Analysis of Investments
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- Income Statement
- Statement of Comprehensive Income
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Dividend Discount Model (DDM)
- Operating Profit Margin since 2005
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) since 2005
- Aggregate Accruals
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Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Amazon.com Inc., adjustment to net income (loss)
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net income (loss) (as reported) | ||||||
| Add: Net change in available-for-sale debt securities | ||||||
| Net income (loss) (adjusted) |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Reported Net Income (Loss) Trends
- Reported net income demonstrated a positive growth trend from 2020 to 2021, increasing significantly from 21,331 million USD to 33,364 million USD. However, there was a notable decline in 2022, where the company reported a loss of 2,722 million USD. This decline was reversed in 2023, with net income rebounding to 30,425 million USD. The upward trajectory continued in 2024, reaching a peak of 59,248 million USD, which represents the highest value over the observed period.
- Adjusted Net Income (Loss) Trends
- Adjusted net income closely followed the pattern of reported net income throughout the period. The values increased from 21,576 million USD in 2020 to 32,987 million USD in 2021, then dipped into a loss of 3,247 million USD in 2022. In 2023, adjusted net income recovered to 30,841 million USD, with a subsequent substantial increase to 65,592 million USD in 2024. The 2024 adjusted net income surpasses the reported net income figure by a notable margin.
- Comparative Observations
- The adjusted net income values typically slightly exceed the reported net income figures, indicating that adjustments made for investment or other considerations positively impact the measurement of profitability. Both metrics exhibit a similar volatility pattern, especially observable in the year 2022, which marks a significant downturn followed by a strong recovery phase.
- Overall Financial Performance Insights
- After a peak in 2021, the company experienced a temporary and pronounced profitability setback in 2022. The following years show a robust recovery and growth in earnings, with 2024 marking a record high in net income. The adjustment process generally inflates net income figures, pointing to non-recurring or non-operational items affecting the reported earnings. This cyclical performance indicates resilience and an ability to recover and grow earnings over a medium-term horizon despite a temporary loss.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
Amazon.com Inc., adjusted profitability ratios
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The financial indicators exhibit notable fluctuations over the five-year period, reflecting a dynamic operational environment with periods of contraction and recovery.
- Net Profit Margin
- The reported net profit margin increased from 5.53% in 2020 to a peak of 7.1% in 2021, indicating improving profitability. However, it declined sharply to a negative figure of -0.53% in 2022, signaling a period of losses. Following this downturn, the margin recovered to 5.29% in 2023 and further improved to 9.29% in 2024, surpassing previous levels. The adjusted net profit margin mirrors this trend closely, with a slight deviation particularly in 2024 where the adjusted margin (10.28%) is higher than the reported, suggesting some adjustments enhanced perceived profitability.
- Return on Equity (ROE)
- The reported ROE followed a similar pattern, rising from 22.84% in 2020 to 24.13% in 2021 before plunging to -1.86% in 2022. It then rebounded to 15.07% in 2023 and further increased to 20.72% in 2024. The adjusted ROE shows a comparable trend, with a more pronounced negative figure in 2022 (-2.22%), and a stronger recovery, culminating at 22.94% in 2024. This pattern reflects a temporary disruption in equity profitability, with substantive recovery and growth thereafter.
- Return on Assets (ROA)
- ROA also experienced a rise from 6.64% in 2020 to 7.93% in 2021, followed by a notable decline to negative territory at -0.59% in 2022. Subsequent years saw consistent recovery, with reported ROA climbing to 5.76% in 2023 and reaching 9.48% in 2024. Adjusted ROA follows this recovery pattern but reaches an even higher adjusted value of 10.5% in 2024, indicating improved asset utilization after adjustments.
Overall, the financial metrics indicate a strong performance through 2020 and 2021, a significant setback in 2022 impacting profitability, equity returns, and asset efficiency, and a robust recovery phase commencing in 2023 continuing into 2024. Adjusted figures tend to amplify the recovery, suggesting that certain non-recurring or investment-related factors affected the reported results, especially in the more challenging midpoint year.
Amazon.com Inc., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Net profit margin = 100 × Net income (loss) ÷ Net sales
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income (loss) ÷ Net sales
= 100 × ÷ =
- Net Income Trends
- The reported net income experienced a significant increase from 21,331 million USD in 2020 to 33,364 million USD in 2021. However, the following year saw a sharp decline, resulting in a loss of 2,722 million USD in 2022. This negative performance was reversed in subsequent years, with net income recovering to 30,425 million USD in 2023 and reaching a peak of 59,248 million USD in 2024.
- The adjusted net income follows a similar pattern, starting at 21,576 million USD in 2020 and increasing to 32,987 million USD in 2021. It also shows a loss in 2022, slightly larger in magnitude at 3,247 million USD. Recovery occurs from 2023 onward, with figures climbing to 30,841 million USD and subsequently 65,592 million USD in 2024, surpassing the reported figures.
- Net Profit Margin Analysis
- Reported net profit margin showed a strong upward trend from 5.53% in 2020 to 7.10% in 2021. This was followed by a negative margin of -0.53% in 2022, indicating an unprofitable year. The margin improved to 5.29% in 2023 and further increased substantially to 9.29% in 2024, indicating enhanced profitability.
- Adjusted net profit margin mirrors this pattern, with 5.59% in 2020 rising to 7.02% in 2021 before declining to -0.63% in 2022. The margin rebounded to 5.37% in 2023 and improved markedly to 10.28% in 2024, exceeding the reported margin and suggesting that adjusted figures provide a more favorable profitability interpretation in the latest year.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income (loss) ÷ Stockholders’ equity
= 100 × ÷ =
- Net Income Trends
- The reported net income displayed a significant increase from 21,331 million USD in 2020 to 33,364 million USD in 2021. This upward trend was interrupted in 2022 by a notable loss of 2,722 million USD. However, a strong recovery occurred in the following years, with reported net income rising to 30,425 million USD in 2023 and further increasing to 59,248 million USD in 2024.
- The adjusted net income followed a similar pattern, increasing from 21,576 million USD in 2020 to 32,987 million USD in 2021 before registering a loss of 3,247 million USD in 2022. Subsequent years showed recovery and growth, with adjusted net income reaching 30,841 million USD in 2023 and 65,592 million USD in 2024. The adjusted figures generally show slightly higher values than the reported net income, indicating adjustments that may improve earnings quality or exclude certain nonrecurring items.
- Return on Equity (ROE) Trends
- Reported ROE rose from 22.84% in 2020 to 24.13% in 2021, demonstrating improved profitability relative to shareholders’ equity. However, this was followed by a sharp decline into negative territory at -1.86% in 2022, reflecting the reported net loss for that year. ROE rebounded to 15.07% in 2023 and increased further to 20.72% in 2024, although these later values did not fully regain the peak observed in 2021.
- The adjusted ROE mirrored the reported ROE trend, increasing from 23.1% in 2020 to 23.86% in 2021 before falling to -2.22% in 2022. Recovery ensued with adjusted ROE rising to 15.28% in 2023 and surpassing the reported ROE by reaching 22.94% in 2024, suggesting that adjustments positively impacted measures of returns.
- Overall Insights
- The data reveals a volatile financial performance over the five-year period, characterized by growth in the initial years, a pronounced setback in 2022, and a strong rebound afterward. Both reported and adjusted measures exhibit this cyclical pattern, with adjusted results generally reflecting a somewhat more favorable financial position. The negative figures in 2022 indicate challenges that temporarily undermined profitability. The substantial recovery in profitability and return on equity in 2023 and 2024 highlights resilience and effective management of financial performance during that period.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 ROA = 100 × Net income (loss) ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income (loss) ÷ Total assets
= 100 × ÷ =
The financial data reveals significant fluctuations in net income and return on assets (ROA) over the five-year span. Initially, there is a strong growth in both reported and adjusted net income from 2020 to 2021, with reported net income growing from 21,331 million US dollars to 33,364 million US dollars, and adjusted net income exhibiting a similar pattern, rising from 21,576 million US dollars to 32,987 million US dollars. Correspondingly, the ROA increased, with the reported ROA rising from 6.64% to 7.93% and adjusted ROA slightly lower at 7.84% in 2021.
However, in 2022, both reported and adjusted net income figures experienced a sharp decline, turning negative to -2,722 million US dollars and -3,247 million US dollars respectively. This downturn is mirrored in the ROA, which similarly dropped to negative values, with reported ROA at -0.59% and adjusted ROA at -0.7%. This indicates that the company faced significant losses during this period, impacting asset profitability.
In the subsequent years, there is a notable recovery and substantial growth. By 2023, the reported net income rebounded to 30,425 million US dollars with adjusted net income following closely at 30,841 million US dollars. The ROA also improved markedly, with reported ROA rising to 5.76% and adjusted ROA to 5.84%, suggesting the company restored profitability and efficient asset use.
The trend continues positively into 2024, with a pronounced increase in profitability metrics. Reported net income almost doubles from the previous year, reaching 59,248 million US dollars, and adjusted net income grows even more sharply to 65,592 million US dollars. The ROA reflects this strong performance, rising to 9.48% (reported) and 10.5% (adjusted), the highest levels within the examined period. The adjusted figures consistently remain slightly above the reported figures, indicating that investment-based adjustments yield a more favorable evaluation of net profits and asset returns.
Overall, the data highlights a period of financial volatility with an initial phase of robust growth, a downturn in 2022, followed by a strong recovery and accelerated growth through 2023 and 2024. The improvements in ROA during the latter years demonstrate enhanced efficiency in utilizing assets to generate earnings. The alignment between reported and adjusted figures suggests a consistency in core financial performance, with adjusted metrics providing a slightly more optimistic perspective on profitability and asset utilization.
- Net Income Trends
- Strong growth through 2020-2021, sharp losses in 2022, followed by rapid recovery and acceleration in 2023-2024.
- Return on Assets
- ROA trends closely mirror net income, indicating profitability and asset use are closely linked. Negative ROA in 2022 contrasts with highest values in 2024.
- Reported vs. Adjusted Figures
- Adjusted net income and ROA are generally slightly higher than reported figures, indicating adjustments may reflect operational or investment efficiencies.