Ratio Analysis-Amazon

Topics: Generally Accepted Accounting Principles, Liability, Accounts payable Pages: 4 (870 words) Published: September 17, 2008
Amazon’s Mission Statement
Our vision is to be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.

Amazon.com is one of the major leaders in online retailing. Amazon may have concerns in the near future about; the statement of cash flows, revenue, debt, and the company’s liabilities. Below is a summary with various ratios to determine the future of the Amazon.

Ratio Analysis

The savings ratio measures the relationship between total annual savings and total expense. The savings ratio is an important component of longevity, as high ratios may indicate excessive savings. In Amazon’s case, and any other business model, it would be beneficial to have more revenue than expenses.


Total Revenue8,49010,711.0
Total Expenses16072067

Savings Ratio4.284.18

These numbers are extremely high for Amazon. Amazon has quadrupled the amount of revenue in comparison to the total amount of expenses. If the savings ratio continues to increase, the amount of excess savings will increase. Amazon will be in a better position if the savings ratio decreased.

The Liquid Funds Indicators measures an organization’s operating liquidity by dividing fund balances (excluding land, equipment, building, and frozen endowment) by an average month’s expenses.


Net Assets1030841
Permanently Restricted00
Land, Building, and Equipment348457

Total Expenses16072067

Liquid Funds Indicator5.092.22

This has a similar effect of savings ratio. Excessive savings can cause Amazon’s resources to not be utilized. If there is excess, it can be shown by: not enough funds, not enough land, buildings, or equipment.

Amazon has to determine if it will function while paying both the current and long-term debt. The debt ratio helps to measure a company’s ability to pay these debts....
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