Stock Analysis on Net

Amazon.com Inc. (NASDAQ:AMZN)

Return on Capital (ROC)

Microsoft Excel LibreOffice Calc

Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.


Return on Invested Capital (ROIC)

Amazon.com Inc., ROIC calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 24,183  16,097  13,690  4,698  4,480 
Invested capital2 150,160  127,843  103,096  79,125  43,073 
Performance Ratio
ROIC3 16.11% 12.59% 13.28% 5.94% 10.40%
Benchmarks
ROIC, Competitors4
Booking Holdings Inc. -6.59% 40.58% 57.09% 37.32% 31.93%
Home Depot Inc. 34.91% 35.70% 27.93% 25.73% 23.46%
Lowe’s Cos. Inc. 18.00% 12.51% 15.33% 14.36% 12.78%
Target Corp. 14.30% 14.14% 12.07% 12.75% 12.12%
TJX Cos. Inc. 19.13% 18.60% 16.31% 16.38% 18.59%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 NOPAT. See details »

2 Invested capital. See details »

3 2020 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 24,183 ÷ 150,160 = 16.11%

4 Click competitor name to see calculations.

Performance ratio Description The company
ROIC A measure of the periodic, after tax, cash-on-cash yield earned in the business. Amazon.com Inc. ROIC deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.

Decomposition of ROIC

Amazon.com Inc., decomposition of ROIC

Microsoft Excel LibreOffice Calc
ROIC = OPM1 × TO2 × 1 – CTR3
Dec 31, 2020 16.11% = 7.23% × 2.58 × 86.28%
Dec 31, 2019 12.59% = 6.37% × 2.21 × 89.41%
Dec 31, 2018 13.28% = 6.29% × 2.28 × 92.74%
Dec 31, 2017 5.94% = 3.30% × 2.26 × 79.61%
Dec 31, 2016 10.40% = 4.62% × 3.20 × 70.36%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 Operating profit margin (OPM). See calculations »

2 Turnover of capital (TO). See calculations »

3 Effective cash tax rate (CTR). See calculations »

The primary reason for the increase in return on invested capital (ROIC) over 2020 year is the increase in efficiency measured by turnover of capital (TO) ratio.


Operating Profit Margin (OPM)

Amazon.com Inc., OPM calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 24,183  16,097  13,690  4,698  4,480 
Add: Cash operating taxes2 3,844  1,907  1,072  1,204  1,888 
Net operating profit before taxes (NOPBT) 28,027  18,004  14,763  5,902  6,368 
 
Net sales 386,064  280,522  232,887  177,866  135,987 
Add: Increase (decrease) in unearned revenue 1,418  2,254  1,839  830  1,905 
Adjusted net sales 387,482  282,776  234,726  178,696  137,892 
Profitability Ratio
OPM3 7.23% 6.37% 6.29% 3.30% 4.62%
Benchmarks
OPM, Competitors4
Booking Holdings Inc. -14.78% 35.66% 36.61% 35.69% 26.54%
Home Depot Inc. 14.80% 14.70% 15.10% 14.77% 13.94%
Lowe’s Cos. Inc. 8.61% 6.38% 9.56% 9.72% 9.07%
Target Corp. 6.17% 5.67% 6.18% 7.35% 7.67%
TJX Cos. Inc. 11.23% 11.30% 11.44% 11.94% 12.79%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2020 Calculation
OPM = 100 × NOPBT ÷ Adjusted net sales
= 100 × 28,027 ÷ 387,482 = 7.23%

4 Click competitor name to see calculations.

Profitability ratio Description The company
OPM The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. Amazon.com Inc. OPM improved from 2018 to 2019 and from 2019 to 2020.

Turnover of Capital (TO)

Amazon.com Inc., TO calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Net sales 386,064  280,522  232,887  177,866  135,987 
Add: Increase (decrease) in unearned revenue 1,418  2,254  1,839  830  1,905 
Adjusted net sales 387,482  282,776  234,726  178,696  137,892 
 
Invested capital1 150,160  127,843  103,096  79,125  43,073 
Efficiency Ratio
TO2 2.58 2.21 2.28 2.26 3.20
Benchmarks
TO, Competitors3
Booking Holdings Inc. 0.45 1.35 1.96 1.98 1.62
Home Depot Inc. 3.01 3.17 2.87 2.75 2.62
Lowe’s Cos. Inc. 2.69 2.86 2.47 2.39 2.41
Target Corp. 2.83 2.86 2.66 2.57 2.57
TJX Cos. Inc. 2.29 2.30 2.22 2.22 2.30

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 Invested capital. See details »

2 2020 Calculation
TO = Adjusted net sales ÷ Invested capital
= 387,482 ÷ 150,160 = 2.58

3 Click competitor name to see calculations.

Efficiency ratio Description The company
TO The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. Amazon.com Inc. TO deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.

Effective Cash Tax Rate (CTR)

Amazon.com Inc., CTR calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 24,183  16,097  13,690  4,698  4,480 
Add: Cash operating taxes2 3,844  1,907  1,072  1,204  1,888 
Net operating profit before taxes (NOPBT) 28,027  18,004  14,763  5,902  6,368 
Tax Rate
CTR3 13.72% 10.59% 7.26% 20.39% 29.64%
Benchmarks
CTR, Competitors4
Booking Holdings Inc. 15.54% 20.39% 47.06% 25.77%
Home Depot Inc. 21.74% 23.26% 35.67% 36.71% 35.80%
Lowe’s Cos. Inc. 22.32% 31.40% 34.96% 38.25% 41.52%
Target Corp. 18.12% 12.76% 26.52% 32.40% 38.55%
TJX Cos. Inc. 25.59% 28.37% 35.80% 38.22% 36.75%

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2020 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 3,844 ÷ 28,027 = 13.72%

4 Click competitor name to see calculations.

Tax rate Description The company
CTR Effective cash tax rate on operating income. Amazon.com Inc. CTR increased from 2018 to 2019 and from 2019 to 2020.