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In: Accounting
As a business, is Amazon company profitable? Will it be able to sustain profitability?and how can...
As a business, is Amazon company profitable? Will it be able to sustain profitability?and how can it make its profit grow?
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Expert Solution
Yes, as a business Amazon is profitable. For the fourth quarter of 2017 the company posted a profit of $1.9 billion. In fact the company made a record by posting a positive net income for eleven consecutive quarters till the fourth quarter of 2017.
Yes, the company will be able to sustain its profitability going forward. Amazon now has higher number of products in its portfolio and when more products are running through warehouses they are able to operate more efficiently.
The company can make its profits grow, going forward, by focusing more on its services like its advertising business ,cloud computing business and AWS, which typically enjoys higher operating margins. In case of the above verticals there are no physical products that have to be bought, stored and then sold. This ensures higher level of margins for these verticals. Thus, to make its profits grow, the company will have to focus more on these verticals.
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