Question

Amazon.com, Inc., reported the following financial data (amounts in millions):

Year Ended December 31,
2016 2015 2014
Sales $135,987 $107,006 $88,988
Net income (loss) 2,371 596 (241)
Interest expense 484 459 210
Preferred stock dividend 0 0 0
Income tax rate 35% 35% 35%
December 31: 2016 2015
Total assets $83,402 $64,747
Preferred stock 0 0
Total common shareholders' equity 19,285 13,384

Calculate ROA for 2016 using average balances for any balance sheet amounts.

a. 2.97%
b. 3.62%
c. 2.55%
d. 2.78%

Answer 1

Calculating the Return on Assets (ROA) for Amazon.com, Inc. for 2016 requires finding the average total assets and dividing the net income by this average. However, none of the provided options (a, b, c, or d) match this calculation,

Step-by-step explanation:

To calculate the Return on Assets (ROA) for Amazon.com, Inc. for the year 2016, you first need to find the average total assets for the year by taking the sum of the assets at the end of 2016 and 2015 then dividing by 2. This value is then used as the denominator in the ROA formula:

• Total assets at the end of 2016: $83,402 million
• Total assets at the end of 2015: $64,747 million
• Average total assets: ($83,402 million + $64,747 million) / 2 = $74,074.5 million
• Net income for 2016: $2,371 million

Next, the ROA is calculated as follows: (Net Income / Average Total Assets) x 100.

ROA for 2016 = ($2,371 million / $74,074.5 million) x 100 = 3.20%%

However, none of the provided options (a, b, c, or d) match this calculation, suggesting a possible error in the question or that additional information might be necessary for an accurate calculation.