Qin, Zixuan; Hassan, Abee ; Adhika ipa ajuli, Mahalaxmi
A icle
Di ec and indi ec implica ions o he COVID-19 pandemic
on Amazon's inancial si ua ion
Jou nal o Risk and Financial Managemen
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MDPI – Mul idisciplina y Digi al Publishing Ins i u e, Basel
Sugges ed Ci a ion: Qin, Zixuan; Hassan, Abee ; Adhika ipa ajuli, Mahalaxmi (2022) : Di ec and
indi ec implica ions o he COVID-19 pandemic on Amazon's inancial si ua ion, Jou nal o Risk and
Financial Managemen , ISSN 1911-8074, MDPI, Basel, Vol. 15, Iss. 9, pp. 1-25,
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Ci a ion: Qin, Zixuan, Abee Hassan,
and Mahalaxmi Adhika ipa ajuli.
2022. Di ec and Indi ec Implica ions
o he COVID-19 Pandemic on
Amazon’s Financial Si ua ion. Jou nal
o Risk and Financial Managemen 15:
414. h ps://doi.o g/10.3390/
j m15090414
Academic Edi o : C is ina Raluca
Gh. Popescu
Recei ed: 24 July 2022
Accep ed: 14 Sep embe 2022
Published: 19 Sep embe 2022
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Jou nal o
Risk and Financial
Managemen
A icle
Di ec and Indi ec Implica ions o he COVID-19 Pandemic on
Amazon’s Financial Si ua ion
Zixuan Qin 1, Abee Hassan 2and Mahalaxmi Adhika ipa ajuli 3,*
1Adam Smi h Business School, Uni e si y o Glasgow, Glasgow G12 8QQ, UK
2School o Business and C ea i e Indus ies, Uni e si y o he Wes o Sco land, Paisley PA1 2BE, UK
3School o Business, Law and Social Sciences, Abe ay Uni e si y, Dundee DD1 1HG, UK
*Co espondence: m.adhika i-pa ajuli@abe ay.ac.uk
Abs ac :
We p o ide heo e ical and empi ical insigh s in o he impac o COVID-19 on Amazon’s
inancial posi ion. A longi udinal case s udy o Amazon’s inancial si ua ion du ing he 2016–2020
pe iod, and ime-se ies analysis, a io analysis, and DuPon analysis, a e employed as a quan i a i e
me hodology o explo e Amazon’s inancial si ua ion changes be o e and a e he COVID-19 pan-
demic. As o he obus ness o he in-dep h analysis, we compa e Amazon’s inancial pe o mance
and posi ion wi h Walma . The esul shows ha he COVID-19 pandemic did no ha e a huge
nega i e impac on he companies’ inancial pe o mance because o i s p omo ion o hei de elop-
men . Howe e , his s udy p o ides an in-dep h analysis o he in luence o COVID-19 on Amazon’s
inancial si ua ion, which inancial aspec s a e mos a ec ed by COVID-19, which a e no , and he
company’s esponse o COVID-19. The e o e, his s udy sheds ligh on he accoun ing li e a u e o
demons a e he impac o COVID-19 on In e ne companies’ inancial pe o mance and p o ides
some e e ence alues o subsequen academic esea ch.
Keywo ds: COVID-19; Amazon; inancial s a emen analysis; DuPon analysis
1. In oduc ion
The apid g ow h o he global economy and elec onic echnology has g ea ly s im-
ula ed he use o he In e ne wo ldwide. The numbe o In e ne use s has doubled in
he pas ew yea s (Nielsen 2010), which has gi en ise o a hos o ela ed indus ies and
companies, Amazon is one o hese mos ypical companies. Amazon has buil a nea -
pe ec pla o m-based ma ke , which has become mo e and mo e popula in ecen yea s
(Kapoo and Aga wal 2017). Howe e , du ing he COVID-19 ou b eak in 2019, Amazon’s
business had been ha d hi by he COVID-19 pandemic when i was booming globally. In
con as , Amazon applied a compe i i ely ad an ageous, low-cos p oduc di e en ia ion
s a egy o expand hei business globally wi h poli ical and en i onmen al adjus men s
(Onyushe a and Seenalasa apo n 2018). The wo ld is s uggling wi h he g ea es public
heal h eme gency o i s ime, gene a ing economic, social, and human c ises (Gu e es
2020). Acco ding o WTO’s ele an iles published in 2020, global ade in goods would be
32 pe cen lowe han be o e (Maliszewska e al. 2020). Amazon is no excep ion; i s a ious
businesses ha e been hi o a ying deg ees du ing he COVID-19 pandemic. Acco ding
o Ai po s Council In e na ional (ACI)’s da a, he COVID-19 pandemic has led o a 40%
d op in global ai a ic, which causes a lo o ouble o Amazon, a company ha elies
hea ily on anspo a ion. No only he ai anspo a ion indus y bu also a se ies o
links including land anspo a ion, cus ome pick-up, doo - o-doo deli e y, e c., ha e
been a ec ed by he COVID-19 pandemic esponse measu es (G ay 2020). Howe e , he
COVID-19 pandemic has no only had a nega i e impac on Amazon. Cab e a-Sánchez
e al. (2020) demons a e ha he ou b eak o he pandemic may g ea ly s imula e he
de elopmen o he eigh indus y, and he e-comme ce indus y may become he bigges
J. Risk Financial Manag. 2022,15, 414. h ps://doi.o g/10.3390/j m15090414 h ps://www.mdpi.com/jou nal/j m
J. Risk Financial Manag. 2022,15, 414 2 o 25
winne . Fu he mo e, Amazon has app op ia ely balanced p o i , Co po a e Social Re-
sponsibili ies (CSR), and he implemen a ion o Sus ainable De elopmen Goals (SDGs),
especially, clima e change, en i onmen , ca bon emissions, and o he na u al measu es (Yu
e al. 2022).
On he whole, he COVID-19 pandemic no only b ings challenges o Amazon bu also
oppo uni ies. The e o e, by applying a end analysis, a io analysis, and Dupon analysis,
we deeply analyze Amazon’s inancial si ua ion, a ious inancial indica o s, and business
sys ems. Fu he mo e, h ough he e ical compa ison, we co ec ly e alua e Amazon’s
inancial si ua ion, a ious inancial capabili ies, he changing ends o ne in e es a e
o asse s and equi ies, and ind ou he gene al inancial changes o Amazon du ing he
COVID-19 pandemic and he easons behind i . Mo e impo an ly, as he summa y o
Amazon’s inancial si ua ion, we pu o wa d some imp o emen s a egies o he exis ing
p oblems in o de o help he company’s su i al, de elopmen and p o i abili y, and o
se e as a e e ence o o he In e ne en e p ises.
Va ious p io s udies p o ide e idence ha i ms wi h di e en cha ac e is ics eac
he e ogeneously ac oss egions and indus ial sec o s in esponse o he COVID-19 pan-
demic, especially he inancial pe o mance and posi ion. Fo ins ance, Go e e al. (2021)
explo e ha COVID-19 does no ha e any signi ican impac on p ima y s uden s’ academic
pe o mance in Aus alia. Likewise, he e is no e ec on lea ning pe o mance, whe he he
session is online o ace- o- ace eaching in highe educa ion (Chu i e al. 2022). Howe e ,
he COVID-19 pandemic has nega i ely dis up ed a ious e ail sec o indus ies such as
ou ism, elecom, and anspo a ion wi hin he Indian economy (Kuma Das and Pa naik
2020). Fu he mo e, COVID-19 has signi ican nega i e in luence on s ock ma ke e u n
in he Saudi A abian con ex (Alzyada and As ou a 2021). The e o e, i is essen ial o
examine he associa ion be ween COVID-19 and e ail companies’ inancial pe o mance as
a deep case s udy esea ch. This s udy con ibu es o he eme ging li e a u e h ough he
examina ion o he impac o COVID-19 on online e ail companies’ inancial pe o mance
using a case s udy o Amazon.
This s udy can add alue o he business pe o mance li e a u e in wo dimensions.
Fi s , as pe ou bes knowledge, his is he i s s udy ha empi ically explo ed COVID-
19’s impac on Amazon’s inancial pe o mance as a case s udy esea ch and inalized
he esul s ia obus ness es wi h p oxy company Walma ’s pe o mance and posi ion.
Second, his migh be one o he ew impac case s udies wi hin he business pe o mance
li e a u e because his s udy e eals a c i ical analy ical analysis o Amazon and Walma ’s
s a egic changes, echnological de elopmen , and ope a ional managemen jus be o e he
pandemic and du ing he pandemic by co e ing he da a om he 2016–2020 pe iod.
The es o he pape is o ganized as ollows: Sec ion 2p esen s he li e a u e e iew
on COVID-19 and Amazons’ pe o mance; Sec ion 3explains he da a and me hodology,
which is ollowed by a discussion o he esea ch esul s in Sec ion 4. Sec ion 5concludes
he s udy.
2. Li e a u e Re iew
2.1. Amazon’s Co po a e P o ile
Amazon is he la ges online e-comme ce company in he Uni ed S a es, loca ed in
Sea le, Washing on. I is one o he ea lies companies ha s a ed o ope a e e-comme ce
on he In e ne . Amazon was ounded in 1994 as an online book sales business, bu now
i has expanded o a wide ange o o he p oduc s, such as he b ick and mo o indus y
online (Mellahi and Johnson 2000). Ini ially, he i m’s e enues doubled in size e e y
4 mon hs, and e enues o he i s yea o ope a ions we e USD 5 million. (These e enues
a e compa able o a la ge Ba nes and Noble supe s o e.) By Augus 1996, book sales we e
g owing a 34% a mon h. Du ing his ime, he i m was able o a ac USD 8 million om
Kleine , Pe kins, Cau ield and Bye s, a en u e-capi al i m based in Silicon Valley ha has
unded well-known i ms such as Sun Mic osys ems and Ne scape. Th ough 31 Decembe
1996, Amazon had sales o mo e han USD 16 million o app oxima ely 180,000 cus ome
J. Risk Financial Manag. 2022,15, 414 3 o 25
accoun s in o e 100 coun ies. On 24 Ma ch 1997, he i m iled an S1 ( he egis a ion
s a emen ) applica ion wi h he SEC, and a ew weeks la e , i wen public. Sales o he six
mon hs ending in June 1997 we e USD 43 million (Ko ha 1998). Despi e mo ing upwa ds
and downwa ds, i s ounde Je Bezos applied h ee co e s a egies o e ol e cus ome s’
demand: he bes selec ion, he lowes p ices, and cheap and con ien deli e y (Lee 2015).
Amazon has become he online e aile wi h he la ges a ie y o goods in he wo ld
and he second la ges In e ne company in he wo ld. Amazon and i s endo s p o ide
cus ome s wi h millions o unique b and-new, e u bished, and second-hand goods, such as
books, mo ies, music and games, digi al downloads, elec onics and compu e s, household
ga dening p oduc s, oys, baby p oduc s, ood, clo hing, shoes and jewel y, heal h and
pe sonal ca e p oduc s, spo s and ou doo p oduc s, au omobiles, and indus ial p oduc s.
All hese enhancemen s we e possible due o con inuously engaging in he inno a ion and
expansion o Amazons’ logis ics in as uc u e, inc easing i s e iciency, and educing he
deli e y cos (Kim and Youn 2013). Amazon has shipped se e al billion packages e e y
yea and he deli e y cos is nea ly 10%–15% o i s ne sales (Hahn e al. 2018).
2.2. COVID-19 and Business Pe o mance
COVID-19 o ces go e nmen s o ake s ic ac ion, and many lockdowns and es ic-
ions in a ious communi ies ha e a nega i e impac on economic ac o s (Kucke z e al.
2020). Du ing he COVID-19 pandemic, as he esul s o dis ac ion and mo emen es ic-
ion, 64% o companies expe ienced a sho age o aw ma e ials, abou 66% o companies
aced he p oblem o inished-goods deli e y, and a ound 35% o companies saugh o
di e si y hei ma ke ing channels and sales in o online wo ldwide ones (Syai ullah e al.
2021). In con as , while COVID-19 occu s, companies’ pe o mance and complexi y a e
de e mined by company size, indeb edness, p o i abili y, in e na ionaliza ion, numbe o
employees, age, and le e age (Pe ei a e al. 2021). Likewise, Wanasida e al. (2021) explo e
how o ganiza ional pe o mance is in luenced by business analysis capabili ies, in o ma-
ion and inno a ion quali y, and o ganiza ional agili y du ing he COVID-19 pandemic.
Addi ionally, while he wo ld is su e ing om COVID-19, en ep eneu ial o ien a ion and
ma ke ing abili y a ec s o ganiza ional pe o mance (Ch is ian e al. 2021). Fu he mo e,
he e ec o he COVID-19 pandemic and he compe i i e business en i onmen has a
signi ican nega i e in luence on a company’s inancial pe o mance, bu such in luence
could be mi iga ed by digi al ma ke ing. The e o e, e-op imiza ion o digi al ma ke ing
would be an essen ial ool o imp o e business pe o mance du ing and a e he pandemic
(Gian a i e al. 2022).
Based on he exis ing backg ound and on an Amazon case s udy, his esea ch aims o
sol e he ollowing esea ch ques ions:
•How did Amazon pe o m du ing he COVID-19 pandemic?
•
Does he COVID-19 pandemic ha e any in luence on Amazon’s inancial pe o mance?
3. Analy ical F amewo k
In his s udy, we apply he case s udy o Amazon. As such, we analyze he p o i abili y,
e u n o equi y, e u n asse s in e es a e, s a emen o inancial pe o mance, s a emen
o inancial posi ion, and cash low s a emen . As he obus ness es , DuPon analysis
is employed and compa es Amazon’s inancial pe o mance wi h Walma as a p oxy
company.
3.1. P o i abili y Analysis
The esea ch and explo a ion o co po a e p o i abili y began in he ea ly 20 h cen u y.
Wang e al. (2021) explo es ha Wole (1928) i s p oposed he concep o c edi index
in his “Resea ch on C edi Ba ome e ”, Addi ionally aking he e u n on ne asse s, ne
sales ma gin, e u n on ne wo h, and o he indica o s as he co e indica o s o e alua e
co po a e p o i abili y. Higgins (1998) pu s o wa d he iewpoin o sus ainable g ow h
o en e p ises and belie es ha he p o i abili y o en e p ises can be discussed om he
J. Risk Financial Manag. 2022,15, 414 4 o 25
pe spec i e o inancial managemen and ha he esou ce alloca ion o en e p ises can be
con olled. A e en e ing he 21s cen u y, schola s con inue o s udy p o i abili y. A e
analyzing he p o i abili y o 1009 companies, Deloo (2003) belie es ha he p o i abili y
o a company is highly co ela ed wi h he le el o ope a ion. I s p o i abili y is di ec ly
p opo ional o he u no e speed o co po a e asse s. Kasozi (2018) concluded h ough
esea ch on e ail companies ha co po a e capi al s uc u e is one o he ac o s.
Wi h he deepening o p o i abili y esea ch, mo e and mo e schola s pay a en ion o
he esea ch o p o i models. Finch (1999) poin ed ou in hei esea ch ha mul iple p o i
ac o s o m a company’s p o i model acco ding o di e en combina ions. I companies
wan o imp o e hei own p o i abili y, hey mus scien i ically combine p o i abili y
elemen s. Mag e a (2003) p oposed ha a scien i ic p o i model con ains many elemen s,
such as p o i poin s, p o i sou ces, sha eholde alue, cash low, e c. Pe e McNama a
e al. (2013) used quan i a i e analysis esea ch me hods o conduc an in-dep h analysis
o he ela ionship be ween inancial indica o s and p o i models and concluded ha he
p o i abili y o a company will decline o a ce ain ex en du ing he p ocess o changing
he p o i model.
3.2. DuPon Analysis
As ea ly as he beginning o he las cen u y, he concep o inancial analysis appea ed
in he Uni ed S a es. La e , wi h he inc ease in p oduc i i y, i was g adually disco e ed
ha a single indica o was no comp ehensi e enough o e alua ion. The e o e, ela ed
schola s explo ed comp ehensi e inancial analysis me hods o scien i ically e alua e
company pe o mance, and he DuPon inancial analysis sys em came in o being. In 1919,
Ame ican DuPon manage s Pie eu Pon and Donaldson B own pu o wa d he DuPon
analysis me hod, which comp ehensi ely uses mul iple indica o s o e alua e and measu e
he p o i abili y o en e p ises. When he DuPon analysis sys em esea ched he e u n
on ne asse indexes, h ee indica o s we e ob ained h ough subdi ision, namely, he ne
sales p o i a e x o al asse u no e a e x equi y mul iplie . The esea ch is ca ied ou
in a hie a chical manne . The h ee indica o s, espec i ely, ep esen he company’s sales
abili y, ope a ing abili y, and deb sol ency. The comp ehensi e applica ion o he h ee
indica o s can accu a ely desc ibe he company’s pe o mance. Since hen, he DuPon
model has been ex ended o o he ields, such as he ield o equi y e u n analysis, and has
played an impo an ole.
Soliman (2008) ound ha he DuPon analysis is he mos common way o analyze
p o i abili y h ough co po a e inancial s a emen s, especially in analyzing i s p o i abili y
and sol ency. Some imes, i may also be used in isk analysis. I decomposes he e u n
on ne asse s in o wo si ua ions: p o i and asse u no e . The au ho s ound ha when
applying hese wo kinds o accoun ing index analyses, i is concluded ha wo di e en
inancial s uc u es in he p oduc ion and ope a ion o en e p ises ha e di e en inancial
and accoun ing p ope ies. In his way, he indica o s in he DuPon analysis sys em can
be ob ained, which can exp ess he changing laws o he p oduc ion and ope a ion o
he en e p ise. As such, a e in-dep h esea ch, he business esul s o a company can
be e lec ed by whe he he company can ealize i s own alue. Income is an impo an
ounda ion o ealizing co po a e alue. The DuPon analysis can e ec i ely s udy he
ela ionship be ween sha eholde income and business de ails. The e o e, he e ec i e use
o Vasile and Radu (2014) applied Dupon analysis and demons a ed he esul s as inc eas-
ing he a e o e u n; hus, he company’s own p o i abili y can be imp o ed. Ahamed
(2020) poin ed ou ha DuPon ’s inancial analysis sys em can play an impo an ole in
analyzing co po a e p o i abili y. The DuPon analysis me hod can compa e and analyze
he his o ical da a and cu en da a o a company, and i can also make e ec i e p edic ions
o he company’s ope a ing condi ions o a pe iod in he u u e, which is conduci e o
he company’s adop ion o a ge ed measu es o imp o e i s p o i abili y. W igh (2017)
belie es ha he DuPon analysis me hod is a ela i ely unique me hod, and he co e o he
DuPon analysis me hod is managemen decision making. A e eaching s uden s o use

J. Risk Financial Manag. 2022,15, 414 5 o 25
hese me hods, i can enable s uden s o ha e a deepe unde s anding o inancing, in es -
men , and business decision making. Wanasida e al. (2021) poin ed ou ha a company’s
sus ainable de elopmen capabili y can be e lec ed by he inc ease in sha eholde income.
A he same ime, o a company’s con inuous ope a ion, cash balance is e y impo an .
Be nha d e al. (2018) poin ed ou ha i is di icul o he cu en common e alua ion
sys em o e alua e he inancial and ope a ing condi ions o mode n en e p ises accu a ely
and e ec i ely. The e o e, cash low should be included in he inancial indica o sys em.
This me hod can be used o a ge he en e p ise comp ehensi ely and sys ema ically. An
e alua ion o he inancial si ua ion is conduci e o ob aining accu a e and objec i e esul s.
Manjuna ha and Gujja (2018) conduc ed a s udy on h ee companies in he in o ma ion
ield. They chose wo indica o s: e u n on sales and e u n on asse s when e alua ing
e u n on equi y and compa ed and analyzed he di e ences be ween he h ee sample
companies. Ma ke in es o s accu a ely judge he company’s si ua ion and make scien i ic
and easonable decisions. Hao and Choi (2019) used DuPon analysis o decompose he as-
se e u n a e in o asse u no e a e and p o i a e. A highe asse u no e a e indica es
he e ec i e use o asse s, while a highe p o i a e indica es an e ec i e cos s uc u e.
Th ough a su ey o se en Chinese online shopping companies, we ound ha companies
ha sell mul iple complex p oduc s ha e highe asse u no e a es han companies ha
sell a single special p oduc . Howe e , he p o i a e o a mul i-complex company is lowe
han ha o a single special company, and he e is no di e ence in he e u n on asse s o
he wo.
Mo e in e es ingly, a ious ea lie schola s applied DuPon Analysis as a “d illing-
down” app oach o analyze inancial pe o mance o a single company as case s udy
esea ch (e.g., Biogen Inc. was analyzed by W igh 2017; he Coca-Cola company was
explo ed by Ga dne e al. 2011; Apple Inc. was examined by La i e al. 2014; Jo danian
A ab comme cial bank was e alua ed by Almaza i 2012). The e o e, we analyzed Amazons’
inancial pe o mance wi h he applica ion o Dupon analysis as case s udy esea ch.
3.3. DuPon Analysis Sys em
The DuPon sys em is a inancial analysis me hod in en ed by DuPon in he Uni ed
S a es in p ac ice. The main analysis me hod is o decompose he co e indica o s o e u n
on ne asse s, and hen calcula e and o ganize he decomposed indica o s. In his way, a
mul i-le el analysis o he p o i abili y o he en e p ise can be ca ied ou om a mo e
sub le poin . The DuPon analysis sys em comp ehensi ely e lec s he p o i abili y o
he company’s p ocu emen , p oduc ion, sales, e c., and can also examine he company’s
managemen le el. S a ing om a co e indica o , i also analyzes he p o i abili y o he
company’s p oduc s, asse u no e , and inancial le e age. Re u n on ne asse s is he
op indica o in he sys em, which can di ec ly e lec he e u n on in es men , which is
he mos conce ned aspec o en e p ises and ela ed in es o s. Howe e , in addi ion o
knowing whe he he company makes money o no , he company o managemen wan s
o know why he company makes money, so he indica o s a e u he decomposed in o ne
asse in e es a e and equi y mul iplie . In his way, i he co po a e managemen wan s
o unde s and a ce ain aspec , hey can conduc a mo e speci ic and in-dep h analysis
by consul ing he sepa a ed da a. The ollowing Figu e 1is he logic diag am o he
DuPon sys em.
J. Risk Financial Manag. 2022,15, 414 6 o 25
J. Risk Financial Manag. 2022, 15, x FOR PEER REVIEW 6 o 27
Figu e 1. DuPon analysis logic diag am.
3.4. DuPon Analysis Sys em Index
3.4.1. Re u n on Equi y (ROE)
ROE is he mos impo an and comp ehensi e indica o in his analysis sys em,
which e lec s he abili y o an en e p ise o ob ain ne p o i h ough i s own capi al si u-
a ion. I can be ob ained acco ding o he a io o he o al ne p o i o he sha eholde s’
equi y o he en e p ise (Hickson e al. 2011). The size o his indica o can di ec ly e lec
he company’s o e all sales e enue le el, comp ehensi e p o i le el and inancial s a us.
This indica o is e y comp ehensi e and will play an impo an auxilia y ole o u u e
managemen o o mula e co po a e business s a egies and managemen models. The el-
e an o mula o he e u n on ne asse s is as ollows: e u n on ne asse s = ne sales
in e es a e x o al asse u no e a e x equi y mul iplie .
3.4.2. Ne Asse In e es Ra e (ROA)
This index is a mo e comp ehensi e index ob ained a e he decomposi ion o he
abo e-men ioned i s laye . I is closely ela ed o he wo indica o s o ne sales ma gin
and o al asse u no e . Th ough he e ical and ho izon al compa ison o ROA alues,
i is possible o analyze and e alua e a company’s de elopmen capabili ies and ope a ing
condi ions in he same indus y, and hen o ob ain an analysis o i s p o i abili y (Annisa
and Hamzah 2020). I is also he main e e ence da a o company manage s o judge
whe he he company can ca y ou deb managemen . The main calcula ion me hod o
ROA is o di ide he ne p o i by he o al a e age asse s.
3.4.3. Equi y Mul iplie (EM)
This indica o has a s ong co ela ion wi h he asse –liabili y a io. I can di ec ly
e lec he le el o liabili ies in he company’s daily ope a ions and he le el o liabili ies
ha can be assumed, and i is a conc e e mani es a ion o he le el o inancial le e age.
The equi y mul iplie shows he co po a e inancing s a us o co po a e deb s a us
(Lízalo á and Kozáko á 2013). The equi y mul iplie is a isk indica o . The highe he
alue o he equi y mul iplie , he mo e he company’s deb inancing asse s inc ease. The
highe he company’s inancial le e age, he g ea e he capi al isk o small and medium
Figu e 1. DuPon analysis logic diag am.
3.4. DuPon Analysis Sys em Index
3.4.1. Re u n on Equi y (ROE)
ROE is he mos impo an and comp ehensi e indica o in his analysis sys em, which
e lec s he abili y o an en e p ise o ob ain ne p o i h ough i s own capi al si ua ion.
I can be ob ained acco ding o he a io o he o al ne p o i o he sha eholde s’ equi y
o he en e p ise (Hickson e al. 2011). The size o his indica o can di ec ly e lec he
company’s o e all sales e enue le el, comp ehensi e p o i le el and inancial s a us.
This indica o is e y comp ehensi e and will play an impo an auxilia y ole o u u e
managemen o o mula e co po a e business s a egies and managemen models. The
ele an o mula o he e u n on ne asse s is as ollows: e u n on ne asse s = ne sales
in e es a e x o al asse u no e a e x equi y mul iplie .
3.4.2. Ne Asse In e es Ra e (ROA)
This index is a mo e comp ehensi e index ob ained a e he decomposi ion o he
abo e-men ioned i s laye . I is closely ela ed o he wo indica o s o ne sales ma gin
and o al asse u no e . Th ough he e ical and ho izon al compa ison o ROA alues, i
is possible o analyze and e alua e a company’s de elopmen capabili ies and ope a ing
condi ions in he same indus y, and hen o ob ain an analysis o i s p o i abili y (Annisa
and Hamzah 2020). I is also he main e e ence da a o company manage s o judge
whe he he company can ca y ou deb managemen . The main calcula ion me hod o
ROA is o di ide he ne p o i by he o al a e age asse s.
3.4.3. Equi y Mul iplie (EM)
This indica o has a s ong co ela ion wi h he asse –liabili y a io. I can di ec ly
e lec he le el o liabili ies in he company’s daily ope a ions and he le el o liabili ies
ha can be assumed, and i is a conc e e mani es a ion o he le el o inancial le e age. The
equi y mul iplie shows he co po a e inancing s a us o co po a e deb s a us (Lízalo á
and Kozáko á2013). The equi y mul iplie is a isk indica o . The highe he alue
o he equi y mul iplie , he mo e he company’s deb inancing asse s inc ease. The
highe he company’s inancial le e age, he g ea e he capi al isk o small and medium
sha eholde s and c edi o s. A lowe equi y mul iplie indica es ha he de elopmen o
he en e p ise is ela i ely mo e s able, which is mo e bene icial o he de elopmen o
he en e p ise. Howe e , he alue is no as low as possible. A oo low equi y mul iplie
J. Risk Financial Manag. 2022,15, 414 7 o 25
indica es ha he company has a poo g asp o capi al u iliza ion e iciency and needs o
imp o e i s capi al managemen capabili ies. This indica o can be ob ained by di iding
he o al a e age asse s.
3.5. Amazon’s S a emen o Financial Posi ions Analysis
The s a emen o inancial posi ion is a s a emen ha e lec s he asse s, liabili ies, and
owne s’ equi y o an en e p ise in a gi en pe iod. The pu pose o he s a emen o inancial
posi ion analysis is o unde s and he inancial si ua ion o en e p ises and he quali y
o accoun ing in o ma ion and make a p ope e alua ion on he sol ency and inancial
lexibili y o en e p ises. The e o e, he balance shee is an impo an ca ie o use s
o accoun ing in o ma ion o ob ain accoun ing in o ma ion. The pu pose o he balance
shee analysis is o unde s and he inancial si ua ion o he en e p ise and he quali y
o he accoun ing in o ma ion and, acco dingly, o make an app op ia e e alua ion on
he sol ency and inancial esilience o he en e p ise (Ramlall 2018). Amazon’s annual
s a emen o inancial posi ion om 2016 o 2020 a e shown below in Table 1.
Table 1. Amazon’s annual s a emen o inancial posi ion om 2016–2020.
31 Decembe
2016
31 Decembe
2017
31 Decembe
2018
31 Decembe
2019
31 Decembe
2020
Cu en Asse s
Cash and Cash Equi alen 19,334 20,522 31,750 36,092 42,122
Ma ke able Secu i ies 6647 10,464 9500 18,929 42,274
In en o ies 11,461 16,047 17,174 20,497 23,795
Accoun s Recei ables 8339 13,164 16,677 20,816 24,542
To al Cu en Asse s 45,781 60,197 75,101 96,334 132,733
P ope y and Equipmen 29,114 48,866 61,797 72,705 113,114
Ope a ing Leases 25,141 37,553
Goodwill 3748 13,350 14,548 14,754 15,017
O he Asse s 4723 8897 11,202 16,314 22,778
To al Asse s 83,402 131,310 162,648 225,248 321,195
Cu en Liabili ies
Accoun s Payables 25,309 34,616 38,192 47,183 72,539
Acc ued Expenses 13,739 18,170 23,663 32,439 44,138
Unea ned Re enue 4768 5097 6536 8190 9708
To al Cu en Liabili ies 43,816 57,883 68,391 87,812 126,385
Long- e m Lease Liabili ies 9650 39,791 52,573
Long- e m Deb 7694 24,743 23,495 23,414 31,816
O he Long- e m Liabili ies 12,607 20,975 17,563 12,171 17,017
T easu y s ock a cos (1837) (1837) (1837) (1837) (1837)
Addi ional Paid-in Capi al 17,186 21,389 26,791 33,658 42,865
Accumula ed o he comp ehensi e loss (985) (484) (1035) (986) (180)
Re ained Ea nings 4916 8636 19,625 31,220 52,551
To al Sha eholde ’s Equi y 19,825 27,709 43,549 62,060 93,404
To al Liabili ies and Sha eholde s’ Equi y 83,402 131,310 162,648 225,248 321,195
F om he abo e Table 1, he ollowing can be analyzed:
3.5.1. Analysis on he Changes o Main I ems o Asse s
F om he Table 1, balance shee o asse s and liabili ies o Amazon, we can see ha
he scale o asse s o Amazon is cons an ly expanding, and he o al asse s a e inc easing
apidly. Amazon’s o al asse s om 2016 o 2020 a e, espec i ely, USD 83,402 million, USD
131,310 million, USD 162,648 million, USD 225,248 million, and USD 321195 million. The
o al inc ease in asse s o e he i e yea s is 237,793, he yea -on-yea g ow h pe cen ages
a e, espec i ely, 57.4%, 23.9%, 38.5%, and 42.6%. In gene al, he g ow h a e o Amazon’s
asse s is e y la ge. Al hough he g ow h a e declined in he 2017–18 pe iod, Amazon
s ill main ains a e y high g ow h a e. Meanwhile, i can be seen ha he ou b eak o
COVID-19 in 2019 does no seem o ha e oo much impac on he g ow h o Amazon’s o al
asse s, nei he posi i e no nega i e. I is wo h no ing ha Amazon’s cu en asse s do
no show a simila a e o g ow h o i s o al asse s, he a io o cu en asse s om 2016
J. Risk Financial Manag. 2022,15, 414 8 o 25
o 2020 a e, espec i ely, 54.9%, 45.8%, 46.17%, 32.3%, and 35.3%, which has expe ienced
a d ama ic decline in he pas i e yea s. By analyzing he asse s uc u e o Amazon in
ecen yea s, we can see ha cu en asse s as a sha e o o al asse s ha e allen almos
below he no mal a io ange; he liquidi y o Amazon is g ea ly weakened, and he isk o
asse s becomes g ea e . The decline in liquidi y o he company is un a o able o enhancing
he sol ency o he en e p ise and mee ing he demand o he liquidi y o he asse .
Amazon’s cash and cash equi alen s ha e been inc easing o hese yea s, especially
in he 2017–18 pe iod, inc easing by 54.7%. This shows ha Amazon has abundan capi al
and s ong sho - e m sol ency, bu i can also be ela ed o he expansion o en e p ise
scale. A he same ime, oo much money is no necessa ily a good hing, i keeps mo e
money han daily needs and inc eases he oppo uni y cos and capi al cos . Amazon
should analyze he easons o he inc ease in cash unds in ecen yea s and judge whe he
he cash unds a e app op ia e o no acco ding o he scale o asse s, business income,
indus y cha ac e is ics, and und- aising abili y o en e p ises. Amazon’s o al in en o y
has also con inued o g ow in ecen yea s. As an impo an p ac ical asse o en e p ises,
wi h nume ous species and huge quan i y, in en o y is pa icula ly sensi i e o he changes
in p oduc ion and business ac i i ies o en e p ises, so i is necessa y o keep he balance
be ween he quan i y o in en o y and business ac i i ies o en e p ises. I he e is oo li le
in en o y, i may lead o he cos o s opping p oduc ion o sho age o goods, which will
a ec he no mal p oduc ion and ope a ion o en e p ises; i he e is oo much in en o y,
i will lead o ising o de ing cos , s o age cos , oppo uni y cos , and managemen cos .
E en he excessi e inc ease in he in en o y quan i y will cause cash p ecipi a ion, which
will a ec he capi al u no e a e o en e p ises and make i di icul o en e p ises o
con inue hei business. Acco ding o he g ow h deg ee o Amazon’s o al asse s, he
au ho s hink ha he g ow h a e o Amazon’s in en o y amoun in o he yea s, excep o
he 2016–17 pe iod, is easonable, as he size o he company expands, i is ine i able ha
he amoun o in en o y will inc ease. The au ho s would ha e expec ed he o line sales
indus y o be hi ha d by he global lockdown due o he COVID-19 pandemic, u he
inc easing he demand o online e-comme ce shopping, bu his is no he case based on
Amazon’s in en o y amoun , which did no inc ease signi ican ly in 2019 and 2020.
3.5.2. Analysis on he Changes o Liabili ies and Owne s’ Equi y
Accoun s payable inc eased yea by yea , especially in 2020, wi h he amoun o
accoun s payable eaching 72,539, an inc ease o 53.8 pe cen yea -on-yea , equal o he
sum o accoun s payable in 2017 and 2018. The inc ease in accoun s payable shows ha
he en e p ise has a la ge scale o p oduc ion and ope a ion and has a la ge amoun o
ma e ials. The accoun s payable is o med due o he ime inconsis ency be ween he
acquisi ion o ma e ials and he paymen o goods, which is exac ly he esul o he su ge
in online o de s o Amazon caused by he COVID-19 pandemic. Meanwhile, Accoun s
payable is gene ally conside ed as a educ ion in en e p ise inancing unds, which is
conside ed as he mos ideal way o occupy he o he pa y’s unds ee o cha ge. In ecen
yea s, Amazon’s accoun s payable has inc eased yea by yea , which shows ha Amazon
is mo e capable o occupying he o he pa y’s unds ee o cha ge, g ea ly sa ing i s
own capi al cos . Due o he inc easing scale o Amazon and he inc easing demand o
comme cial goods, supplie s a e willing o sell goods on c edi o Amazon and mode a ely
ex end hei collec ion pe iod o bene i Amazon. I he Amazon wan s o achie e his
e ec , hey mus ensu e ha hei own s eng h is as s ong as Amazon’s, so ha supplie s
a e willing o p o ide hem wi h sales emo al se ices, and he paymen pe iod is longe
han ha o o he en e p ises.
The cu en liabili ies inc ease apidly. F om 2016 o 2020, he amoun o cu en
liabili ies ipled, inc easing om 43,816 o 126,385. The yea wi h he as es g ow h is om
2019 o 2020, inc easing by 43.9 pe cen . Compa ed wi h cu en liabili ies, non-cu en
liabili ies show a much sha pe g ow h in hese yea s. To al non-cu en liabili ies in 2020
a e i e imes he amoun in 2016, om 20,301 o 101,406, he bigges eason being ha
J. Risk Financial Manag. 2022,15, 414 15 o 25
J. Risk Financial Manag. 2022, 15, x FOR PEER REVIEW 16 o 27
Figu e 4. Amazon’s indica o line cha .
The a e o e u n on equi y is an index o measu e he abili y o en e p ises o make
p o i s by using asse s. The a e o e u n on equi y has ully conside ed he in luence o
inancing me hods on he p o i abili y o en e p ises. The e o e, he p o i abili y e lec ed
by i is he esul o he comp ehensi e ac ion o many ac o s, such as en e p ise manage-
men abili y, inancial decision making, and inancing me hods (Eas o and Monahan
2016). To a la ge ex en , in es o s in en e p ises judge whe he o in es o ans e sha es
acco ding o he ROE index, inspec ion o he pe o mance o manage s, and he di idend
dis ibu ion policy. This index is also e y impo an o he manage s o he company.
4.1.2. Two-Fac o Analysis o Re u n on Equi y (ROE)
ROE = Ne asse in e es a e (ROA) × Equi y mul iplie (EM) (1)
The p oduc o ne in e es a e o asse s and equi y mul iplie can be ega ded as he
a e o e u n on sha eholde s’ equi y. The abili y o a company’s o al asse s o make
p o i s is e lec ed by he ne in e es a e o asse s and also e lec s he u iliza ion e ec o
o al asse s. The highe he index o he ne in e es a e o asse s, he be e he u iliza ion
e ec o o al asse s, he be e he managemen abili y, and he highe he ope a ing le el
o he company (Dai and Picco i 2020). The au ho s use ac o analysis o calcula e he
in luence o DuPon model indica o s on he e u n on sha eholde s’ equi y in 2016, 2017,
2018, 2019, and 2020, espec i ely.
2016:
ROE = 2.84% (ROA) × 4.325 (EM) = 12.29% ①
Replace ROA: ROE = 2.31% (ROA 2017) × 4.325 (EM 2016) = 9.99% ②
Replace EM: ROE = 2.31% (ROA 2017) × 4.739 (EM 2017) = 10.95% ③
The impac o he dec ease in ROA on he e u n on ROE in 2017 is as ollows: ② −
① = 9.99% − 12.29% = −2.3%
Figu e 4. Amazon’s indica o line cha .
The a e o e u n on equi y is an index o measu e he abili y o en e p ises o make
p o i s by using asse s. The a e o e u n on equi y has ully conside ed he in luence o
inancing me hods on he p o i abili y o en e p ises. The e o e, he p o i abili y e lec ed by
i is he esul o he comp ehensi e ac ion o many ac o s, such as en e p ise managemen
abili y, inancial decision making, and inancing me hods (Eas o and Monahan 2016). To a
la ge ex en , in es o s in en e p ises judge whe he o in es o ans e sha es acco ding o
he ROE index, inspec ion o he pe o mance o manage s, and he di idend dis ibu ion
policy. This index is also e y impo an o he manage s o he company.
4.1.2. Two-Fac o Analysis o Re u n on Equi y (ROE)
ROE = Ne asse in e es a e (ROA) ×Equi y mul iplie (EM) (1)
The p oduc o ne in e es a e o asse s and equi y mul iplie can be ega ded as
he a e o e u n on sha eholde s’ equi y. The abili y o a company’s o al asse s o make
p o i s is e lec ed by he ne in e es a e o asse s and also e lec s he u iliza ion e ec o
o al asse s. The highe he index o he ne in e es a e o asse s, he be e he u iliza ion
e ec o o al asse s, he be e he managemen abili y, and he highe he ope a ing le el
o he company (Dai and Picco i 2020). The au ho s use ac o analysis o calcula e he
in luence o DuPon model indica o s on he e u n on sha eholde s’ equi y in 2016, 2017,
2018, 2019, and 2020, espec i ely.
2016:
ROE = 2.84% (ROA) ×4.325 (EM) = 12.29% 1

Replace ROA: ROE = 2.31% (ROA 2017) ×4.325 (EM 2016) = 9.99% 2

Replace EM: ROE = 2.31% (ROA 2017) ×4.739 (EM 2017) = 10.95% 3

The impac o he dec ease in ROA on he e u n on ROE in 2017 is as ollows:
2
−1
= 9.99% −12.29% = −2.3%
The impac o he inc ease in EM on he e u n on ROE in 2017 is as ollows:
3
−2
= 10.95% −9.99% = 0.96%
2017:

J. Risk Financial Manag. 2022,15, 414 16 o 25
ROE = 2.31% (ROA) ×4.739 (EM) = 10.94% 1

Replace ROA: ROE = 6.19% (ROA 2018) ×4.739 (EM 2017) = 29.33% 2

Replace EM: ROE = 6.19%(ROA 2018) ×3.735 (EM 2018) = 23.12% 3

The impac o he inc ease in ROA on he e u n on ROE in 2018 is as ollows:
2
−1
= 29.33% −10.94% = 18.39%
The impac o he dec ease in EM on he e u n on ROE in 2018 is as ollows:
3
−2
= 23.12% −29.33% = −6.21%
2018:
ROE = 6.19% (ROA) ×3.735 (EM) = 23.13% 1

Replace ROA: ROE = 5.14% (ROA 2019) ×3.735 (EM 2018) = 19.20% 2

Replace EM: ROE = 5.14% (ROA 2019) ×3.63 (EM 2019) = 18.66% 3

The impac o he dec ease in ROA on he e u n on ROE in 2019 is as ollows:
2
−1
= 19.20% −23.13% = −3.93%
The impac o he dec ease in EM on he e u n on ROE in 2019 is as ollows:
3
−2
= 18.66% −19.20% = −0.54%
2019:
ROE = 5.14% (ROA) ×3.63 (EM) = 18.67% 1

Replace ROA: ROE = 6.64% (ROA 2020) ×3.63 (EM 2019) = 24.10% 2

Replace EM: ROE = 6.64% (ROA 2020) ×4.439 (EM 2020) = 29.48% 3

The impac o he inc ease in ROA on he e u n on ROE in 2020 is as ollows:
2
−1
= 24.10% −18.67% = 5.43%
The impac o he inc ease in EM on he e u n on ROE in 2020 is as ollows:
3
−2
= 29.48% −24.1% = 5.38%
F om he abo e calcula ions, i can be seen ha , on he whole, ROA has shown an
upwa d end and EM has shown a downwa d end in he las i e yea s, and he changing
ends o hese wo ac o s also de e mine ha ROE has shown an upwa d end despi e
sligh luc ua ions in hese i e yea s. The ise in ROA o Amazon is closely ela ed o
he company’s igo ous de elopmen . The company’s asse u iliza ion e ec is becoming
be e and be e , and i has achie ed good esul s in inc easing e enue and sa ing capi al
use. As o EM, which e e s o he mul iple o o al asse s equal o sha eholde s’ equi y,
i can e alua e he deb le el o an en e p ise. The e o e, EM is closely ela ed o he
asse –liabili y a io index, which is why he asse –liabili y a io appea s in he abo e able.
I is no di icul o see ha in he pas i e yea s, he asse –liabili y a io o Amazon has
been dec easing, and he EM index has also been dec easing, which shows ha he deb
le el o Amazon has been dec easing, and he p o ec ion deg ee o c edi o s’ igh s and
in e es s has been inc easing. I is wo h no ing he change end in ROA in 2019 and 2020;
ROA in 2019 dec eased by 17% yea -on-yea .
Acco ding o he epo da a, he au ho s ound ha his was due o he insigni ican
inc ease in ne p o i o Amazon in 2019 and he subs an ial inc ease in o al asse s. As
o he s agna ion in ne p o i , acco ding o he au ho s’ analysis in 2019, he company
o ced all selle s o p o ide VAT in oices o he pu chase p ice, because in 2019, Amazon’s
ax payable inc eased signi ican ly by mo e han 100%, which led o a dec ease in p o i s.
On he o he hand, in 2019, he company s a ed ope a ing business leasing and pu chased
a la ge numbe o co po a e bonds, which led o he inc ease in o al asse s. As o 2020, he
ROA alue g ea ly inc eased, wi h a yea -on-yea inc ease o 29%. The au ho s specula e
ha his is caused by he impac o he COVID-19 pandemic. Al hough he company
bough mo e co po a e bonds and ixed asse s in 2020, he g ow h a e o o al asse s is s ill
a lowe han ha o ne p o i . In 2020, Amazon’s ne p o i almos doubled. The main
eason is he su ge in online sales due o he pandemic. Al hough he uni cos and uni
income may no change much, he su ge in numbe will also inc ease he o al p o i .
4.1.3. Th ee-Fac o Analysis o Re u n on Equi y (ROE)
Acco ding o he h ee- ac o DuPon model, he e a e h ee ac o s ha de e mine
he e u n a e o sha eholde s’ equi y: equi y mul iplie , ne sales in e es a e, and o al
J. Risk Financial Manag. 2022,15, 414 17 o 25
asse s u no e a e. The a ios o equi y mul iplie , ne sales in e es a e, and o al asse s
u no e a e, espec i ely, e lec he deb a io, p o i abili y a io, and ope a ional capaci y
a io o en e p ises. A e his decomposi ion, we can conc e ize he easons o he ise
and all o he comp ehensi e index o he a e o e u n on sha eholde s’ equi y and
quan i a i ely explain he p oblems exis ing in en e p ise managemen . We can se he
o mula as ollows:
ROE = To al asse u no e (TAT) ×Ne p o i ma gin on sales (NPMS) ×Equi y
mul iplie (EM) (2)
Fac o analysis me hod is used o calcula e he impac o DuPon model indica o s on
he ROE in 2016, 2017, 2018, 2019, and 2020.
2016:
ROE = 1.74% (NPMS 2016) ×163.05% (TAT 2016) ×4.325 (EM 2016) = 12.29% 1

Replace NPMS: ROE = 1.70% (NPMS 2017)
×
163.05% (TAT 2016)
×
4.325 (EM 2016) =
11.99% 2

Replace TAT: ROE = 1.70% (NPMS 2017)
×
135.46% (TAT 2017)
×
4.325 (EM 2016) =
9.96% 3

Replace EM: ROE = 1.70% (NPMS 2017)
×
135.46% (TAT 2017)
×
4.739 (EM 2017) =
10.91% 4

The impac o he dec ease in NPMS on he e u n on ROE in 2017 is as ollows:
2
−1
= 11.99% −12.29% = −0.3%
The impac o he dec ease in TAT on he e u n on ROE in 2017 is as ollows:
3
−2
= 9.96% −11.99% = −2.03%
The impac o he inc ease in EM on he e u n on ROE in 2017 is as ollows:
4
−3
= 10.91% −9.96% = 0.95%
2017:
ROE = 1.70% (NPMS 2017) ×135.46% (TAT 2017) ×4.739 (EM 2017) = 10.94% 1

Replace NPMS: ROE = 4.32% (NPMS 2018)
×
135.46% (TAT 2017)
×
4.739 (EM 2017) =
27.73% 2

Replace TAT: ROE = 4.32% (NPMS 2018)
×
143.18% (TAT 2018)
×
4.739 (EM 2017) =
29.31% 3

Replace EM: ROE = 4.32% (NPMS 2018)
×
143.18% (TAT 2018)
×
3.735 (EM 2018) =
23.10% 4

The impac o he inc ease in NPMS on he e u n on ROE in 2018 is as ollows:
2
−1
= 27.73% −10.94% = 16.36%
The impac o he inc ease in TAT on he e u n on ROE in 2018 is as ollows:
3
−2
= 29.31% −27.73% = 1.58%
The impac o he dec ease in EM on he e u n on ROE in 2018 is as ollows:
4
−3
= 23.10% −29.31% = −6.21%
2018:
ROE = 4.32% (NPMS 2018) ×143.18% (TAT 2018) ×3.735 (EM 2018) = 23.13% 1

34 Replace NPMS: ROE = 4.13% (NPMS 2019)
×
143.18% (TAT 2018)
×
3.735 (EM
2018) = 22.09% 2

Replace TAT: ROE = 4.13% (NPMS 2019)
×
124.54% (TAT 2019)
×
3.735 (EM 2018) =
19.21% 3

Replace EM: ROE = 4.13% (NPMS 2019)
×
124.54% (TAT 2019)
×
3.630 (EM 2019) =
18.67% 4

The impac o he dec ease in NPMS on he e u n on ROE in 2019 is as ollows:
2
−1
= 22.09% −23.13% = −1.04%
The impac o he dec ease in TAT on he e u n on ROE in 2019 is as ollows:
3
−2
= 19.21% −22.09% = −2.88%
The impac o he dec ease in EM on he e u n on ROE in 2019 is as ollows:
4
−3
= 18.67% −19.21% = −0.54%
2019:
J. Risk Financial Manag. 2022,15, 414 18 o 25
ROE = 4.13% (NPMS 2019) ×124.54% (TAT 2019) ×3.630 (EM 2019) = 18.67% 1

Replace NPMS: ROE = 5.52% (NPMS 2020)
×
124.54% (TAT 2019)
×
3.630 (EM 2019) =
24.95% 2

Replace TAT: ROE = 5.52% (NPMS 2020)
×
120.20% (TAT 2020)
×
3.630 (EM 2019) =
24.09% 3

Replace EM: ROE = 5.52% (NPMS 2020)
×
120.20% (TAT 2020)
×
3.439 (EM 2020) =
22.82% 4

The impac o he inc ease in NPMS on he e u n on ROE in 2020 is as ollows:
2
−1
= 24.95% −18.67% = 6.28%
The impac o he dec ease in TAT on he e u n on ROE in 2020 is as ollows:
3
−2
= 24.09% −24.95% = −0.86%
The impac o he dec ease in EM on he e u n on ROE in 2019 is as ollows:
4
−3
= 22.82% −24.09% = −1.27%
The changes in EM we e analyzed o some ex en abo e, and his pa ocuses on
analyzing he changes in TOT and NPMS. On he whole, TOT has basically main ained a
downwa d end in he pas i e yea s, wi h a huge decline ange, and NPMS has shown a
ising end. The u no e a io o o al asse s is he a io o ne sales e enue o a e age
o al asse s o an en e p ise in a ce ain pe iod, and i is an index o measu e he a io
be ween he scale o asse in es men and sales le el; he highe he u no e a e o asse s,
he s onge he sales abili y o en e p ises and he be e he bene i o asse in es men
(Pa in e al. 2020). Wi hin i e yea s, Amazon’s o al asse u no e a io dec eased by 40%,
which is a huge amoun , bu he au ho s do no hink ha his ep esen s a decline in he
company’s sales capaci y. On he con a y, we can see om he abo e ha he company’s
sales e enue has main ained a e y high g ow h a e e e y yea , bu Amazon’s asse
pu chase speed is eally oo as , and a la ge numbe o ixed asse s a e pu chased e e y
yea , especially in 2020; because o COVID-19, he amoun o ixed asse s bough doubled
om he amoun in 2019, which shows ha Amazon ac i ely de elops he company’s basic
business and ac i ely expands globally, ha is he eason why TOT has keep going down
in he pas 5 yea s. As o EPMS, i e lec s he ne p o i o each dolla o sales e enue and
indica es he income le el o sales e enue. The ollowing Figu e 5can show he change
end o Amazon’s ne sales and ope a ing expenses:
The able abo e shows he annual g ow h a e o Amazon’s sales e enue and sales
cos . Acco ding o he abo e EPMS da a, he index suddenly inc eased by 2.62% in he
2017–2018 pe iod, wi h a yea -on-yea inc ease o 154.1%, and hen i en e ed a loa ing
pe iod in he ollowing yea s. I can also be seen om he cha ha he g ow h a e o sales
e enue om 2017 o 2018 is much highe han he g ow h a e o sales expenses, which
u he leads o he sha p inc ease in ope a ing income and ne income, which has ipled
compa ed wi h 2016. F Mo eo e , such a huge di e ence in income and expenses only
las ed o one yea and e u ned o he no mal le el in he 2018–19 pe iod. Un o una ely,
he au ho s ha e no been able o ind he speci ic eason o his so a . Acco ding o
he da a on ope a ing expenses in he company’s 2018 inancial s a emen s, he e is no
signi ican change in any o hem, bu he o e all inc ease end has declined, which led o
he dec ease in he o al ope a ing expenses.
The Figu e 6demons a es he annual g ow h o Amazon’s p oduc and se ice sales,
whe e he p oduc sales include p oduc sales and ela ed shipping ees, including digi al
media con en . Howe e , he se ice sales comp ehensi ely co e ed he hi d-pa y selle s’
ees, AWAS sales, ad e ising se ices, Amazon P ime membe ship ees, and ce ain digi al
con en subsc ip ions. Acco ding o he igu e, No h Ame ican sales e enue inc eased by
70.38% in he 2016–2020 pe iod. Likewise, in e na ional segmen sales e enue jumped up
by 137.39%, and AWS e enue sha ply inc eased by 271% om 2016 o 2020.
J. Risk Financial Manag. 2022,15, 414 19 o 25
J. Risk Financial Manag. 2022, 15, x FOR PEER REVIEW 20 o 27
Figu e 5. Amazon’s ne sales % ope a ing sales change end line.
The able abo e shows he annual g ow h a e o Amazon’s sales e enue and sales
cos . Acco ding o he abo e EPMS da a, he index suddenly inc eased by 2.62% in he
2017–2018 pe iod, wi h a yea -on-yea inc ease o 154.1%, and hen i en e ed a loa ing
pe iod in he ollowing yea s. I can also be seen om he cha ha he g ow h a e o
sales e enue om 2017 o 2018 is much highe han he g ow h a e o sales expenses,
which u he leads o he sha p inc ease in ope a ing income and ne income, which has
ipled compa ed wi h 2016. F Mo eo e , such a huge di e ence in income and expenses
only las ed o one yea and e u ned o he no mal le el in he 2018–19 pe iod. Un o u-
na ely, he au ho s ha e no been able o ind he speci ic eason o his so a . Acco ding
o he da a on ope a ing expenses in he company’s 2018 inancial s a emen s, he e is no
signi ican change in any o hem, bu he o e all inc ease end has declined, which led
o he dec ease in he o al ope a ing expenses.
The Figu e 6 demons a es he annual g ow h o Amazon’s p oduc and se ice sales,
whe e he p oduc sales include p oduc sales and ela ed shipping ees, including digi al
media con en . Howe e , he se ice sales comp ehensi ely co e ed he hi d-pa y
selle s’ ees, AWAS sales, ad e ising se ices, Amazon P ime membe ship ees, and ce -
ain digi al con en subsc ip ions. Acco ding o he igu e, No h Ame ican sales e enue
inc eased by 70.38% in he 2016–2020 pe iod. Likewise, in e na ional segmen sales e e-
nue jumped up by 137.39%, and AWS e enue sha ply inc eased by 271% om 2016 o
2020.
Figu e 5. Amazon’s ne sales % ope a ing sales change end line.
J. Risk Financial Manag. 2022, 15, x FOR PEER REVIEW 21 o 27
Figu e 6. Amazon’s pe o mance by segmen .
The Figu e 7 p esen s he annual g ow h o Walma ’s p oduc s and se ices wo ld-
wide, whe e Walma ’s US segmen e enue inc eased by 3.94% in he 2016–2020 pe iod
bu , in con as , Walma ’s in e na ional segmen e enue and Sam’s Club segmen e e-
nue dec eased by 2.43% and 8.55%, espec i ely. When we compa e he segmen al inan-
cial pe o mance be ween Amazon and Walma , Amazon has pe o med a be e han
Walma . This analysis is in line wi h Yu e al. (2022), who explo ed how Amazon has
su icien expe ience o balance p o i and CSR, clima e change, and human igh s ac i i-
ies.
Figu e 7. Walma ’s pe o mance by segmen .
0 50 100 150 200 250
2016
2017
2018
2019
2020
Amazons' Segmen al Pe o mance
AWS In e na ional No h Ame ica
01234567
2016
2017
2018
2019
2020
Walma 's segmen al pe o mance
Sam`s Club segmen Walma In e na ional segmen Walma US segmen
Figu e 6. Amazon’s pe o mance by segmen .
The Figu e 7p esen s he annual g ow h o Walma ’s p oduc s and se ices wo ld-
wide, whe e Walma ’s US segmen e enue inc eased by 3.94% in he 2016–2020 pe iod
bu , in con as , Walma ’s in e na ional segmen e enue and Sam’s Club segmen e enue
dec eased by 2.43% and 8.55%, espec i ely. When we compa e he segmen al inancial
pe o mance be ween Amazon and Walma , Amazon has pe o med a be e han Wal-
ma . This analysis is in line wi h Yu e al. (2022), who explo ed how Amazon has su icien
expe ience o balance p o i and CSR, clima e change, and human igh s ac i i ies.
J. Risk Financial Manag. 2022,15, 414 20 o 25
J. Risk Financial Manag. 2022, 15, x FOR PEER REVIEW 21 o 27
Figu e 6. Amazon’s pe o mance by segmen .
The Figu e 7 p esen s he annual g ow h o Walma ’s p oduc s and se ices wo ld-
wide, whe e Walma ’s US segmen e enue inc eased by 3.94% in he 2016–2020 pe iod
bu , in con as , Walma ’s in e na ional segmen e enue and Sam’s Club segmen e e-
nue dec eased by 2.43% and 8.55%, espec i ely. When we compa e he segmen al inan-
cial pe o mance be ween Amazon and Walma , Amazon has pe o med a be e han
Walma . This analysis is in line wi h Yu e al. (2022), who explo ed how Amazon has
su icien expe ience o balance p o i and CSR, clima e change, and human igh s ac i i-
ies.
Figu e 7. Walma ’s pe o mance by segmen .
0 50 100 150 200 250
2016
2017
2018
2019
2020
Amazons' Segmen al Pe o mance
AWS In e na ional No h Ame ica
01234567
2016
2017
2018
2019
2020
Walma 's segmen al pe o mance
Sam`s Club segmen Walma In e na ional segmen Walma US segmen
Figu e 7. Walma ’s pe o mance by segmen .
4.2. Compa ison o ROA, ROE, and EM be ween Amazon and Walma
As he obus ness es o Amazon’s inancial pe o mance analysis, he au ho s em-
ployed a compa a i e analysis o ROA, ROE, and EM be ween Amazon and Walma
du ing he s udy pe iod o 2016–2020, see Table 6.
Table 6. Compa a i e da a o ROA, ROE, and EM o Amazon and Walma (2016–2020).
Amazon Walma
I em/Yea 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
ROA (ne p o i /To al a e age asse s
2.84% 2.31% 6.19% 5.14%
7.8%
7.31% 7.22% 5.23% 3.41%
6.72%
ROE (ne sales in e es a e × o al asse s
u no e a e ×equi y mul iplie
12.29% 10.94% 23.13% 18.87% 27.09% 17.90% 17.17% 12.53% 8.57%
19.08%
EM ( o al asse s/ o al sha eholde s’ equi y) 4.32 4.73 3.73 3.63 3.82 2.48 2.56 2.63 3.02 3.17
The able abo e demons a es ha Amazon’s ROA inc eased by 174.65% om 2016 o
2020, bu Walma ’s ROA declined by 8.07% du ing he 2016–2020 pe iod. The dec easing
s a is ics o ROA o Walma a e inconsis en wi h Pandey e al. (2021), whe e he au ho s
concluded ha Walma did no unde s and consume s’ as es and p e e ences be o e
en e ing he o eign ma ke , and he ne p o i om hei in e na ional segmen dec eased
om 2016 o 2020. In addi ion, e en hough Walma p o ides essen ial goods ha people
s ill buy du ing he COVID-19 pandemic, e.g., ood, be e ages, and pe sonal ca e p oduc s,
which a e p o i able wi h lowe isk, hei s ock p ice was nega i ely a ec ed by he COVID-
19 ou b eak (Guo e al. 2021). The ROEs o bo h companies ha e inc easing ends du ing
he s udy pe iod o 2016–2020, howe e , he aising pe cen age is di e en . Fo ins ance,
Amazon’s ROE jumped by 120.26% om 2016 o 2020, bu Walma ’s ROE only imp o ed
by 6.59%. Again, his esul is suppo ed by Baud and Du and (2021), whe e he au ho s
obse ed s eady g ow h o dis ibu ed ea nings o sha eholde s and he abili y o educe
he deb equi y a io; in opposi ion, Amazon is e y di e en , hey did no dis ibu e any
unds o hei sha eholde s di ec ly, bu hei sha eholde s a e becoming iche a a e y
imp essi e hy hm ia equi y p ice. Mo e in e es ingly, Amazon’s EM is in a declining
posi ion by 11.5% o he s udy pe iod. Howe e , Walma ’s EM inc eased by 27.82%.

J. Risk Financial Manag. 2022,15, 414 21 o 25
To summa ize, om he o e all poin o iew o he DuPon analysis, he mos in-
ui i e indica o ( e u n on equi y (ROE)) in he DuPon amewo k has main ained an
upwa d end in he pas i e yea s o bo h Amazon and Walma , which means ha
bo h companies ha e main ained an op imis ic de elopmen end as a whole. I ROE is
subdi ided in o EM and ROA, we can see ha ROA has been on he ise, which shows ha
Amazon and Walma ’s asse s a e becoming be e and be e , and bo h companies ha e
done a good job in sa ing money and inc easing e enue. A he same ime, in he pas
i e yea s, he EM index has expe ienced a p ocess o i s ising and hen alling, which
shows ha he deb le el o Amazon is g adually dec easing, and he igh s and in e es s
o c edi o s a e being much be e p o ec ed. A he same ime, he ROA index is ob ained
by mul iplying ne p o i ma gin on sales (NPMS) by o al asse u no e a e (TAT). F om
he abo e da a analysis, i can be seen ha NPMS has been ising con inuously du ing he
pas i e yea s, which shows ha Amazon’s e enue le el is ising con inuously, and i s
p o i le el is gua an eed. A he same ime, he u no e a e o o al asse s is cons an ly
dec easing, which shows ha al hough he company’s p o i abili y is cons an ly imp o ing,
he sales capaci y is s ill lacking, and he pu chase speed o o al asse s is oo as , which
canno be used in ime and con e ed in o sales.
4.3. P oblems and Coun e measu es in Financial Managemen
4.3.1. Poo Cos Con ol
As men ioned abo e, Amazon’s sales e enue has been g owing a a a e o 30 pe cen
a yea o he pas i e yea s, bu co esponding ope a ing cos s a e also ising yea by
yea , and some yea s e en ou pace he g ow h in ope a ing income, such as 2016 and 2018,
wi h only 2017 seeing a much highe annual inc ease in ope a ing expenses. E en hough
Walma enhanced a ious de elopmen s in a ious s ages, o ins ance ee wo-days
shipping ia S o e No 8, e-comme ce pla o m o Flipka and Myn a in India du ing 2019,
and nex -day deli e y o mo e han 75% o he US popula ion in 2020 (Walma 2020), hei
ope a ing expenses inc eased 2.41% om 2019 o 2020. Main business income has inc eased
yea by yea , bu he sales expenses and managemen expenses ha e inc eased by a la ge
ma gin, which has led o a dec ease in he ne p o i o en e p ises yea by yea and a
slowdown in he g ow h a e o asse s. This shows ha Amazon should s ic ly con ol he
p oduc ion cos and ope a ing expenses and y hei bes o educe a ious expenses, so as
o expand he oom o he company’s p o i g ow h. The cos o en e p ises is an impo an
ac o a ec ing p o i s and sa ing he cos is conduci e o imp o ing he p o i abili y and
compe i i eness o en e p ises. F om he DuPon analysis sys em, we can analyze whe he
he cos s uc u e o en e p ises is easonable, so as o ind ou he p oblems exis ing in he
cos managemen o en e p ises and p o ide he basis o s eng hening cos managemen .
We can s a om he ollowing aspec s: s ic ly con ol he scope and s anda d o cos and
expense, ocus on imp o ing he basic wo k o cos and expense managemen , calcula e
he cos and expense in ime, and make he cos and expense plan egula ly.
4.3.2. Poo Capi al Ope a ion Abili y
Because he u no e a e o he company’s o al asse s is oo low, which shows poo
asse u iliza ion e ec , Amazon should ake some measu es o e ec i ely u ilize asse s.
The company’s asse u no e a e is low, and i has been going down o a long ime.
Howe e , compa ing Amazon’s asse u no e a e (1.25 imes in 2019 and 1.20 imes in
2020), Walma e ec i ely u ilizes asse s by ha ing a highe asse u no e a e (2.33 ime in
2019 and 2.12 imes in 2020) and should ake measu es o imp o e he u iliza ion e iciency
o a ious asse s, dispose o edundan and unused asse s, and inc ease sales e enue, so
as o imp o e asse u no e a e. The essence o he asse u iliza ion e ec is o p oduce
as many p oduc s as possible and c ea e as much income as possible wi h as li le asse
occupa ion as possible and as sho a u no e as possible. The e ec i e use o asse s is
he key link ha a ec s he inancial s abili y and p o i abili y o en e p ises. The asse
u no e a e di ec ly a ec s he p o i abili y o an en e p ise. I he asse u no e a e o
J. Risk Financial Manag. 2022,15, 414 22 o 25
an en e p ise is slow, i will ake up a lo o capi al, inc ease he cos o capi al, and educe
he p o i o he en e p ise. The analysis o asse u no e should no only analyze he
o al asse u no e a e o en e p ises bu also analyze he in en o y u no e a e and
accoun s ecei able u no e a e o en e p ises and combine he u no e a e wi h capi al
occupa ion. F om he analysis o he abo e wo aspec s, we can ind he p oblems exis ing
in he asse managemen o en e p ises, so as o s eng hen con ol and managemen and
imp o e he e iciency and e ec o asse u iliza ion.
4.3.3. Poo Managemen Le el o Liabili ies
In ecen yea s, he EM index o Amazon has been dec easing yea by yea , and he
asse liabili y a io also has been dec easing. In a sense, his may be a good hing, bu on
he o he hand, i also shows ha he mechanism o he company’s deb u iliza ion is no
easonable enough. In con as , Walma ’s EM has a s eady g ow h du ing he s udy pe iod.
F om he abo e income s a emen , we can see ha al hough he o al liabili ies o he
company a e also inc easing yea by yea , he g ow h a e is s ill ela i ely slow compa ed
wi h he o al asse s, especially o long- e m liabili ies, he amoun o which has kep a
e y slow g ow h a e in he pas i e yea s. The eason why he company’s asse –liabili y
a io does no show a e y sha p decline is because Amazon began o ca y ou long- e m
lease liabili ies in 2017, which g ea ly inc eased he company’s o al long- e m liabili ies.
Likewise, Walma ’s long liabili ies a e an inc easing end, bu hei cash low si ua ion
is much s onge in 2020. The e o e, Walma ’s liabili y managemen is mo e e icien
ha Amazon. Howe e , long- e m lease liabili ies canno eally ob ain a ce ain amoun
o cash low, which has no in luence on he company’s o eign in es men o in e nal
imp o emen . Unde he backg ound o he COVID-19 pandemic, i may be a majo blow
o o he indus ies such as manu ac u ing and se ice indus ies, bu i is eally a golden
age o e-comme ce companies such as Amazon, whe e he numbe o o de s has su ged
and sales ha e doubled, which means ha Amazon is a he cen e o he de elopmen
o he imes. Unde such a o able condi ions, why can Amazon no be mo e adical,
con inue o inc ease i s amoun o deb , in oduce a la ge amoun o cash low, and expand
subs an ially o seize he oppo uni y o he imes?
4.3.4. Lack o Co e Compe i i eness
Amazon lacks co e en e p ise compe i i eness. Wi h he ad en o he In e ne age,
mo e and mo e e-comme ce companies a e en e ing he ma ke , such as Taobao and Suning
in China. Ob iously, Amazon has no shown as s ong dominance in China as in he wo ld.
When i comes o Taobao, people’s i s imp ession is ha i is cheap and good. When i
comes o Suning, people hink o household appliances. Amazon lacks his i s imp ession,
he e o e, cul i a ing he co e compe i i eness o en e p ises is he undamen al way o
imp o e business pe o mance, and i is also he objec i e equi emen o he sus ainable
de elopmen o en e p ises. Wi hin a simila ein, Walma is acing simila p oblems o
en e o eign coun ies, mainly A gen ina, B azil, Indonesia, China, and Japan, because
Walma ’s p oduc s ail o mee cus ome s’ as es and lag behind compa ed wi h o he
b ands (Pandey e al. 2021). Amazon should cons an ly s eng hen echnological inno a ion
and managemen inno a ion, imp o e he quali y o p oduc s and se ices, shape a unique
co po a e cul u e, and change he pas ex ensi e managemen mode, so as o be in incible
in he complica ed ma ke economy en i onmen and make a di e ence in such a big
ma ke as China. Likewise, Walma should launch consume su eys abou hei as es
and p e e ences o p oduc s be o e en e ing new coun ies.
5. Conclusions
F om he analysis esul s o he abo e inancial s a emen s, Amazon and Walma bo h
ha e shown good de elopmen s a es in ecen yea s, no ma e asse s, sales, p o i s, o
cash low being in a s eady upwa d s a e. Especially since he ou b eak o he COVID-19
pandemic in 2019, he company has shown a comple ely di e en ope a ing s a e om mos
J. Risk Financial Manag. 2022,15, 414 23 o 25
indus ies, wi h a subs an ial inc ease in sales and as e expansion o he company, which
is unexpec ed. Al hough he DuPon analysis shows ha he company has some p oblems
in inancial managemen , such as high ope a ing cos and high u no e a e o o al asse s,
he de elopmen o Amazon is s ill ema kable. On one hand, Amazon con inues o seize
he double-edged swo d o he COVID-19 pandemic, con inues o expand sales, apply a
unique inno a i e co po a e s yle, and lay a good ounda ion o business o ganiza ion.
Howe e , on he o he hand, Amazon app op ia ely ackled challenges o globaliza ion
and adjus ed i s sus ainable de elopmen s a egy wi hin he equi ed ime.
Nex , he au ho s conclude ha he company should con inue o seize he double-
edged swo d o he COVID-19 pandemic, con inue o expand sales, c ea e i s unique
co po a e s yle and mode, and lay a good ounda ion o he nex business ope a ion.
The scale e ec o he e-comme ce e ail indus y is e y impo an . The la ge he scale,
he easie i is o en e p ises o su i e and de elop. The e o e, Amazon should wo k
on high-speed expansion, speci ically, i is o use di e si ied, la ge-scale, low-cos , and
high-e iciency de elopmen s a egies, quickly eplica ed in he whole wo ld wi h he
chain de elopmen model, and expand wi h low cos and high e iciency h ough he
applica ion o a ious managemen echnologies o c ea e he bes chain ne wo k se ice
b and in he wo ld. A he same ime, Amazon should change i s de elopmen mode and
p omo e s a egic ans o ma ion om ocusing on g ow h quan i y o quali y, om low
added alue o high added alue, and om ex ensi e managemen o ine managemen .
As o he limi a ions o his s udy, he au ho s explo ed wo poin s which can be
u he s udied and imp o ed in he u u e. The i s poin is ha his case s udy is based
on Amazon and Walma only because he esea ch heme o his pape is abou he impac
o he COVID-19 pandemic on Amazon, which is mapped o he whole In e ne indus y.
Howe e , because he COVID-19 pandemic o icially b oke ou in 2019, u he s udies
could be expanded h ough c oss-sec ional and longi udinal da a bases. The second p ob-
lem is ha his pape only analyzes he companies’ inancial da a om he pe spec i e o
Amazon’s consolida ed inancial s a emen s and Walma ’s inancial consolida ed inancial
s a emen s as a whole and does no hink abou he p oblem om he pe spec i e o a
single Amazon subsidia y o Walma subsidia y in di e en coun ies o egions. This
is a big de iciency because di e en coun ies and egions ha e di e en policies o deal
wi h he COVID-19 pandemic, such as China’s ough policies o deal wi h he pandemic
o he coexis ence policies o Denma k and o he coun ies; di e en subsidia ies will
show di e en de elopmen ends. The e o e, u u e esea ch can s a om his angle,
speci ically analyzing he di e en inancial si ua ions o di e en subsidia ies a ec ed
by di e en policies and s udying he di e en impac s o di e en coun ies’ COVID-19
p e en i e policies on In e ne companies.
Au ho Con ibu ions:
Concep ualiza ion and me hodology, Z.Q. and A.H.; da a cu a ion, alida ion,
and so wa e, Z.Q., A.H. and M.A.; o mal analysis and esou ces, Z.Q. and M.A. w i ing—o iginal
d a p epa a ion, Z.Q., A.H. and M.A.; w i ing— e iew and edi ing and supe ision, Z.Q., A.H. and
M.A. All au ho s ha e ead and ag eed o he published e sion o he manusc ip .
Funding: This esea ch ecei ed no ex e nal unding.
Da a A ailabili y S a emen :
Da a we e ob ained om Amazon’s annual epo and inancial s a e-
men and a e a ailable on Amazon’s websi e.
Con lic s o In e es : The au ho s decla e no con lic o in e es .
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