Amazon.com Inc. (NASDAQ:AMZN)

The analysis of the annual financial data reveals notable fluctuations and trends in key performance indicators over the observed periods.

Net Operating Profit After Taxes (NOPAT)

The NOPAT experienced significant variation, increasing markedly from 24,183 million US dollars in 2020 to 37,525 million US dollars in 2021. However, there was a sharp decline in 2022, with NOPAT turning negative at -5,619 million US dollars. This downturn was followed by a recovery period, with profit rising to 31,856 million US dollars in 2023 and further increasing to 58,988 million US dollars in 2024.

Cost of Capital

The cost of capital shows a relatively stable pattern, fluctuating slightly between 14.53% and 15.46% over the five years. It decreased gradually from 15.36% in 2020 to a low of 14.53% in 2022 before increasing again to 15.46% in 2024, indicating a broadly consistent capital cost environment with minor variations.

Invested Capital

Invested capital demonstrated a continuous upward trend, growing from 150,160 million US dollars in 2020 to 375,421 million US dollars in 2024. This steady increase indicates ongoing investment and expansion in the company’s capital base over the periods analyzed.

Economic Profit

Economic profit mirrored the volatility observed in NOPAT but with more pronounced swings. It rose from 1,122 million US dollars in 2020 to a peak of 6,910 million US dollars in 2021 before plummeting to a highly negative value of -44,752 million US dollars in 2022. The company continued to face negative economic profits in 2023, albeit less severe at -17,662 million US dollars, before returning to a modestly positive 939 million US dollars in 2024. This pattern reflects significant challenges in generating returns above the cost of capital during 2022 and 2023, followed by a marginal recovery in 2024.

In summary, the data points to a period of strong profitability through 2021, a substantial decline in financial performance in 2022, and a recovery phase in the subsequent years. Despite the growth in invested capital annually, the company experienced considerable challenges in achieving economic profitability during the middle years, emphasizing volatility in operational efficiency and returns relative to the cost of capital.

Net Income (Loss)

The net income fluctuated significantly over the five-year period. Beginning at $21,331 million in 2020, there was a substantial increase to $33,364 million in 2021. However, 2022 marked a notable downturn with a net loss of $2,722 million. This negative performance rebounded sharply in the subsequent years, reaching $30,425 million in 2023 and further rising to $59,248 million in 2024. The data indicates a strong recovery and growth trajectory after the loss experienced in 2022.

Net Operating Profit After Taxes (NOPAT)

NOPAT followed a similar pattern to net income, starting at $24,183 million in 2020 and rising to $37,525 million in 2021. It then experienced a sharp decline to a negative $5,619 million in 2022, deeper than the net income loss in the same year, indicating challenges in operating profitability. However, a significant recovery occurred in 2023 with NOPAT increasing to $31,856 million, followed by a strong increase to $58,988 million in 2024. This suggests an improvement in the company's core operational efficiency and profitability in the last two years.

Overall Analysis

The financial results reveal volatility, with a peak in 2021, a pronounced downturn in 2022, and substantial recovery and growth by 2024. The presence of negative figures in 2022 for both net income and NOPAT indicates operational and profitability challenges during that year. The subsequent rebound in 2023 and 2024 demonstrates strong adaptive or strategic measures resulting in enhanced earnings and operating profit, achieving new highs at the end of the evaluated period.

Provision (benefit) for income taxes, net

The net provision for income taxes showed considerable volatility over the observed periods. In 2020 and 2021, the provision increased significantly from 2,863 million USD to 4,791 million USD. However, the year 2022 presented an unusual pattern with a net tax benefit of -3,217 million USD, indicating a reversal or tax benefit situation rather than a conventional tax expense. Subsequently, the provision rose again sharply to 7,120 million USD in 2023 and further to 9,265 million USD in 2024, reflecting a substantial increase in tax obligations or adjustments during these years.

Cash operating taxes

Cash operating taxes exhibited a steadily increasing trend from 3,844 million USD in 2020 to 5,646 million USD in 2021, followed by a more moderate rise to 5,689 million USD in 2022. In 2023, there was a notable surge to 13,583 million USD, nearly doubling the previous year's amount. This upward momentum continued in 2024 with cash operating taxes reaching 14,023 million USD. The substantial increase observed in the last two years suggests significant growth in actual tax payments, potentially correlated with rising taxable income or changes in tax rates and regulations.

Total reported debt & leases

Over the five-year period, total reported debt and leases exhibited an overall increasing trend from 100,504 million US dollars in 2020 to a peak of 154,972 million in 2022. This increase suggests a significant rise in the company's leverage or obligations during these years. However, this peak level of debt was relatively maintained in 2023, with a slight decrease to 154,556 million, followed by a further moderate reduction to 147,838 million in 2024. The slight decline in the last two years might indicate strategic deleveraging or improved debt management efforts.

Stockholders’ equity

Stockholders' equity demonstrated strong and consistent growth throughout the period under review. Starting at 93,404 million US dollars in 2020, equity levels increased markedly year over year, reaching 138,245 million in 2021 and continuing upward to 146,043 million in 2022. This growth accelerated significantly during 2023 and 2024, culminating in a sizable equity base of 285,970 million by the end of 2024. The substantial rise in equity in the final years suggests enhanced retained earnings, possible equity issuances, or asset revaluations, which strengthen the company's net asset position and financial stability.

Invested capital

Invested capital showed a continuous and pronounced increase across the five years. Beginning at 150,160 million US dollars in 2020, it increased substantially to 202,836 million in 2021, then accelerated its upward trajectory to 269,358 million in 2022. The growth sustained momentum through 2023 and 2024, reaching 326,668 million and 375,421 million respectively. This pattern indicates significant expansion in the company's total capital employed in operations, possibly due to investments in long-term assets, acquisitions, or business growth initiatives.

The financial data reveals several notable trends and shifts over the five-year period.

Economic Profit

The economic profit exhibited significant fluctuations during the period. Initially, it showed a positive value of 1122 million US dollars in 2020, followed by a substantial increase to 6910 million US dollars in 2021. However, this was succeeded by a sharp decline into negative territory, with economic profits recording -44,752 million in 2022 and -17,662 million in 2023. The year 2024 showed a recovery with economic profit returning to a positive figure of 939 million US dollars.

Invested Capital

Invested capital demonstrated consistent growth throughout the period. Starting at 150,160 million US dollars in 2020, it increased steadily each year, reaching 202,836 million in 2021 and continuing upward to 269,358 million in 2022, then 326,668 million in 2023, and finally reaching 375,421 million US dollars in 2024. This indicates ongoing capital investment and expansion.

Economic Spread Ratio

The economic spread ratio followed a pattern somewhat similar to that of economic profit. It began at a modest positive ratio of 0.75% in 2020, improved to 3.41% in 2021, but then turned sharply negative at -16.61% in 2022 and remained negative at -5.41% in 2023. This ratio returned to a slightly positive 0.25% in 2024. The fluctuations suggest variability in the returns generated over and above the cost of capital during this period.

Overall, the data indicates a phase of strong financial performance in 2021, followed by a period of significant challenges in 2022 and 2023 as reflected in the negative economic profit and spread ratio despite growing invested capital. The partial recovery in 2024 points to improving profitability dynamics relative to invested capital. The sustained increase in invested capital highlights ongoing commitments to growth or capacity expansion irrespective of short-term profitability variations.

Adjusted Net Sales

The adjusted net sales demonstrate a consistent upward trajectory over the five-year period. Starting at approximately $387.5 billion in 2020, the sales increased steadily each year, reaching around $641.6 billion by 2024. This represents a substantial growth in revenue, indicating strong market demand and effective sales strategies.

Economic Profit

The economic profit figures show significant volatility during the period. Initial data in 2020 indicates a positive economic profit of about $1.1 billion, which increased markedly to nearly $6.9 billion in 2021. However, the company experienced a sharp downturn in 2022, with economic profit turning negative to approximately -$44.8 billion. This negative trend persisted in 2023 with a loss of roughly -$17.7 billion, before recovering to a slightly positive level of about $0.9 billion in 2024. This pattern suggests substantial challenges impacting profitability, possibly due to increased costs or investments that temporarily reduced economic profit.

Economic Profit Margin

The economic profit margin, which reflects economic profit as a percentage of sales, follows a similar pattern to the economic profit itself. It starts low but positive at 0.29% in 2020, peaks at 1.46% in 2021, then declines sharply into negative territory at -8.67% in 2022. It remains negative in 2023 at -3.05% before improving to 0.15% in 2024. The margin fluctuations indicate periods of significant inefficiency or increased capital costs relative to the company's earnings before gradual normalization towards a breakeven level by 2024.

Overall Analysis

While revenue growth exhibits a strong and steady increase throughout the five years, the economic profit and profit margin trends reveal periods of considerable financial strain beginning in 2022. The temporary negative economic profit and margin suggest that expenditures or operational inefficiencies increased substantially despite rising sales, impacting overall profitability. Nonetheless, the slight recovery observed in 2024 could signal early signs of financial stabilization or improved capital allocation strategies going forward.