Chapter 5, Problem 5.1ADM

Continuing Company Analysis-Amazon: Asset turnover ratio

Amazon.com, Inc. is one of the largest Internet retailers in the world. Netflix, Inc. provides digital streaming and DVD rentals in the United States. Amazon and Netflix compete in streaming and digital services, however Amazon also sells many other products through the Internet. The sales and total assets (in millions) from recent financial statements were reported as follows for both companies:

	Amazon	Netflix
Total revenues (sales)	$88,988	$5,505
Total assets:
Beginning of year	40,159	5,413
End of year	54,505	7,057

A. Based on your knowledge of each company, identify three major assets used by each company in generating revenue.

B. Compute the asset turnover ratio for each company. (Round to two decimal places).

C. Which company generates sales from total assets more efficiently?