HOW TO QUICKLY ASSESS YOUR COMPANY’S LIQUIDITY?
3. listopada 2023.5 RAZLOGA ZAŠTO SVAKI KUPAC TREBA IMATI KREDITNI LIMIT
5. listopada 2023.* The first financial statement presented in the Amazon’s (AMZN) annual report is…the cash flow statement. Are they trying to tell us something or is it a mere coincidence? Anyway, draw your own conclusions, but if they believe CF statement should be the first one to present…
* AMZN’s financial reporting in the 10-K form is not that great. For example, they classify short-term debt under “accrued expenses and other”. That’s why it is important to carefully read the whole report…
* AMZN had $70bn of liquid assets, but approx. 1/3 includes debt and equity investments into various corporates. And there is no way one can reconcile what is classified as cash, and what as a short-term financial asset.
* AMZN’s sales amounted to $514bn (!) in 2022. Next time you think your company is big, remember this figure.
* Product sales account for only 47% of their total sales, 53% comes from services (subscriptions, advertising, third party seller, AWS). The share of services was 44% two years ago.
* They seem to be struggling with the online sales, as they decreased by 1% in 2022, with the share of online sales in total sales going down from 51% in 2020 to 43% in 2022. Other segments recorded a double-digit growth.
* Sales in Germany decreased by 10% and in the UK 6% in 2022. On the other side, US sales grew 13%. Signs of an upcoming recession in Europe?
* AMZN recorded a net loss of $2,7bn in 2022, mostly due to increasing R&D and sales and marketing expenses, and a loss on valuation of their investment portfolio. It seems the investment in Rivian played a huge role in this loss…
* EBIT halved in 2022, and it was positive only for the AWS segment, the rest of the business generated losses…
* AMZN had a negative Free Cash Flow (FCF) in 2021 and 2022 (2y total $-57bn). They covered the gap with new debt ($41bn), their investments portfolio ($28bn), and sale of assets ($11bn). Even on a maintenance Capex basis, FCF was negative in 2022 ($-1,2bn).
* They have incurred debt with maturities between 2057-2062. Yes, you read it correctly, some debt matures in 35-40 years. Average maturity is 13 years.
* They pay 1,6% interest rate on average. If your financing conditions are at this level, you should be happy. Although this accounts for long maturities and largely unsecured debt, AMZN’s rating is at AA/A1, and not many corporates have such high rating…
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Surprised by the facts and figures above?
If this is the case with AMZN, imagine how many surprises could you find in your key customer’s financials?
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