Amazon.com Inc. (NASDAQ:AMZN)

The analysis of the key financial ratios over the reported periods reveals several notable trends and fluctuations.

Inventory Turnover Ratio

The inventory turnover ratio exhibits variability across the periods. Starting from values around 9.8 to 10.9 in late 2020 and early 2021, it then declined to a low near 7.3 by late 2022. A recovery trend follows through 2023 into early 2024, when it peaks around 9.94, before experiencing a slight decrease again towards mid-2025 with a ratio near 8.27. This indicates periods of both increased and decreased efficiency in managing inventory over the years.

Payables Turnover Ratio

The payables turnover ratio remains relatively stable but with noticeable oscillations. Initially around 3.22 in early 2021, it rises and peaks near 4.34 in mid-2023. Following that, fluctuations continue between approximately 3.44 and 4.24 through mid-2025. This suggests moderate variations in the pace at which payables are settled.

Working Capital Turnover Ratio

The working capital turnover ratio shows significant volatility. Early in 2021, values are high around 60.82 to 69.81, sharply dropping to 19.23 and 31.5 by late 2021, which may indicate less efficient use of working capital during that time. After some missing data intervals, the ratio climbs again from 2024 onwards, reaching an exceptionally high level of approximately 148.93 in mid-2025, signaling a marked improvement in working capital utilization toward the later periods.

Average Inventory Processing Period (Days)

The average inventory processing period fluctuates moderately, with values generally ranging from the low 30s to the mid-40s in days. It starts around 37 days in early 2021, peaks at 50 days by late 2022, then declines again to the range of 37 to 44 days by mid-2025. These variations reflect changes in how long inventory remains before being sold or used, indicating shifts in inventory management efficiency.

Average Payables Payment Period (Days)

The average payables payment period displays substantial fluctuations from approximately 84 to 113 days. Early 2021 values are near 113 days, contracting to about 86 to 93 days during much of 2022 and parts of 2023, then increasing again towards 106 days by mid-2025. This pattern suggests alterations in payment practices or negotiating terms with suppliers over the observed timeframe.

Overall, the financial metrics reflect dynamic operational management with periods of both tightening and loosening in inventory controls, payables management, and working capital efficiency. The marked improvement in working capital turnover in more recent periods may point to strategic shifts that improve asset utilization. However, persistent fluctuations in inventory and payables turnover ratios suggest ongoing adjustments in supply chain and payment cycle management.

The cost of sales exhibits notable fluctuations over the observed periods. From March 2020 to December 2020, there was a pronounced upward trend, rising from approximately $44.3 billion to nearly $79.3 billion. This increase continued into early 2021, maintaining high values with some variability through 2021 and into 2022. A peak is observed in December 2021 at roughly $82.8 billion, followed by a moderate decline and stabilization around the mid-$60 billion to high-$70 billion range in 2022 and early 2023. Towards the end of the period, particularly December 2024, the cost of sales reaches a new high close to $98.9 billion, indicating substantial growth before slightly tapering by mid-2025.

Inventories have generally trended upward throughout the timeline. Beginning at approximately $18.9 billion in the first quarter of 2020, inventory levels increase steadily, with some periods of more rapid growth, notably from mid-2020 through the end of 2021. Inventories peak around $38.1 billion in mid-2022, followed by a mild decline and relative stabilization in the $33 billion to $36 billion range during 2023 and early 2024. In the final quarters displayed, inventories again rise significantly, reaching an all-time high nearing $40.8 billion by mid-2025.

The inventory turnover ratio demonstrates some degree of volatility but generally remains within a range from 7.3 to 10.9. Higher turnover ratios, above 9.0, indicate more rapid inventory movement and were observed in several quarters, such as September 2020 (9.8), June 2021 (10.54), and June 2024 (9.94). Conversely, lower turnover values (around 7.3 to 8.4) occur intermittently, suggesting periods when inventory was held longer. Overall, the turnover metric fluctuates moderately but does not indicate a long-term acceleration or deceleration in inventory velocity, reflecting relative consistency in operational efficiency with occasional shifts.

In summary, the cost of sales has demonstrated significant increases over the reported periods, with peaks in late 2021 and late 2024. Inventories progressively rose over time, albeit with some periods of decrease or stabilization. The inventory turnover ratio remained variable but relatively stable, suggesting consistent management of inventory levels relative to cost of sales despite growth in absolute amounts. The combined analysis points toward an expanding scale of operations, with inventory investment and cost of sales both increasing while maintaining reasonable turnover efficiency.

The analysis of the quarterly financial data reveals several noteworthy trends and patterns in cost of sales, accounts payable, and payables turnover ratios over the reported periods.

Cost of Sales

The cost of sales exhibits a general upward trend from March 31, 2020, through December 31, 2025, with some fluctuations reflecting operational volume changes or pricing adjustments. Beginning at approximately 44,257 million USD in early 2020, the figure rises notably, peaking around 98,893 million USD in the fourth quarter of 2024. Periodic increases are particularly pronounced during the fourth quarters, suggesting seasonality effects consistent with increased sales activity in these periods.

Accounts Payable

Accounts payable amounts also trend upwards over the observed timeline, moving from 40,056 million USD in March 2020 to nearly 98,285 million USD by June 2025. This growth parallels the trend in cost of sales, indicative of expanded purchasing or extended credit terms. Peaks tend to align with the end-of-year quarters, further supporting anticipated seasonal purchasing patterns. Despite occasional quarter-to-quarter variations, the overall trajectory suggests increasing short-term liabilities tied to supplier obligations.

Payables Turnover Ratio

Payables turnover ratios, available from March 31, 2020, onwards, fluctuate within a moderate range primarily between approximately 3.2 and 4.3. The ratio slightly declines during some periods but recovers or improves in others, indicating variability in the frequency at which payables are settled relative to cost of sales. Higher turnover ratios correspond to faster payment cycles whereas lower ratios suggest extended credit periods or slower payment practices. Notably, ratios tend to decrease in the early quarters and rise in the latter part of each year, potentially highlighting seasonal influences on payment behavior.

In summary, the data reflects ongoing increases in operational scale, evidenced by rising costs of sales and corresponding growth in accounts payable balances. Seasonal fluctuations are apparent, with peaks typically observed in the fourth quarter, consistent with increased holiday period activity. The payables turnover ratio indicates a relatively stable payment cycle with some seasonal variation, balancing between efficient payments and extended supplier credit. These patterns collectively suggest sustained business expansion with operational dynamics influenced by both internal cash flow management and external market conditions.

Working Capital Trend

The working capital figures demonstrate notable volatility across the observed periods. Initially, positive working capital balances were recorded, peaking at 23,056 million USD in June 2021. Subsequently, a sharp decline is evident starting in March 2022, with consecutive negative values reaching as low as -11,349 million USD by March 2023. From December 2023 onwards, working capital returns to positive territory, showing a consistent upward movement through mid-2025, reaching 4,499 million USD in June 2025.

Net Sales Trend

Net sales exhibit a general growth trajectory throughout the periods under review. Beginning at approximately 75,452 million USD in the first quarter of 2020, net sales increased with some fluctuations to a high of 187,792 million USD by March 2025. Periodic seasonal peaks are observable, specifically in December quarters, aligning with typical retail trends, such as 137,412 million USD in December 2021 and 169,961 million USD in December 2023. Despite some quarter-to-quarter variability, the overall trend indicates sustained expansion in sales volume.

Working Capital Turnover Ratio

The working capital turnover ratio data is incomplete, with missing values in earlier periods but available from December 2020 forward. The ratio experiences considerable fluctuations, ranging from a low of approximately 19.23 to a high nearing 148.93 by June 2025. This variability suggests changes in the efficiency with which working capital supports sales generation. Notably, elevated ratios in the latter periods may indicate improved operational efficiency or inventory management practices relative to sales.

Interrelations and Insights

The correlation between working capital and net sales across the time frame reveals an atypical pattern, with negative working capital coinciding with increased net sales from 2022 to 2023. This phenomenon could imply a strategic shift in the company's capital management, such as extended payables or reduced inventories. Additionally, the rising working capital turnover ratios in recent periods align with the recovery and growth of working capital, suggesting enhanced utilization of short-term assets and liabilities in generating sales.

Summary

Overall, the analyzed data highlights significant fluctuations in working capital, with a pronounced dip into negative figures during 2022 and early 2023, followed by a recovery trend. Net sales progressively increased, demonstrating strong revenue growth. The working capital turnover ratio, though partially incomplete, indicates varying efficiency levels, culminating in notable improvement towards mid-2025. These trends suggest a dynamic approach to capital and operational management responding to evolving business conditions.

Inventory Turnover Ratio

The inventory turnover ratio shows an overall declining trend from the first recorded value in March 2020 of 9.8 to a low of 7.3 in September 2022. This decline suggests a slowing rate of inventory utilization over this period. After September 2022, the ratio demonstrates some fluctuations but generally improves, reaching a peak of 9.94 in June 2024 before slightly declining again towards March 2025 where it records 8.27. This pattern indicates a period of recovery in inventory management efficiency following the earlier decline.

Average Inventory Processing Period

The average inventory processing period inversely mirrors the inventory turnover ratio. Initially, it increases from 37 days in March 2020 to a peak of 50 days in September 2022, indicating a longer duration to process inventory during this period. After that peak, the processing period decreases, reaching 37 days again in March 2024 before gradually rising back to 44 days by March 2025. This variation suggests initial challenges in inventory processing that were partially alleviated, followed by some instability towards the end of the observed period.

Overall Insights

The data reflects a phase of reduced inventory efficiency from early 2020 through mid-2022, characterized by lower turnover ratios and longer processing periods. Subsequently, there is evidence of operational improvements, with turnover ratios increasing and processing periods shortening, indicating more effective inventory management. However, the fluctuations in the last year suggest some volatility in maintaining inventory efficiency, which may require further attention to sustain consistent performance.

Payables Turnover Ratio Trends

The payables turnover ratio demonstrates fluctuations over the periods analyzed, ranging generally between 3.22 and 4.34. Initial available data from March 31, 2020, shows a lower value of 3.22, increasing to a peak of 4.34 by June 30, 2023. Thereafter, the ratio exhibits a decline, dropping to 3.44 by June 30, 2025. This pattern suggests variability in how frequently the company is settling its payables, with a tendency toward faster turnover during mid-2023 and a slower turnover rate toward mid-2025.

Average Payables Payment Period Trends

The average payables payment period, expressed in number of days, inversely correlates with the payables turnover ratio as expected. Starting from 113 days on March 31, 2020, the payment period generally decreases to a low of 84 days on March 31, 2023, indicating an improvement in payment speed. Following this, there is an upward shift, with values reaching as high as 106 days by June 30, 2025. This suggests that after a period of accelerated payments, the company has extended its payment schedules somewhat in later periods.

Overall Observations

The data reflects a cyclical pattern in accounts payable management. The earlier trend up to 2023 indicates improved efficiency in paying suppliers, perhaps enhancing relationships or taking advantage of early payment benefits. The subsequent elongation of payment periods and decreased turnover might indicate strategic cash flow management or external pressure to optimize working capital. Despite these fluctuations, the values remain within a moderate range, without extreme volatility.