Amazon.com Inc. (NASDAQ:AMZN)

The solvency position, as indicated by the provided ratios, demonstrates a consistent improvement over the analyzed period spanning from March 2022 to December 2025. A general trend of decreasing leverage and increasing coverage is observed, suggesting a strengthening financial structure.

Debt to Equity

The debt to equity ratio exhibits a clear downward trend, decreasing from 0.53 in March 2022 to 0.20 in June 2025, and stabilizing at 0.20 in September 2025 before a slight increase to 0.20 in December 2025. This indicates a decreasing reliance on equity financing relative to debt.

Debt to Equity (Including Operating Lease Liability)

Similar to the standard debt to equity ratio, this metric also shows a consistent decline, moving from 0.97 in March 2022 to 0.41 in December 2025. The inclusion of operating lease liabilities initially presents a higher leverage figure, but the decreasing trend remains consistent, highlighting a reduction in overall debt obligations when considering lease commitments.

Debt to Capital

The debt to capital ratio mirrors the trend observed in debt to equity, decreasing from 0.35 in March 2022 to 0.15 in September 2025, and then increasing slightly to 0.16 in December 2025. This suggests a decreasing proportion of debt financing within the company’s capital structure.

Debt to Capital (Including Operating Lease Liability)

This ratio also demonstrates a declining trend, starting at 0.49 in March 2022 and reaching 0.29 in December 2025. The pattern is consistent with the other debt ratios, reinforcing the observation of reduced leverage when accounting for operating leases.

Debt to Assets

A steady decrease is evident in the debt to assets ratio, falling from 0.17 in March 2022 to 0.10 in June 2025, and then increasing slightly to 0.10 in December 2025. This indicates a decreasing proportion of assets financed by debt.

Debt to Assets (Including Operating Lease Liability)

This ratio also shows a consistent downward trend, decreasing from 0.32 in March 2022 to 0.21 in December 2025. The inclusion of operating lease liabilities results in a higher ratio, but the decreasing trend remains clear.

Financial Leverage

Financial leverage, as measured by this ratio, generally decreases over the period, moving from 3.07 in March 2022 to 1.99 in December 2025. This indicates a reduced reliance on borrowed funds to amplify returns.

Interest Coverage

The interest coverage ratio exhibits a significant improvement throughout the period. After a negative value in December 2022 (-1.51), the ratio steadily increases, reaching 43.55 in December 2025. This substantial increase demonstrates a significantly enhanced ability to meet interest obligations from earnings, indicating improved financial health and reduced risk of default.

In summary, the analyzed ratios consistently point towards a strengthening solvency position. The company has demonstrably reduced its reliance on debt financing, improved its ability to cover interest expenses, and generally decreased its overall financial leverage over the observed timeframe.

The debt to equity ratio demonstrates a consistent downward trend over the analyzed period, spanning from March 31, 2022, to December 31, 2025. Initially, the ratio stood at 0.53, indicating that for every dollar of equity, the company held 53 cents of debt. Throughout the period, this ratio decreased, reaching 0.20 by September 30, 2025, before slightly increasing to 0.20 by December 31, 2025.

Overall Trend

A clear and sustained decline in the debt to equity ratio is observed. This suggests a strengthening of the company’s financial position, as the proportion of debt financing relative to equity financing has decreased over time. The increase in the final period is minimal and does not negate the overall downward trend.

Initial Phase (Mar 31, 2022 – Dec 31, 2022)

The ratio experienced an initial increase from 0.53 to 0.59. This suggests a period of increased reliance on debt financing relative to equity. However, this increase was relatively modest.

Subsequent Decline (Mar 31, 2023 – Sep 30, 2025)

Following December 31, 2022, a consistent and more pronounced decline in the debt to equity ratio is evident. The ratio decreased from 0.54 in March 2023 to 0.18 in September 2025. This indicates a deliberate or opportunistic reduction in debt levels, or a substantial increase in equity, or a combination of both.

Magnitude of Change

The most significant decreases occurred between June 30, 2023, and December 31, 2024, indicating accelerated debt reduction or equity growth during this timeframe. The final period shows a slight increase, but the ratio remains significantly lower than at the beginning of the analyzed period.

The observed trend suggests improving solvency and a reduced level of financial risk. A lower debt to equity ratio generally indicates a greater ability to meet long-term obligations and a stronger financial foundation.

The debt to equity ratio, including operating lease liability, demonstrates a consistent downward trend over the analyzed period, spanning from March 31, 2022, to December 31, 2025. Initially, the ratio fluctuated around 1.0, indicating a relatively balanced relationship between debt and equity financing. However, subsequent quarters reveal a progressive decrease, culminating in a ratio of 0.41 by the end of the observed timeframe.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The ratio began at 0.97 and increased to 1.06 over this period. This suggests a slight increase in leverage, with debt growing at a faster rate than equity. Total debt increased from US$129,450 million to US$154,972 million, while stockholders’ equity experienced more moderate growth, moving from US$134,001 million to US$146,043 million.

Downward Trend (Mar 31, 2023 – Dec 31, 2025)

From March 31, 2023, the ratio consistently declined. It moved from 1.00 to 0.41 by December 31, 2025. This decrease is attributable to a more substantial growth in stockholders’ equity compared to total debt. Stockholders’ equity increased significantly, from US$154,526 million to US$411,065 million, while total debt experienced comparatively smaller increases, rising from US$154,779 million to US$169,934 million.

The observed trend indicates a strengthening financial position, with the company relying less on debt financing relative to its equity base. The reduction in the debt to equity ratio suggests a decreased level of financial risk and improved solvency. The substantial increase in equity, coupled with relatively stable debt levels, contributed to this positive shift. The ratio stabilizing at 0.41 in the final two quarters suggests a potential new equilibrium in the company’s capital structure.

Magnitude of Change

The ratio nearly halved over the period, decreasing from approximately 1.0 to 0.41. This represents a significant improvement in the company’s financial leverage profile. The largest single-quarter decrease occurred between September 30, 2024, and December 31, 2024, with the ratio falling from 0.58 to 0.52.

In summary, the analysis reveals a clear and consistent decline in the debt to equity ratio, indicating a strengthening financial position and reduced reliance on debt financing. The growth in equity significantly outpaced the growth in debt, driving this positive trend.

The debt to capital ratio demonstrates a consistent downward trend over the observed period, spanning from March 31, 2022, to December 31, 2025. Initially, the ratio stood at 0.35, indicating that for every dollar of capital, 35 cents were financed by debt. Throughout the period, this proportion decreased, culminating in a ratio of 0.16 by the end of 2025.

Overall Trend

A clear and sustained decline in the debt to capital ratio is evident. The ratio decreased from 0.35 in March 2022 to 0.16 in December 2025. This suggests a decreasing reliance on debt financing relative to the company’s capital structure.

Phases of Decline

The rate of decline was not uniform. A more rapid decrease occurred between June 2022 and December 2023, falling from 0.38 to 0.28. The decline moderated between December 2023 and September 2025, decreasing from 0.28 to 0.15. A slight increase to 0.16 occurred in December 2025.

Total Debt and Capital

While the debt to capital ratio decreased, both total debt and total capital generally increased over the period. Total debt peaked at US$85,932 million in December 2022, then decreased to US$66,504 million in September 2025, before rising to US$80,682 million in December 2025. Total capital exhibited a consistent upward trajectory, increasing from US$205,165 million in March 2022 to US$491,747 million in December 2025. The larger increase in total capital compared to the fluctuations in total debt is the primary driver of the declining ratio.

The observed trend suggests a strengthening of the company’s financial position, with a reduced level of financial risk associated with debt financing. The increasing capital base provides a greater cushion for existing debt obligations.

The debt to capital ratio, including operating lease liability, demonstrates a consistent downward trend over the observed period from March 31, 2022, to December 31, 2025. Initially, the ratio stood at 0.49, and progressively decreased to 0.29 by the end of the analyzed timeframe.

Initial Phase (Mar 31, 2022 – Dec 31, 2022)

From March 31, 2022, to December 31, 2022, the debt to capital ratio experienced a slight increase, moving from 0.49 to 0.52, before stabilizing around 0.51. This suggests a modest increase in relative debt levels during this period, potentially due to increased borrowing or a slower growth rate in capital.

Downward Trend (Mar 31, 2023 – Dec 31, 2024)

Beginning in March 2023, a clear downward trend emerged. The ratio decreased from 0.50 to 0.39 by June 2024. This indicates that capital growth outpaced the increase in debt, improving the company’s solvency position. The rate of decline accelerated during this phase.

Stabilization (Mar 31, 2025 – Dec 31, 2025)

The decline in the debt to capital ratio continued into 2025, reaching 0.29 by December 31, 2025. The ratio remained stable between June 30, 2025, and December 31, 2025, suggesting a potential plateau in the relationship between debt and capital. This stabilization could be attributed to a deliberate strategy to maintain a specific capital structure or a change in investment patterns.

Throughout the period, total debt increased from US$129,450 million to US$169,934 million, but total capital experienced a more substantial increase, rising from US$263,451 million to US$580,999 million. This disparity in growth rates is the primary driver of the observed decrease in the debt to capital ratio. The consistent reduction in the ratio suggests improving financial leverage and a strengthening solvency position.

The debt-to-assets ratio demonstrates a consistent, albeit gradual, decline over the observed period. Initially, the ratio fluctuated around 0.17 to 0.19 between March 2022 and September 2022, before initiating a downward trajectory.

Overall Trend

A clear decreasing trend in the debt-to-assets ratio is evident from December 2022 through September 2025. The ratio decreased from 0.15 in December 2022 to 0.09 in September 2025. This suggests a decreasing reliance on debt financing relative to the company’s asset base.

Short-Term Fluctuations

While the overall trend is downward, there is a slight increase in the ratio in December 2025, rising to 0.10. This could be due to a temporary increase in debt or a decrease in total assets during that period, warranting further investigation.

Magnitude of Change

The most significant declines occurred between June 2023 and December 2024, with the ratio decreasing from 0.17 to 0.13, and again between September 2024 and September 2025, decreasing from 0.12 to 0.09. These periods represent the most substantial improvements in the company’s solvency position as measured by this ratio.

Asset and Debt Dynamics

The decline in the debt-to-assets ratio is supported by the observed growth in total assets, which increased from US$410,767 million in March 2022 to US$818,042 million in December 2025. Simultaneously, total debt remained relatively stable, with a slight increase observed in December 2025, but remained below the levels seen in the earlier periods. This combination of increasing assets and relatively stable debt contributed to the observed decrease in the ratio.

In summary, the company has demonstrated improving solvency over the analyzed timeframe, characterized by a consistent reduction in its debt-to-assets ratio. The increase in the ratio during the final period requires further scrutiny, but the overall trend indicates a strengthening financial position.

The debt to assets ratio, including operating lease liability, demonstrates a generally decreasing trend over the observed period from March 31, 2022, to December 31, 2025. Initially, the ratio fluctuated around 0.32 to 0.34 before exhibiting a more consistent decline in later periods.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The ratio began at 0.32 and increased to 0.34 by June 30, 2022, before stabilizing around 0.33 to 0.34 for the remainder of the year. Total debt increased during this period, but total assets grew at a slightly faster rate, preventing a significant increase in the ratio.

Stabilization and Initial Decline (Mar 31, 2023 – Dec 31, 2023)

The ratio remained relatively stable in the first half of 2023, hovering around 0.32 to 0.33. A noticeable decrease occurred in the latter half of the year, falling to 0.29 by December 31, 2023. This decline coincided with a more substantial increase in total assets compared to the growth in total debt.

Continued Decline (Mar 31, 2024 – Dec 31, 2025)

The downward trend continued into 2024 and 2025. The ratio decreased from 0.29 in March 2024 to 0.21 by December 2025. Total assets experienced significant growth, particularly between September 2024 and December 2025, while total debt remained relatively consistent until the final period, where it saw a notable increase. This asset growth significantly contributed to the declining ratio.

Total Debt Trend

Total debt, including operating lease liability, experienced moderate increases between March 2022 and December 2022, reaching 154,972 US$ in millions. It remained relatively stable through the first three quarters of 2023, then increased substantially to 169,934 US$ in millions by December 2025.

Total Assets Trend

Total assets demonstrated consistent growth throughout the observed period. Starting at 410,767 US$ in millions in March 2022, assets grew to 818,042 US$ in millions by December 2025, representing a substantial increase over the timeframe. The most significant asset growth occurred between December 2023 and December 2025.

Overall, the decreasing debt to assets ratio suggests a strengthening solvency position. The company appears to be financing its growth more through equity and retained earnings than through debt, or that asset growth is outpacing debt accumulation. The final period shows a significant increase in debt, which warrants further investigation to understand the reasons behind it and its potential impact on future solvency.

The financial leverage ratio demonstrates a consistent downward trend over the observed period, spanning from March 31, 2022, to December 31, 2025. This indicates a decreasing reliance on debt financing relative to equity.

Overall Trend

Beginning at 3.07 in March 2022, the ratio generally declined, reaching 1.99 by December 2025. While there were minor fluctuations, the overall trajectory is clearly downward.

Initial Phase (Mar 31, 2022 – Dec 31, 2022)

The ratio experienced initial volatility, increasing from 3.07 to 3.19 before decreasing to 3.12 and then rising slightly to 3.17. This period suggests a relatively stable, though slightly increasing, level of financial leverage.

Significant Decline (Mar 31, 2023 – Sep 30, 2024)

A more pronounced decline began in March 2023, with the ratio falling from 3.01 to 2.66 by September 2024. This suggests a deliberate effort to reduce debt or an increase in equity during this timeframe. The rate of decline accelerated during this period.

Stabilization (Dec 31, 2024 – Dec 31, 2025)

The rate of decline slowed considerably between December 2024 and December 2025. The ratio moved from 2.19 to 1.99, indicating a potential stabilization of the capital structure. The decrease in leverage became more incremental.

Relationship to Equity and Assets

The decreasing financial leverage ratio coincides with consistent growth in both total assets and stockholders’ equity throughout the period. This suggests that the reduction in leverage is not solely due to debt reduction, but also driven by an increase in the equity base, which is growing at a faster rate than total assets.

In conclusion, the observed trend in financial leverage suggests a strengthening financial position, characterized by a decreasing reliance on debt and a growing equity base. The company appears to be strategically managing its capital structure towards a more conservative profile.

The interest coverage ratio exhibits a generally positive trend over the observed period, though with significant fluctuations. Initial values indicate a relatively strong ability to meet interest obligations, followed by a period of concern, and then a substantial improvement.

Initial Period (Mar 31, 2022 - Dec 31, 2022)

The interest coverage ratio begins at 13.02, demonstrating a robust capacity to cover interest expenses with earnings before interest and tax. However, a marked decline is observed through June and September 2022, reaching a low of 6.57 and 5.61 respectively. This downward trend culminates in a negative ratio of -1.51 by December 2022, indicating that earnings before interest and tax were insufficient to cover interest expense during that quarter.

Recovery and Growth (Mar 31, 2023 - Dec 31, 2024)

Starting in March 2023, the ratio begins a consistent upward trajectory. It recovers to 2.27 and continues to improve each quarter, reaching 16.43 by December 2023. This positive momentum continues into 2024, with the ratio increasing to 29.48 by December. This period demonstrates a significant strengthening in the ability to service debt obligations.

Recent Performance (Mar 31, 2025 - Dec 31, 2025)

The upward trend persists into the first half of 2025, peaking at 38.17 in June. A slight decrease is then observed in September 2025 (43.93) before settling at 43.55 by December 2025. While a minor fluctuation, the ratio remains at a very healthy level, indicating a strong financial position with respect to interest-bearing debt.

Underlying Factors

The fluctuations in the interest coverage ratio are directly correlated with changes in earnings before interest and tax. The negative value in December 2022 is attributable to a substantial loss before interest and tax during that period. The subsequent improvements are driven by a consistent increase in earnings before interest and tax, while interest expense remained relatively stable.

Overall, the interest coverage ratio demonstrates a substantial recovery from a period of vulnerability. The current levels suggest a strong capacity to meet interest obligations and a healthy financial position.