)
and in additional capacity to support fulfillment network. Cash payments
and other investment activity consist of 2.0 billion and 8.3 billion in 2021
and 2022. Amazon funded the acquisition of MGM Holdings Inc. with cash
on hand.
Financing Activities
Cash provided by financing activities was 6.3 billion and 9.7 billion in 2021
and 2022. Cash inflows from financing activities resulted from proceeds
from short-term debt, and other and long-term-debt of 27.0 billion and 62.7
billion in 2021 and 2022. Cash outflows from financing activities resulted
from repurchases of common stock, payments of short-term debt, and
other, long-term debt, finance leases, and financing obligations of 20.7
billion and 53.0 billion in 2021 and 2022. Property and equipment acquired
under finance leases was 7.1 billion and 675 million in 2021 and 2022.
Free Cash Flows
Free cash flows are driven primarily by increasing operating income and
managing accounts receivable, inventory, accounts payable, and cash
capital expenditures, including the decision to purchase or lease property
and equipment. Increases in operating income result from increases in
sales of products and services and managing operating costs, partially
offset by investments in longer-term strategic initiatives, including capital
expenditures focused on improving the customer experience.
Ratios
Current Ratio
Quick Ratio
Cash Ratio
2021 – 1.14
2021 – .91
2021 – .68
2022 – .94
Indicates that the
company may have
difficulty meeting its
current obligations. But
the company may be
able to borrow against
long-term prospects to
meet current obligations
2022 – .72
Indicates that the
company cannot
currently pay its
current liabilities in
full
2022 – .45
Indicates that there are
more current liabilities
than Cash, Cash
Equivalents, Marketable
Securities, and the
company does not have
sufficient cash on hand
to pay off its short-term
debt.
Total Net Sales
2021 – 469.8
billion
2022 – 513.9
billion
Operating
Income
2021 – 24.9
2022 – 12.2
Liquidity
Principal sources of liquidity are cash flows generated from operations and
cash, cash equivalents, and marketable securities balances, which, at fair
value, were 96.0 billion and 70.0 billion as of December 31, 2021, and 2022.
Amounts held in foreign currencies were 22.7 billion and 18.3 billion as of
December 31, 2021, and 2022. We can safely assume Amazon did and will
continue to generate cash during its daily operations.
Future Plans affecting Liquidity
Continue investments in
AWS and fulfillment network
over time, with increased
spending on technology
infrastructure
The sale of additional equity
or convertible debt
securities would be dilutive
to shareholders
Fund the acquisitions of
1Life Healthcare, Inc. (One
Medical) and iRobot
Corporation with cash on
hand
Acquisition of, or investment
in, complementary
businesses, products,
services, capital
infrastructure, and
technologies
Why is Amazon different?
Primary customer sets consist of consumers, sellers, developers, enterprises,
content creators, advertisers, and employees. Amazon serves developers and
enterprises of all sizes through AWS, which offers a broad set of on-demand
technology services, including compute, storage, database, analytics, and
machine learning, and other services. Amazon also manufactures and sells
electronic devices
Operations are organized into three segments: North America, International, and
AWS. AWS sales increased 29% in 2022, compared to the prior year. The sales
growth primarily reflects increased customer usage, partially offset by pricing
changes, primarily driven by long-term customer contracts.
Financials
● Capital Structure
Amazon’s Capital Structure
Capital structure is the debt and equity that make
up company’s finances.
Amazon’s total assets were $420,549 million in
2021 and 462,675 million in 2022 . Total
stockholder’s equity of $138,245 million in 2021
and 146,043 in 2022.
Amazon’s Debt
Debt is summed up as all money borrowed. Amazon has
substantially increased amount of debt due to its growth
over the years.
At the end of 2021, Amazon reported current liabilities of
$142,266 million and long-term debts of $140,038 million.
This made for a total debt of $282,304 million.
At the end of 2022, Amazon reported current liabilities of
155,393 million and long-term debt of 161,239 million. This
made for a total debt of 316,632.
Amazon’s 10-K Ending December 2022
Total Assets: $462,675 Million
Accounts Payable & Accrued Expenses: $142,066 Million
Long-term Debt: $67,150 Million
Current Liabilities: $142,266 Million
Total Liabilities: $282,304 Million
Total Shareholder Equity: $146,043 Million
Total Equity: $462,675 Million
Amazon’s Financial Leverage
Financial leverage is borrowing money to invest so that assets will exceed the cost
of borrowing.
Financial leverage ratios are used to assess whether a company can pay its debt.
𝐷𝑒𝑏𝑡 𝑟𝑎𝑡𝑖𝑜 =
𝐷𝑒𝑏𝑡 𝑟𝑎𝑡𝑖𝑜 =
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 −𝑡𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 −𝑡𝑜𝑡𝑎𝑙 𝑒𝑞𝑢𝑖𝑡𝑦
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
=
=
$420,549,000 −$138,245,000
$420,549,000
$ 462,675,000−$146,043,000
$462,549,000
= 0.671 𝑜𝑟 67.1% (2021)
= 0.68 𝑜𝑟 68% (2022)
In 2021, Amazon’s debt ratio shows that for every dollar of their assets there are
around 67 cents of debt.
In 2022, Amazon’s debt ratio shows that for every dollar of their assets there are
around 68 cents of debt.
As we can see the debt ratio has not changed much from 2021 to 2022.
Amazon’s Financial Leverage
𝐴𝑚𝑎𝑧𝑜𝑛′𝑠 𝑡𝑖𝑚𝑒𝑠 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑎𝑟𝑛𝑒𝑑 𝑜𝑟 𝑇𝐼𝐸
=
𝐸𝐵𝐼𝑇
$24,879,000
=
= 13.752 (2021)
𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒
$1,809,000
𝐴𝑚𝑎𝑧𝑜𝑛′𝑠 𝑡𝑖𝑚𝑒𝑠 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑎𝑟𝑛𝑒𝑑 𝑜𝑟 𝑇𝐼𝐸
=
𝐸𝐵𝐼𝑇
$12,248,000
=
= 5.174 (2022)
𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒
$2,367,000
In 2021, Amazon covered almost 14 times over its interest obligation by its
earnings before it payed its interest expense and taxes.
In 2022, Amazon the ratio decreased. However, the company still has its
interest obligations covered by its earnings.
Amazon’s Financial Leverage
𝐴𝑚𝑎𝑧𝑜𝑛′𝑠 𝐶𝑎𝑠ℎ 𝑐𝑜𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑎𝑡𝑖𝑜 =
𝐸𝐵𝐼𝑇+𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛
𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒
=
$39,960,000+ $34,296,000
= 41.0480 (2021)
$1,809,000
𝐴𝑚𝑎𝑧𝑜𝑛′𝑠 𝐶𝑎𝑠ℎ 𝑐𝑜𝑣𝑒𝑟𝑎𝑔𝑒 𝑟𝑎𝑡𝑖𝑜 =
𝐸𝐵𝐼𝑇+𝑑𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛
𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒
=
$−3,569,000+$41,921,000
= 16.2028 (2022)
$2,367,000
Amazon produced enough cash from its operations, so it can
cover its interest expense.
Amazon’s solvency ratio decreased, but the company still
can meet is long-term financial obligations.
Amazon is a less risky company for potential investments.
Financials
● Selected Financial Data (END)
Income Statements (in millions)
*A*All Numbers in Thousands
12/31/2015
2022
12/31/2014
Revenue
$513,983
s
2021
$469,822
Gross Profit
$67,640
$66,315
Operating Profit
$12,248
$24,879
Interest Expense
$2,367
$1,809
Earnings before taxes and
interest
-3,569
$39,960
Net Income
$-2,722
$33,364
Statements of Cash Flow (in millions)
*A*All Numbers in Thousands
2022
12/31/2015
12/31/2014
Operating Cash Flow
$46,752
s
2021
$46,327
Investing Cash Flow
$-37,601
$-58,154
Financing Cash Flow
$9,718
$6,291
End Cash Position
$54,253
$36,477
Operating income (loss) by segment (in millions):
2022
2021
North America
$(2,847)
$7,271
International
$(7,746)
$(924)
AWS
$22,841
$18,532
Consolidated
$12,248
$24,879
Operating Income
(Loss)
Balance Sheet Select Data (in millions)
*A*All Numbers in Thousands2022
Total Assets
$462,675
12/31/2015
12/31/2014
Cash and Cash
$70,026
s
2021
$420,549
$96,049
Equivalents
Total Liabilities
$316,632
$282,304
Total Debt
$212,904
$172,599
Shareholder’s Equity
$146,043
$138,245
Current Assets
$462.675B
$420.549B
Cash and Cash
equivalents
$70.026B
$96.049B
Current liabilities
$155.393B
$142.266B
Key Ratios
2022
*A*All Numbers in Thousands
Current Ratio
.94
12/31/2015
12/31/2014
.72
s Quick Ratio
2021
Walmart 2022
1.14
.93
.91
.23
Cash Ratio
.45
.68
.11
Debt Ratio
.68
.67
.48
Times Interest Earned
5.17
13.75
11
Cash Coverage Ratio
16
41
15.72
Inventory Turnover
8.39
8.34
7.59
Total Asset Turnover
1.19
1.26
2.34
Profit Margin
-.0053
.07
2.39
Return on Equity
-2%
28%
15.17%
Earnings per Share
-.27
3.30
4.90
Conclusion
Why invest in Amazon?
We work TIRELESSLY for you here, at GADSMAN, to give you the
very best financial information and investment opinion. Please,
review our conclusion about investing in Amazon.
Why invest in Amazon?
Amazon along with other tech stocks experienced a challenging year.
Many investors moved from growth into value stocks with paying
dividends. Amazon also suffered as the pandemic fears eased and
consumers returned to brick-and-mortar stores. Amazon will face pressure
in the retail industry with competitors like Walmart and Target, in the
technology sector with Microsoft and Apple, and the steaming industry with
Netflix and Disney. Other threats such as cyber hacking, supply bottleneck
and currency exchanges are also there.
Why invest in Amazon?
However, we believe that Amazon’s strong brand name and
reputation, their diverse product offerings, well-designed distribution
network and cutting-edge technology, will overcome the current
weakness. Amazon’s wide moat and excellent credit ratings will
make it a great addition to a well diverse portfolio for the long-term
investor (5 years minimum). Note, that S&P Global Ratings affirmed
the “AA” Foreign Currency LT credit rating of Amazon.com on
January 24, 2022. The outlook is stable.
Why invest in Amazon?
The company may face another rough year in 2023 with the inflation and
interest rate unstable situation. A famous investor once said: “Be fearful
when other are greedy and be greedy when other are fearful.” We are not
greedy at GADSMAN, but enthusiastically optimistic about Amazon. We are
suggesting that our investors take a 10% position now and average up or
down for the next 9 months until 100% is reached. This is the right way to
acquire stocks of Amazon in 2023.
Why invest in Amazon?
When we analyze stock options for our investors, we always look at
how Amazon could affect other businesses in the future. Talk about
Amazon dominance! Amazon is an exceptional company. A longterm investment now, will reap a nice rewards later. Buy Amazon as
instructed and sleep well at night.
References
1.https://stockanalysis.com/stocks/amzn/financials/ratios/
2.https://www.marketscreener.com/quote/stock/AMAZON-COM-INC12864605/financials/
3.https://www.sec.gov/ix?doc=/Archives/edgar/data/0001018724/000101
872423000004/amzn20221231.htm#icc32c5c732854b7f9975929c57cd5bd4_100
4.https://finance.yahoo.com/quote/AMZN/financials?p=AMZN
5.https://cbonds.com/news/1568543/
6.https://finance.yahoo.com/quote/WMT/financials?p=WMT
Thank You!
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