Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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Profitability Ratios (Summary)
Amazon.com Inc., profitability ratios
Based on: 10-K (reporting date: 2025-12-31), 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).
The profitability metrics demonstrate a period of volatility followed by substantial improvement. Initial figures show a decline in operating and net profitability before a marked recovery and continued growth through the observed period. Gross profitability consistently increased, while operating and net margins experienced more significant fluctuations.
- Gross Profit Margin
- The gross profit margin exhibits a consistent upward trend, increasing from 42.03% in 2021 to 50.29% in 2025. This indicates improving efficiency in managing the cost of goods sold relative to revenue. The increase suggests enhanced pricing strategies, improved sourcing, or a shift towards higher-margin products.
- Operating Profit Margin
- The operating profit margin experienced a significant decrease from 5.30% in 2021 to 2.38% in 2022, before recovering substantially to 11.16% in 2025. This suggests initial challenges in controlling operating expenses, followed by successful cost management and operational improvements. The growth from 2022 onwards is particularly noteworthy.
- Net Profit Margin
- The net profit margin mirrored the volatility of the operating margin, falling to a negative value of -0.53% in 2022. It then demonstrated a strong recovery, reaching 10.83% in 2025. This indicates that factors beyond core operations, such as interest expense or one-time items, significantly impacted net income in 2022, but were subsequently mitigated. The positive trend from 2023 onwards aligns with the improvements in operating profitability.
- Return on Equity (ROE)
- Return on equity followed a similar pattern to the profit margins, declining sharply to -1.86% in 2022 before rising to 18.89% in 2025. This indicates that the company’s ability to generate profit from shareholder investments was initially impaired, but improved considerably as profitability increased. The fluctuations in ROE are directly linked to changes in net income.
- Return on Assets (ROA)
- The return on assets also experienced a decline in 2022, reaching -0.59%, followed by a recovery to 9.49% in 2025. This suggests that the efficiency with which assets are used to generate profit was initially compromised, but improved alongside the overall profitability trends. The stabilization of ROA in 2024 and 2025 suggests a consistent level of asset utilization efficiency.
Overall, the observed period demonstrates a turnaround in profitability. While 2022 presented challenges, subsequent years show consistent and substantial improvements across all measured ratios, indicating successful strategic adjustments and operational enhancements.
Return on Sales
Return on Investment
Gross Profit Margin
Amazon.com Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
The gross profit margin demonstrates a consistent upward trend over the five-year period. Simultaneously, both gross profit and net sales exhibit growth annually, contributing to this positive margin expansion.
- Gross Profit Margin Trend
- The gross profit margin increased from 42.03% in 2021 to 50.29% in 2025. This represents a cumulative increase of 8.26 percentage points over the observed timeframe.
- Year-over-year increases in the gross profit margin were observed each year: 1.78 percentage points from 2021 to 2022, 3.17 percentage points from 2022 to 2023, 1.87 percentage points from 2023 to 2024, and 1.44 percentage points from 2024 to 2025. The rate of increase appears to be moderating slightly in the later years.
- Gross Profit Growth
- Gross profit increased consistently, moving from US$197,478 million in 2021 to US$360,510 million in 2025. This indicates a strengthening ability to generate profit from core business operations.
- The largest absolute increase in gross profit occurred between 2023 and 2024, with an addition of US$41,525 million. The increase from 2024 to 2025 was US$48,839 million, representing the largest absolute increase over the period.
- Net Sales Growth
- Net sales also increased steadily, from US$469,822 million in 2021 to US$716,924 million in 2025. This demonstrates consistent revenue growth.
- Similar to gross profit, the largest absolute increase in net sales occurred between 2024 and 2025, with an increase of US$79,000 million.
The concurrent growth in both gross profit and net sales, coupled with the expanding gross profit margin, suggests improving operational efficiency and potentially increased pricing power or a shift towards higher-margin products or services. The consistent upward trajectory of these metrics indicates a positive trend in the company’s core profitability.
Operating Profit Margin
Amazon.com Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
| Operating Profit Margin, Sector | ||||||
| Consumer Discretionary Distribution & Retail | ||||||
| Operating Profit Margin, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
The operating profit margin exhibited a fluctuating trend over the five-year period. Initial values indicate a decline followed by substantial improvement and stabilization.
- Operating Profit Margin Trend
- In 2021, the operating profit margin stood at 5.30%. A significant decrease was observed in 2022, with the margin falling to 2.38%. This represents a substantial contraction in profitability relative to sales. A strong recovery occurred in 2023, as the operating profit margin increased to 6.41%. This upward momentum continued into 2024, with the margin reaching 10.75%, indicating a considerable improvement in operational efficiency and profitability. The increase moderated slightly in 2025, with the operating profit margin reaching 11.16%.
The operating income increased throughout the period, but the operating profit margin demonstrates that the rate of income generation relative to sales varied considerably. The substantial increase in the margin from 2022 to 2024 suggests successful cost management strategies or increased pricing power. The stabilization of the margin in 2025, while still high, may indicate a reaching of peak profitability given current conditions.
- Relationship to Net Sales
- While net sales consistently increased year-over-year, the operating profit margin’s performance was not directly proportional. The largest increase in operating income occurred between 2023 and 2024, coinciding with the most significant jump in the operating profit margin. This suggests that improvements in operational efficiency were more impactful than simply increasing sales volume.
Overall, the operating profit margin demonstrates a period of initial weakness followed by a strong and sustained recovery, culminating in a period of relative stability at a significantly improved level.
Net Profit Margin
Amazon.com Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
| Net Profit Margin, Sector | ||||||
| Consumer Discretionary Distribution & Retail | ||||||
| Net Profit Margin, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
Net profit margin = 100 × Net income (loss) ÷ Net sales
= 100 × ÷ =
2 Click competitor name to see calculations.
The net profit margin exhibited significant fluctuation over the five-year period. Initial profitability was followed by a substantial decline, then a recovery and subsequent growth.
- Net Profit Margin Trend
- In 2021, the net profit margin stood at 7.10%. This represents a healthy level of profitability, indicating that the company retained approximately 7.10 cents of profit for every dollar of net sales.
- 2022 witnessed a dramatic shift, with the net profit margin falling to -0.53%. This indicates a net loss relative to net sales, signifying a period of reduced profitability or operational challenges.
- A recovery began in 2023, as the net profit margin increased to 5.29%. While positive, this remained below the 2021 level, suggesting ongoing efforts to restore profitability.
- Further improvement was observed in 2024, with the net profit margin rising to 9.29%. This indicates a strengthening of profitability and improved operational efficiency.
- The trend continued positively into 2025, with the net profit margin reaching 10.83%. This represents the highest level of profitability within the observed period, demonstrating a substantial improvement in the company’s ability to convert sales into profit.
The substantial increase in net profit margin from 2022 to 2025 suggests successful implementation of cost control measures, increased sales efficiency, or a favorable shift in the business environment. The negative margin in 2022 warrants further investigation to understand the underlying causes and ensure they are not recurring issues.
- Relationship to Net Income and Net Sales
- The net profit margin’s fluctuations correlate with changes in net income. The negative margin in 2022 aligns with the reported net loss for that year. Conversely, the increasing margins in 2024 and 2025 correspond with significant increases in net income.
- Net sales consistently increased throughout the period. However, the net profit margin demonstrates that increased sales volume alone do not guarantee profitability; efficient cost management and pricing strategies are also crucial.
Return on Equity (ROE)
Amazon.com Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
| ROE, Sector | ||||||
| Consumer Discretionary Distribution & Retail | ||||||
| ROE, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
ROE = 100 × Net income (loss) ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The return on equity (ROE) exhibited considerable fluctuation over the five-year period. Initial values were strong, followed by a significant decline, and then a recovery, though not to the original levels. This analysis details the observed trends and potential implications.
- Overall Trend
- The ROE began at 24.13% in 2021, representing a robust return for stockholders. A substantial decrease was then observed in 2022, resulting in a negative ROE of -1.86%. Subsequent years demonstrated recovery, with ROE increasing to 15.07% in 2023, 20.72% in 2024, and stabilizing at 18.89% in 2025.
- Net Income Impact
- The negative ROE in 2022 directly correlates with a net loss of US$2,722 million. This indicates that the company’s earnings were insufficient to generate a return for shareholders during that year. The subsequent positive ROE values in 2023, 2024, and 2025 align with positive net income figures of US$30,425 million, US$59,248 million, and US$77,670 million respectively. The increasing net income contributed to the ROE recovery.
- Stockholders’ Equity Influence
- Stockholders’ equity consistently increased throughout the period, moving from US$138,245 million in 2021 to US$411,065 million in 2025. While increasing equity generally indicates financial strength, its impact on ROE is moderated by net income. The substantial equity growth in 2023, 2024, and 2025, coupled with positive net income, contributed to the observed ROE improvements. However, the large increase in equity also partially offset the positive impact of rising net income, preventing ROE from reaching its 2021 peak.
- Comparative Analysis
- The ROE in 2025, at 18.89%, remains below the 2021 level of 24.13%. This suggests that while profitability has recovered, the company is generating a slightly lower return on shareholder investment compared to the beginning of the period. The 2024 ROE of 20.72% represents the highest value in the latter part of the observed timeframe.
In summary, the ROE experienced a period of volatility, driven primarily by fluctuations in net income. While a recovery is evident, the return has not fully returned to its initial strength, potentially due to the concurrent growth in stockholders’ equity.
Return on Assets (ROA)
Amazon.com Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
| ROA, Sector | ||||||
| Consumer Discretionary Distribution & Retail | ||||||
| ROA, Industry | ||||||
| Consumer Discretionary | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 2025 Calculation
ROA = 100 × Net income (loss) ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
The Return on Assets (ROA) exhibited significant fluctuation over the five-year period. Initial values demonstrated a strong profitability relationship with assets, followed by a substantial decline, and then a recovery culminating in consistent performance. A detailed examination of the ROA alongside its constituent components reveals key insights into the company’s operational efficiency and profitability.
- Overall Trend
- The ROA began at 7.93% in 2021. A marked decrease was observed in 2022, resulting in a negative ROA of -0.59%. Subsequent years showed improvement, with the ROA reaching 5.76% in 2023, and further increasing to 9.48% in 2024. This upward trend stabilized in 2025, with the ROA holding steady at 9.49%.
- Net Income Influence
- The negative ROA in 2022 directly correlates with a net loss of US$2,722 million. This indicates that, in that year, the company’s assets generated insufficient profit to cover operational costs and other expenses. The subsequent recovery in ROA from 2023 onwards aligns with the return to positive net income, which grew substantially from US$30,425 million in 2023 to US$77,670 million in 2025.
- Asset Base Impact
- Total assets increased consistently throughout the period, rising from US$420,549 million in 2021 to US$818,042 million in 2025. While asset growth typically requires corresponding profit growth to maintain ROA, the company demonstrated an ability to improve ROA despite this expansion, particularly in the later years. This suggests increasing efficiency in asset utilization.
- Stabilization in Recent Years
- The ROA’s stabilization at 9.49% in both 2024 and 2025 suggests a potential plateau in profitability relative to the asset base, given the current operational model. Further investigation would be required to determine if this represents an optimal level or an area for potential improvement through enhanced asset management or increased profitability.
In summary, the ROA trajectory reflects a period of volatility followed by a return to strong performance. The company’s ability to recover from a net loss and improve ROA alongside asset growth indicates effective management of resources and a strengthening financial position.