Amazon (AMZN) Financial Deep Dive: 2024 Margins, Cash Flow & Balance Sheet

Opening: FY2024 headline and the tension in the numbers#

Amazon reported FY2024 revenue of $637.96B and net income of $59.25B (fiscal year ended 2024, Form filings accepted 2025-02-06 / filed 2025-02-07). That top-line rise masks an important structural shift: operating performance improved sharply—operating income surged to $68.59B from $36.85B in 2023—while capital spending accelerated to $83.0B and free cash flow remained only modestly higher at $32.88B. The immediate tension is clear: Amazon is generating stronger accounting profits and more operating cash, yet management is plowing an outsized share of that cash back into capital expenditures and expansion, compressing free-cash-flow leverage and leaving questions about incremental returns on that investment.

This report uses only the company’s FY statements (accepted/filling dates shown in each dataset) to calculate trends, margins, balance sheet movements and cash-flow quality. Where possible I compute ratios from the raw numbers in the filings rather than relying on precomputed TTM metrics. All percentage changes are shown to two decimals when appropriate.

Income-statement trends: revenue growth with margin expansion#

Amazon’s revenue increased from $574.78B (2023) to $637.96B (2024), a year-over-year increase of +10.99%. The calculation is (637.96 - 574.78) / 574.78 = +10.99% (FY2024 income statement, filing date 2025-02-07). Revenue growth accelerated versus prior years and is corroborated by the published figures in the company filing.

Gross profit rose from $270.05B in 2023 to $311.67B in 2024, a +15.41% change ((311.67 - 270.05) / 270.05 = +15.41%). That growth outpaced top-line expansion and produced a gross margin improvement to 48.85% in 2024 from 46.98% in 2023 (gross profit / revenue = 311.67 / 637.96 = 48.85%). The data show Amazon improved product and service mix and/or realized higher contribution per unit sold in 2024 compared with 2023.

Operating income moved from $36.85B to $68.59B, an +86.11% increase ((68.59 - 36.85) / 36.85 = +86.11%). The operating margin rose from 6.41% to 10.75% (68.59 / 637.96 = 10.75%). The improvement in operating leverage is a central driver of the company’s improved profitability in 2024: Amazon turned a double-digit uplift in gross profit into a substantially larger percentage increase in operating income.

Net income jumped from $30.43B to $59.25B, a +94.73% increase (59.25 - 30.43 = 28.82; 28.82 / 30.43 = +94.73%). Net margin rose to 9.29% (59.25 / 637.96 = 9.29%), up from 5.29% a year earlier. The move reflects both higher operating income and a materially lower effective tax/other item burden in 2024 (see tax-rate calculation below).

Earnings before interest, tax, depreciation and amortization (EBITDA) increased from $89.40B to $123.81B, a +38.51% change ((123.81 - 89.40) / 89.40 = +38.51%). EBITDA margin expanded to 19.41% (123.81 / 637.96 = 19.41%), consistent with improved operating leverage across Amazon’s portfolio.

Two operating-expense items help explain the margin improvement. Research & development expense rose to $88.54B in 2024 but as a percent of revenue that is roughly 13.88% (88.54 / 637.96 = 13.88%). Selling, general & administrative expense was $55.27B, about 8.66% of revenue (55.27 / 637.96 = 8.66%). Total reported operating expenses were $243.08B, or 38.11% of revenue (243.08 / 637.96 = 38.11%). The combined effect: Amazon both grew investment (R&D) and improved core retail economics enough that operating expenses consumed a smaller share of the enlarged gross profit pool.

Summary income-statement table (FY2021–FY2024)

(Values sourced from each fiscal year income-statement entries; margins are computed as column value / revenue.)

Cash-flow quality: strong operating cash conversion but heavy capex#

Operating cash flow (net cash provided by operating activities) increased from $84.95B (2023) to $115.88B (2024), a +36.41% increase ((115.88 - 84.95) / 84.95 = +36.41%). Free cash flow increased only slightly from $32.22B to $32.88B, a +2.05% change, because capital expenditures rose sharply to $83.0B in 2024 from $52.73B in 2023 ((83.0 - 52.73) / 52.73 = +57.45%).

Free cash flow margin — free cash flow divided by revenue — was 5.15% in 2024 (32.88 / 637.96 = 5.15%) versus 5.60% in 2023. Put another way, Amazon converted nearly all incremental operating cash into capital investment in 2024. Cash-flow conversion and capex patterns therefore matter more than headline operating income when assessing the company’s capacity to fund growth without external financing.

Two cash quality metrics provide clarity. First, cash conversion from EBITDA to operating cash flow: operating cash flow / EBITDA = 115.88 / 123.81 = 93.60%. That is a robust conversion rate and signals that reported EBITDA is translating into cash at a high rate. Second, operating cash flow relative to net income: CFO / Net Income = 115.88 / 59.25 = 1.96x, indicating that earnings are being supported by strong cash generation rather than accrual-driven gains.

Change-in-working-capital was -15.54B in 2024 (a use of cash) compared with -11.54B in 2023; the larger negative number shows working-capital absorption increased and thus subtracted more from free cash flow. Depreciation & amortization was $52.8B, which is a sizable non-cash add-back supporting higher operating-cash generation.

Cash-flow table (selected items, FY2021–FY2024)

(Values sourced from cash-flow statements; CFO/Net Income uses absolute sign conventions to illustrate conversion.)

What the cash-flow numbers reveal is a straightforward trade-off: Amazon’s operational engine is producing materially more cash and earnings, but management is aggressively reinvesting—capex rose to roughly 13.01% of revenue** (83.0 / 637.96 = 13.01%)—which limits free-cash-flow growth despite strong operating performance.

Balance-sheet changes: asset buildup, equity jump, net-debt improvement#

Total assets rose from $527.85B (2023) to $624.89B (2024), an increase of $97.04B or +18.37% ((624.89 - 527.85) / 527.85 = +18.37%). Total liabilities rose modestly from $325.98B to $338.92B (+3.97%), while total stockholders’ equity expanded from $201.88B to $285.97B, a +41.65% increase. The equity increase is largely explained by the flow-through of retained earnings (retained earnings rose by $59.25B, equal to reported net income for 2024), consistent with the filings.

Amazon’s cash position improved: cash and cash equivalents increased to $78.78B from $73.39B, while cash and short-term investments rose to $101.20B from $86.78B. Total debt (long-term debt) moved slightly lower to $130.90B from $135.61B, and net debt improved to $52.12B from $62.22B (net debt = total debt - cash & short-term investments), an improvement of $10.10B or roughly -16.24% ((62.22 - 52.12) / 62.22 = 16.24%).

Key balance-sheet ratios computed from FY2024 balances:

• Current ratio = total current assets / total current liabilities = 190.87 / 179.43 = 1.06x. This indicates short-term liquidity slightly in excess of current obligations.

• Debt-to-equity = total debt / total stockholders’ equity = 130.90 / 285.97 = 0.46x (about 0.46x). The company’s leverage on a debt-to-equity basis is moderate.

• Net-debt / EBITDA = 52.12 / 123.81 = 0.42x, showing net leverage measured against EBITDA is low; Amazon remains conservatively leveraged relative to its earnings power.

Balance-sheet table (selected items, FY2021–FY2024)

(*2021 net debt computed as total debt minus cash & short-term investments = 116.39 - 96.05 = 20.34) — all values taken from the company balance-sheet entries.

Taken together, the balance-sheet movement shows an asset-heavy expansion funded largely by operating cash and retained earnings, with a modest reduction in gross debt and a meaningful equity build driven by earnings retention.

Key ratios (computed) and what they mean#

I compute a set of key ratios directly from the fiscal-year line items to show underlying financial health and cash dynamics.

• Gross margin (2024) = 311.67 / 637.96 = 48.85%.
• Operating margin (2024) = 68.59 / 637.96 = 10.75%.
• Net margin (2024) = 59.25 / 637.96 = 9.29%.
• EBITDA margin (2024) = 123.81 / 637.96 = 19.41%.
• Free cash flow margin = 32.88 / 637.96 = 5.15%.
• Capex intensity = 83.00 / 637.96 = 13.01% of revenue.
• Cash conversion (CFO / EBITDA) = 115.88 / 123.81 = 93.60%.
• CFO / Net Income = 115.88 / 59.25 = 1.96x.
• Current ratio = 190.87 / 179.43 = 1.06x.
• Debt-to-equity = 130.90 / 285.97 = 0.46x.
• Net-debt / EBITDA = 52.12 / 123.81 = 0.42x.
• ROE (approx) = Net Income / Average Equity = 59.25 / ((201.88 + 285.97) / 2) = 59.25 / 243.925 = 24.31%.
• ROA (approx) = Net Income / Average Assets = 59.25 / ((527.85 + 624.89) / 2) = 59.25 / 576.37 = 10.28%.
• Effective tax rate (2024) = (Income before tax - Net income) / Income before tax = (68.51 - 59.25) / 68.51 = 13.52%.

These ratios point to several conclusions grounded in the numbers. First, the company is now delivering both high gross margins and expanding operating margins at scale, which is reflected in double-digit operating and near-double-digit net margins—a significant re-rating from earlier years when net margin was near zero or negative. Second, cash-generation metrics (CFO/EBITDA and CFO/Net Income) are strong, showing that earnings are largely cash-backed. Third, capital intensity jumped—capex now consumes a large share of revenue—dampening free-cash-flow growth despite stronger operating cash flow.

What the numbers actually reveal (not the narrative)#

1. Margin improvement is real and broad-based, not solely an accounting artifact. The step-up in gross profit (+15.41%) outpaced revenue growth (+10.99%), and operating income grew much faster than gross profit (+86.11%) because operating expenses grew more slowly relative to gross profit. In short, the core business shows improved unit economics in 2024.

2. Cash generation is healthy but being redeployed. Operating cash flow nearly doubled versus 2022 and is large relative to net income (CFO / Net Income = 1.96x). However, the company's capex spike to $83B meant free cash flow barely budged. That implies the company is prioritizing investment-led growth over maximizing free cash for other uses in the near term.

3. Leverage and liquidity are conservative. Net-debt / EBITDA at 0.42x and debt-to-equity at 0.46x indicate a low net leverage profile. The current ratio of 1.06x shows adequate short-term liquidity. The balance sheet expansion was funded largely by retained earnings and operating cash rather than new debt issuance.

4. The tax/other item shift materially helped net income. The effective tax rate fell from around 19% in 2023 to 13.52% in 2024 ((37.56 - 30.43) / 37.56 = 19.03% for 2023; 68.51 and 59.25 produce 13.52% for 2024). That change contributed to the net-income acceleration and should be monitored as a source of volatility in future net-income comparables.

5. Capex intensity is a potential growth lever and a near-term cash drag. Capex at 13.01% of revenue in 2024 is materially higher than in recent years. With free cash flow margin at 5.15%, the company’s capacity to expand without generating proportionally higher returns per dollar invested depends on the eventual productivity of those investments.

6. Profitability ratios such as ROE (24.31%) and ROA (10.28%) are strong, indicating that the expanded asset base and retained earnings are yielding robust returns today. However, the step-up in assets also raises the bar on sustaining those returns in future periods as new capital must earn at least comparable returns to avoid diluting ROIC.

What this means for stakeholders#

For management and capital allocators, the numbers show latitude: Amazon generates substantial cash and has low net leverage, enabling an aggressive investment posture without pressing for incremental external financing. The trade-off is explicit—the company is converting operating strength into a materially larger asset base and higher ongoing capital commitments. These investments may sustain future revenue and margin expansion, but they raise the standard for capital returns: incremental projects must produce returns equal to or above current ROE/ROA to maintain profitability metrics.

For creditors and lenders, leverage metrics are conservative. Net-debt / EBITDA of 0.42x and a modest amount of gross debt relative to cash and investments suggest limited solvency risk. For counterparties and suppliers, the improved margins and robust cash conversion indicate reduced short-term counterparty credit risk.

For equity holders, the ledger is mixed. On one hand, operating leverage produced materially higher margins and higher ROE. On the other hand, rising capex and working-capital absorption constrained free-cash-flow growth in absolute terms. The sustainability of margin improvements and the productivity of incremental capital expenditures will determine whether earnings growth converts into growing distributable cash in coming years.

Closing synthesis and conclusions#

Using only the company’s fiscal-year disclosures, the FY2024 picture is one of stronger operating performance and robust cash generation that management is reinvesting aggressively. Key, verifiable takeaways: revenue $637.96B (+10.99%), gross profit $311.67B (+15.41%), operating income $68.59B (+86.11%), net income $59.25B (+94.73%), operating cash flow $115.88B (+36.41%), capex $83.0B (+57.45%), free cash flow $32.88B (+2.05%), and net-debt / EBITDA = 0.42x. The company’s profitability and cash-conversion metrics are strong, but the increased capital intensity (capex at 13.01% of revenue) is the principal factor that will determine whether that profitability translates into durable free cash flow and shareholder value over time.

This analysis does not offer investment advice. It does, however, make a clear, data-driven statement: Amazon’s FY2024 results show meaningful margin and cash-generation improvement, but those gains are being largely invested back into the business, shifting the conversation from near-term distributable cash to the long-term returns on that capital deployment. Monitor capex productivity, working-capital trends, and effective tax rate behavior in coming filings to evaluate whether the current investment cadence will sustain or dilute the company’s improved profitability profile.