Morningstar Project on Amazon Inc.
Morningtar.com,. (2015). Amazon.com Inc(USD) AMZN. Retrieved 26 June 2015
Amazon Inc. is a company that has had a good growth perspective. The above is justifiable from the observation of the various financial aspects of the company. With respect to the trend analysis of that shows Amazon’s performance from several years ago, there are some specific factors that help in justifying the above conclusion. To start with, the market price of Amazon’s stock that trades on the New York Stock Exchange has been on a steady rise since the year 2009.
However, there are various other ways to ascertain the performance of a company with respect to understanding its future growth. Profitability ratios such as the ROA, ROE, and Financial Leverage are a good example. In the case of Amazon Inc., ROE has gradually dropped from 3821.4% in the year 2005 to -2.4% in the year 2014. During the same period, ROA dropped from 10.3% to -0.5 with Financial Leverage dropping from 15.0 to 5.1. Despite the positive growth depicted by the stock price and the increasing of Amazon’s stock in relation to the S&P 500 index, the information from the above ratios indicates that the long-term performance of the company is questionable. If the current trend with respect to the above ratios persists, the future of Amazon Inc. will be in jeopardy.