Final answer:
The current ratio, quick ratio, and total debt-to-total-assets ratio are important financial ratios used to assess a company's liquidity and financial health. In 2021, Amazon's current ratio was 1.06 and its quick ratio was 0.85. In 2022, Amazon's current ratio improved to 1.11 and its quick ratio increased to 0.89.
Step-by-step explanation:
The current ratio, quick ratio, and total debt-to-total-assets ratio are important financial ratios used to assess a company's liquidity and financial health.
The current ratio is calculated by dividing current assets by current liabilities. It measures a company's ability to pay its short-term obligations using its current assets. In 2021, Amazon's current ratio was 1.06, and in 2022, it was 1.11. This indicates that Amazon's short-term liquidity improved slightly in 2022 compared to 2021.
The quick ratio, also known as the acid-test ratio, is a more stringent measure of a company's liquidity. It excludes inventory from current assets since it may not be easily converted into cash. In 2021, Amazon's quick ratio was 0.85, and in 2022, it was 0.89. This suggests that Amazon's ability to meet its short-term obligations improved slightly in 2022.
The total debt-to-total-assets ratio measures the extent to which a company relies on debt to finance its operations. It is calculated by dividing total debt by total assets. In 2021, Amazon's total debt-to-total-assets ratio was 0.46, and in 2022, it was 0.48. This indicates that Amazon's reliance on debt increased slightly in 2022.