Sonia Jones
@02624499
SoniaJones35@gmail.com
Principles of Finance
Etta
Amazon Ratio and Operations Management Analysis
I. Short Term Ratios
I.Short Term Ratios (x/times)
Amazon
Industry
Difference
Current Ratio
1.17
1.43
0.26
Quick Ratio
0.84
0.84
0.00
Cash Ratio
0.35
0.21
0.14
Amazon’s overall short term ratios compared to that of the industry (median quartile) is
fairly successful and shows its overall liquidity. Its current ratio (1.17) which is the
measurement of short-term liquidity is a.26 difference from the industry ratio which suggests
that Amazon utilizes its cash more in comparison to that of the industry. This however may
impact future investors slightly because investors seek higher current ratios. Amazon’s quick
ratio which is the measurement of their liquidity with inventory being added into the equation
is at the exact same measurement of that of the industry. Amazon is an online and shipping
business and its assets are virtually all inventory, with that being said it is safe to say that
Amazon’s overall inventory management is successful and judging by the quick ratio can lead an
investor to determine that it’s assets to liability measurement is quite favorable. Amazon’s
cash ratio may appeal to a very short term investor since it is higher than the industry.
II. Long Term Ratios
II. Long Term Ratios (x/times)
Amazon
Industry
Difference
Total Debt Ratio
0.69
0.52
0.17
Debt-Equity Ratio
0.25
1.08
0.83
Times Interest Ratio
15.37
8.06
7.31
Cash Coverage Ratio
15.37
8.43
6.94
Amazons long term ratios which showcase its ability to pay its long term obligations can
be viewed as deviant from the industry. It’s Total Debt Ratio which takes into count all of
Amazon’s debts and obligations illustrates that Amazon uses 69% of its debt this is a 17 unit
