Amazon.com Inc. (NASDAQ:AMZN)

The analysis of the financial ratios over the reported periods reveals several noteworthy trends and changes. Return on Assets (ROA) initially exhibited moderate fluctuations, starting around 8.33% in the first quarter and experiencing a gradual decline through 2021 and 2022, reaching a low point at the end of 2022 with a slightly negative value. From early 2023 onwards, ROA demonstrated a consistent recovery and upward trend, ultimately exceeding the initial levels by the end of the analyzed period in late 2025, where it reached approximately 10.51%. This suggests an improvement in asset profitability over the medium term.

Financial leverage showed a gradual but steady decline over the same timeframe. Beginning with a ratio slightly above 3.1 in early 2021, the leverage ratio steadily decreased, reaching just below 2.0 by the end of 2025. This indicates a progressive reduction in the company’s reliance on debt financing relative to equity, reflecting a potential shift towards a more conservative capital structure or improved balance sheet strength.

Return on Equity (ROE) mirrored the ROA trend but with greater volatility. ROE started from a high level above 26% in early 2021, then sharply declined throughout 2021 and 2022, dropping to negative territory at the end of 2022. From early 2023, ROE showed a recovery, rising significantly and surpassing 20% by late 2025. The initial drop in ROE can likely be attributed to the combination of reduced asset returns and financial leverage changes. The subsequent recovery highlights enhanced profitability and improved operational efficiency combined with optimized financial leverage.

Overall, the combined trends suggest an initial period of financial stress or operational challenges leading to diminished returns and decreased leverage, followed by a phase of recovery marked by improved profitability and ongoing deleveraging. The stronger ROA and ROE towards the end of the period indicate reinforcing financial health, with increasing effectiveness in asset use and shareholder value creation. The decreasing financial leverage throughout implies a potential strategy to reduce financial risk and stabilize the capital base.

Return on Assets (ROA)

Initial decline through 2021-2022, slight negative dip at end of 2022, followed by steady improvement through 2023-2025, ending above 10%.

Financial Leverage

Consistent downward trend from slightly above 3.1 to below 2.0, indicating reduced dependence on debt financing over time.

Return on Equity (ROE)

High starting point above 26%, sharp fall to negative at end of 2022, then robust recovery surpassing 20% by 2025, reflecting improved profitability and balance sheet optimization.

Net Profit Margin

The net profit margin demonstrates a fluctuating but overall improving trend over the observed periods. Initially starting at 6.42% in early 2021, it experienced a decline through 2022, even becoming negative at -0.53% in December 2022. However, from 2023 onward, there is a clear and steady recovery, reaching 11.06% by September 2025. This suggests increasing profitability and improved cost management or revenue quality in recent quarters.

Asset Turnover

The asset turnover ratio displays a gradual downward trend throughout the timeline. Beginning at 1.3 in March 2021, it decreases moderately to 0.95 by September 2025. This decline indicates a reduced efficiency in generating revenue from assets, implying that the company may be accumulating assets or that revenue generation is not keeping pace with asset growth.

Financial Leverage

Financial leverage has steadily decreased from 3.13 in early 2021 to 1.97 by the third quarter of 2025. This suggests a deliberate reduction in the use of debt relative to equity, signaling a potentially more conservative capital structure over time. The declining leverage may result in lower financial risk but could also impact returns if high leverage was previously enhancing profitability.

Return on Equity (ROE)

Return on equity exhibits notable volatility with a significant dip into negative territory (-1.86%) at the end of 2022, mirroring the low net profit margins during the same period. After this trough, ROE rebounds strongly, climbing from 2.78% in early 2023 to a peak of 21.56% in mid-2025 before a slight dip towards the end of the series. This pattern reflects the combined effects of profitability recovery, reduced leverage, and relatively stable asset utilization.

The financial analysis reveals several key trends in the company's performance over the examined periods.

Tax Burden

The tax burden ratio fluctuated over time, initially ranging between 0.85 and 0.95 in early periods, peaking at 1.14 around late 2021 to early 2022, indicating periods of higher effective tax rates relative to earnings. Following the peak, the ratio showed a downward trend, stabilizing around 0.81 to 0.86 in the most recent quarters, suggesting a more favorable tax environment or improved tax efficiency.

Interest Burden

This ratio declined significantly from approximately 0.95 in the first periods to a low of 0.56 in early 2023, indicating higher interest expenses relative to earnings before interest and taxes (EBIT). However, it subsequently recovered steadily, reaching near 0.98 by the later quarters, reflecting reduced interest expenses or improved interest coverage over time.

EBIT Margin

The EBIT margin demonstrated a notable fluctuation, starting around 7-8% in early 2021, then declining sharply to negative territory (-0.69%) by late 2022. After this trough, the margin improved consistently, reaching over 13% by early 2025. This recovery suggests enhanced operational efficiency and profitability in recent quarters.

Asset Turnover

Asset turnover showed a gradual decline from about 1.3 in early 2021 to 0.95 in early 2025. This indicates a progressive decrease in the company's efficiency in generating sales from its assets over the periods analyzed.

Financial Leverage

Financial leverage ratios decreased steadily from over 3.1 in early 2021 to below 2.0 by early 2025. This downward trend implies a reduction in the reliance on debt financing relative to equity, potentially reflecting a more conservative capital structure or deleveraging efforts.

Return on Equity (ROE)

ROE followed a volatile path, declining from above 26% in early 2021 to negative values around late 2022, indicating periods of losses or low profitability. Nonetheless, it recovered progressively thereafter, achieving levels exceeding 20% by early 2025. This trajectory suggests an overall improvement in shareholder returns, driven by enhanced profitability and possibly deleveraging.

In summary, the company experienced a period of operational and financial challenges around late 2021 and 2022, reflected by declining EBIT margins, lower ROE, increased interest burdens, and a peak in tax burden. However, from 2023 onward, there is clear evidence of recovery and strengthening financial health, marked by improving profitability ratios, reduced financial leverage, and better interest cost management, despite a gradual decline in asset turnover efficiency.

Net Profit Margin

The net profit margin demonstrates noticeable fluctuations over the analyzed periods. Initially, it maintains relatively high levels around 6.4% to 7.1% in 2021, before experiencing a marked decline throughout 2022, even dipping into negative territory in the final quarter of 2022 (-0.53%). Starting in early 2023, the margin recovers steadily, showing continuous growth in each subsequent quarter, reaching above 11% by the third quarter of 2025. This trend indicates a period of operational challenges or increased costs in 2022, followed by a sustained improvement in profitability afterward.

Asset Turnover

Asset turnover ratios show a gradual decline over the periods. From a high of 1.3 in early 2021, it fluctuates slightly but generally trends downward, reaching as low as 0.95 by the third quarter of 2025. This decline suggests that the company is generating fewer sales per unit of assets over time. The reduction in asset turnover implies potential asset base expansion or less efficient utilization of assets to generate revenue.

Return on Assets (ROA)

The return on assets follows a pattern similar to the net profit margin, indicating a strong correlation between profitability and asset efficiency. ROA starts at a relatively strong level around 8.3% in early 2021 but then declines substantially through 2022, including a negative dip in the final quarter of that year. From 2023 onward, ROA trends upward continuously, surpassing 10% in mid-2025. This recovery and growth in ROA indicate an improving ability to generate profit from asset investments over the latter periods.

Tax Burden

The tax burden ratio exhibited fluctuation over the periods analyzed. Initially, it remained within a range close to 0.85-0.88 through 2021. A rising trend occurred during the first three quarters of 2022, peaking at 1.14, indicating either increased profitability before tax or adjustments in tax provisions. A data gap appears in late 2022, followed by a significant peak of 1.25 in the first quarter of 2023. Subsequently, the ratio declined and stabilized around 0.81 to 0.86 from mid-2023 through 2025, suggesting a normalization in effective tax rates or pre-tax profit levels relative to net income.

Interest Burden

The interest burden ratio started consistently at 0.95 from early through late 2021, indicating relatively stable interest expenses compared to earnings before interest and taxes (EBIT). A decline to 0.82 and lower values occurred during much of 2022 and early 2023, with the lowest recorded at 0.56 in the first quarter of 2023, implying increased interest expense or higher leverage during this timeframe. From mid-2023 onwards, the ratio steadily improved, approaching and exceeding previous stable levels, peaking near 0.98 by late 2025, suggesting reduced interest costs or improved earnings dynamics relative to interest obligations.

EBIT Margin

The EBIT margin demonstrated considerable volatility. During 2021, margins hovered between approximately 7% and 8.5%, reflecting relatively strong profitability. In 2022, a pronounced decline resulted in near break-even or negative margin in the final quarter (-0.69%), coinciding with broader economic or operational challenges. Following this trough, a robust recovery began in 2023, with margins progressively increasing to reach a high of nearly 13.8% by the first quarter of 2025. This signifies improving operating efficiency and profitability over the extended horizon.

Asset Turnover

Asset turnover showed a gradual declining trend over the analyzed time span. Starting at 1.3 in early 2021, the ratio decreased steadily, reaching approximately 0.95 by early 2025. This trend indicates that the company generated slightly less revenue per unit of assets over time, possibly reflecting asset base expansion or changes in business mix that dilute turnover efficiency.

Return on Assets (ROA)

The ROA aligned broadly with the trends in EBIT margin and burden ratios. Beginning near 8.3% in early 2021, ROA dropped notably below 1% by the end of 2022, influenced by decreased operating profitability and higher burdens. A recovery trend emerged from 2023 onward, with ROA climbing steadily to approximately 10.5% by early 2025. This improvement suggests enhanced overall asset profitability, driven by rising margins and stabilized financial burdens despite the ongoing reduction in asset turnover.

Tax Burden

The tax burden ratio displays variability across the examined periods, with initial values close to 0.85–0.88, increasing to a peak above 1.1 in late 2021 and early 2022, indicating a period of unusually high tax-related charges or adjustments. Subsequently, the ratio stabilizes around 0.81 to 0.86 from early 2023 through to late 2025, suggesting a more normalized tax expense relative to pre-tax earnings in recent quarters.

Interest Burden

The interest burden ratio maintains a relatively stable range near 0.95 in the early quarters, before experiencing a notable dip to 0.56 at the end of 2021. This decline indicates higher interest expense in that period relative to operating profit. Following this sharp decrease, the ratio recovers steadily, rising again to nearly 0.98 by the end of 2025, reflecting reduced interest expense or improved interest coverage over time.

EBIT Margin

The EBIT margin shows a declining trend from approximately 7.8% to a low near -0.7% at the end of 2021, indicating a period where operating profitability was negatively impacted. From early 2022 onwards, there is a clear and sustained recovery trajectory, with margins improving consistently quarter-over-quarter. By late 2025, the margin reaches around 13.8%, signaling a strong and improving operational performance.

Net Profit Margin

The net profit margin trend mirrors that of the EBIT margin, starting at around 6.4% and dropping to a negative margin (-0.53%) near the end of 2021. Post this trough, the margin steadily increases, indicating improved bottom-line profitability. By 2025, the net profit margin exceeds 11%, suggesting enhanced comprehensive profitability, likely driven by operational efficiencies and favorable cost management.

Overall Insights

The financial ratios collectively depict a period of operational and financial stress culminating around late 2021, with both EBIT and net profit margins turning negative and increased tax and interest burdens. However, the subsequent quarters reveal a robust recovery trend, characterized by steadily improving margins, normalization of tax impacts, and reduced interest burden. This suggests effective management actions led to enhanced profitability and financial stability over the medium term.