Intrinsic value of Amazon.com, Inc. - AMZN

Previous Close

$1,764.77

  Intrinsic Value

$2,107

stock screener

  Rating & Target

hold

+19%

Previous close

$1,764.77

 
Intrinsic value

$2,107

 
Up/down potential

+19%

 
Rating

hold

We calculate the intrinsic value of AMZN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 866.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  19.70
  18.23
  16.91
  15.72
  14.64
  13.68
  12.81
  12.03
  11.33
  10.70
  10.13
  9.61
  9.15
  8.74
  8.36
  8.03
  7.72
  7.45
  7.21
  6.99
  6.79
  6.61
  6.45
  6.30
  6.17
  6.06
  5.95
  5.85
  5.77
  5.69
Revenue, $m
  278,766
  329,585
  385,308
  445,864
  511,159
  581,087
  655,536
  734,404
  817,596
  905,039
  996,679
  1,092,490
  1,192,472
  1,296,652
  1,405,090
  1,517,871
  1,635,110
  1,756,951
  1,883,564
  2,015,145
  2,151,917
  2,294,125
  2,442,041
  2,595,960
  2,756,197
  2,923,093
  3,097,011
  3,278,335
  3,467,472
  3,664,854
Variable operating expenses, $m
  235,455
  277,252
  323,082
  372,887
  426,590
  484,103
  545,335
  610,201
  678,624
  750,542
  819,733
  898,535
  980,766
  1,066,451
  1,155,637
  1,248,395
  1,344,821
  1,445,031
  1,549,165
  1,657,386
  1,769,876
  1,886,837
  2,008,493
  2,135,085
  2,266,875
  2,404,141
  2,547,182
  2,696,315
  2,851,874
  3,014,214
Fixed operating expenses, $m
  23,787
  24,310
  24,845
  25,392
  25,950
  26,521
  27,105
  27,701
  28,311
  28,933
  29,570
  30,220
  30,885
  31,565
  32,259
  32,969
  33,694
  34,435
  35,193
  35,967
  36,759
  37,567
  38,394
  39,238
  40,102
  40,984
  41,886
  42,807
  43,749
  44,711
Total operating expenses, $m
  259,242
  301,562
  347,927
  398,279
  452,540
  510,624
  572,440
  637,902
  706,935
  779,475
  849,303
  928,755
  1,011,651
  1,098,016
  1,187,896
  1,281,364
  1,378,515
  1,479,466
  1,584,358
  1,693,353
  1,806,635
  1,924,404
  2,046,887
  2,174,323
  2,306,977
  2,445,125
  2,589,068
  2,739,122
  2,895,623
  3,058,925
Operating income, $m
  19,524
  28,023
  37,381
  47,585
  58,619
  70,462
  83,096
  96,502
  110,662
  125,563
  147,376
  163,735
  180,820
  198,637
  217,194
  236,507
  256,595
  277,485
  299,206
  321,792
  345,282
  369,721
  395,155
  421,636
  449,220
  477,968
  507,943
  539,213
  571,850
  605,929
EBITDA, $m
  40,646
  51,868
  64,213
  77,663
  92,196
  107,788
  124,413
  142,045
  160,665
  180,253
  200,798
  222,292
  244,737
  268,137
  292,507
  317,864
  344,237
  371,658
  400,165
  429,804
  460,625
  492,686
  526,048
  560,779
  596,952
  634,646
  673,943
  714,932
  757,706
  802,366
Interest expense (income), $m
  290
  1,386
  2,767
  4,299
  5,980
  7,806
  9,776
  11,884
  14,130
  16,508
  19,017
  21,655
  24,418
  27,308
  30,323
  33,465
  36,736
  40,137
  43,673
  47,348
  51,166
  55,135
  59,259
  63,548
  68,009
  72,651
  77,484
  82,518
  87,763
  93,231
  98,936
Earnings before tax, $m
  18,138
  25,256
  33,081
  41,605
  50,812
  60,687
  71,212
  82,372
  94,153
  106,546
  125,721
  139,317
  153,512
  168,313
  183,728
  199,771
  216,458
  233,812
  251,858
  270,626
  290,148
  310,461
  331,606
  353,626
  376,569
  400,484
  425,425
  451,450
  478,618
  506,994
Tax expense, $m
  4,897
  6,819
  8,932
  11,233
  13,719
  16,385
  19,227
  22,240
  25,421
  28,767
  33,945
  37,615
  41,448
  45,445
  49,607
  53,938
  58,444
  63,129
  68,002
  73,069
  78,340
  83,825
  89,534
  95,479
  101,674
  108,131
  114,865
  121,891
  129,227
  136,888
Net income, $m
  13,241
  18,437
  24,149
  30,372
  37,093
  44,301
  51,985
  60,131
  68,732
  77,778
  91,776
  101,701
  112,064
  122,869
  134,122
  145,833
  158,015
  170,683
  183,856
  197,557
  211,808
  226,637
  242,073
  258,147
  274,895
  292,353
  310,560
  329,558
  349,391
  370,105

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  194,669
  230,157
  269,070
  311,357
  356,955
  405,787
  457,777
  512,852
  570,947
  632,010
  696,005
  762,912
  832,731
  905,483
  981,208
  1,059,966
  1,141,837
  1,226,921
  1,315,338
  1,407,224
  1,502,735
  1,602,043
  1,705,336
  1,812,821
  1,924,719
  2,041,266
  2,162,717
  2,289,340
  2,421,419
  2,559,256
Adjusted assets (=assets-cash), $m
  194,669
  230,157
  269,070
  311,357
  356,955
  405,787
  457,777
  512,852
  570,947
  632,010
  696,005
  762,912
  832,731
  905,483
  981,208
  1,059,966
  1,141,837
  1,226,921
  1,315,338
  1,407,224
  1,502,735
  1,602,043
  1,705,336
  1,812,821
  1,924,719
  2,041,266
  2,162,717
  2,289,340
  2,421,419
  2,559,256
Revenue / Adjusted assets
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
  1.432
Average production assets, $m
  74,709
  88,329
  103,262
  119,491
  136,991
  155,731
  175,684
  196,820
  219,116
  242,550
  267,110
  292,787
  319,582
  347,503
  376,564
  406,789
  438,210
  470,863
  504,795
  540,059
  576,714
  614,826
  654,467
  695,717
  738,661
  783,389
  829,999
  878,594
  929,283
  982,181
Working capital, $m
  -41,257
  -48,779
  -57,026
  -65,988
  -75,652
  -86,001
  -97,019
  -108,692
  -121,004
  -133,946
  -147,508
  -161,689
  -176,486
  -191,905
  -207,953
  -224,645
  -241,996
  -260,029
  -278,767
  -298,241
  -318,484
  -339,531
  -361,422
  -384,202
  -407,917
  -432,618
  -458,358
  -485,194
  -513,186
  -542,398
Total debt, $m
  46,894
  72,871
  101,355
  132,310
  165,687
  201,432
  239,489
  279,804
  322,329
  367,028
  413,872
  462,848
  513,955
  567,210
  622,640
  680,291
  740,221
  802,502
  867,223
  934,484
  1,004,398
  1,077,091
  1,152,702
  1,231,381
  1,313,290
  1,398,603
  1,487,505
  1,580,193
  1,676,875
  1,777,771
Total liabilities, $m
  142,498
  168,475
  196,959
  227,914
  261,291
  297,036
  335,093
  375,408
  417,933
  462,632
  509,476
  558,452
  609,559
  662,814
  718,244
  775,895
  835,825
  898,106
  962,827
  1,030,088
  1,100,002
  1,172,695
  1,248,306
  1,326,985
  1,408,894
  1,494,207
  1,583,109
  1,675,797
  1,772,479
  1,873,375
Total equity, $m
  52,171
  61,682
  72,111
  83,444
  95,664
  108,751
  122,684
  137,444
  153,014
  169,379
  186,529
  204,460
  223,172
  242,670
  262,964
  284,071
  306,012
  328,815
  352,511
  377,136
  402,733
  429,347
  457,030
  485,836
  515,825
  547,059
  579,608
  613,543
  648,940
  685,881
Total liabilities and equity, $m
  194,669
  230,157
  269,070
  311,358
  356,955
  405,787
  457,777
  512,852
  570,947
  632,011
  696,005
  762,912
  832,731
  905,484
  981,208
  1,059,966
  1,141,837
  1,226,921
  1,315,338
  1,407,224
  1,502,735
  1,602,042
  1,705,336
  1,812,821
  1,924,719
  2,041,266
  2,162,717
  2,289,340
  2,421,419
  2,559,256
Debt-to-equity ratio
  0.900
  1.180
  1.410
  1.590
  1.730
  1.850
  1.950
  2.040
  2.110
  2.170
  2.220
  2.260
  2.300
  2.340
  2.370
  2.390
  2.420
  2.440
  2.460
  2.480
  2.490
  2.510
  2.520
  2.530
  2.550
  2.560
  2.570
  2.580
  2.580
  2.590
Adjusted equity ratio
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268
  0.268

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  13,241
  18,437
  24,149
  30,372
  37,093
  44,301
  51,985
  60,131
  68,732
  77,778
  91,776
  101,701
  112,064
  122,869
  134,122
  145,833
  158,015
  170,683
  183,856
  197,557
  211,808
  226,637
  242,073
  258,147
  274,895
  292,353
  310,560
  329,558
  349,391
  370,105
Depreciation, amort., depletion, $m
  21,122
  23,845
  26,832
  30,078
  33,578
  37,326
  41,316
  45,544
  50,003
  54,690
  53,422
  58,557
  63,916
  69,501
  75,313
  81,358
  87,642
  94,173
  100,959
  108,012
  115,343
  122,965
  130,893
  139,143
  147,732
  156,678
  166,000
  175,719
  185,857
  196,436
Funds from operations, $m
  34,362
  42,282
  50,982
  60,450
  70,671
  81,627
  93,301
  105,675
  118,735
  132,468
  145,198
  160,259
  175,981
  192,369
  209,435
  227,191
  245,656
  264,855
  284,816
  305,569
  327,151
  349,602
  372,966
  397,291
  422,627
  449,031
  476,560
  505,277
  535,248
  566,542
Change in working capital, $m
  -6,790
  -7,521
  -8,247
  -8,962
  -9,664
  -10,349
  -11,019
  -11,672
  -12,312
  -12,942
  -13,563
  -14,180
  -14,797
  -15,419
  -16,049
  -16,692
  -17,351
  -18,032
  -18,739
  -19,474
  -20,242
  -21,047
  -21,892
  -22,780
  -23,715
  -24,701
  -25,740
  -26,836
  -27,992
  -29,213
Cash from operations, $m
  41,152
  49,804
  59,229
  69,412
  80,335
  91,977
  104,320
  117,348
  131,047
  145,410
  158,761
  174,439
  190,778
  207,788
  225,483
  243,882
  263,008
  282,888
  303,554
  325,043
  347,393
  370,649
  394,858
  420,071
  446,343
  473,732
  502,300
  532,113
  563,240
  595,754
Maintenance CAPEX, $m
  -12,461
  -14,942
  -17,666
  -20,652
  -23,898
  -27,398
  -31,146
  -35,137
  -39,364
  -43,823
  -48,510
  -53,422
  -58,557
  -63,916
  -69,501
  -75,313
  -81,358
  -87,642
  -94,173
  -100,959
  -108,012
  -115,343
  -122,965
  -130,893
  -139,143
  -147,732
  -156,678
  -166,000
  -175,719
  -185,857
New CAPEX, $m
  -12,403
  -13,619
  -14,934
  -16,229
  -17,499
  -18,741
  -19,953
  -21,136
  -22,296
  -23,435
  -24,560
  -25,677
  -26,795
  -27,920
  -29,061
  -30,225
  -31,420
  -32,653
  -33,932
  -35,264
  -36,655
  -38,112
  -39,642
  -41,250
  -42,944
  -44,728
  -46,610
  -48,595
  -50,689
  -52,898
Cash from investing activities, $m
  -24,864
  -28,561
  -32,600
  -36,881
  -41,397
  -46,139
  -51,099
  -56,273
  -61,660
  -67,258
  -73,070
  -79,099
  -85,352
  -91,836
  -98,562
  -105,538
  -112,778
  -120,295
  -128,105
  -136,223
  -144,667
  -153,455
  -162,607
  -172,143
  -182,087
  -192,460
  -203,288
  -214,595
  -226,408
  -238,755
Free cash flow, $m
  16,288
  21,242
  26,629
  32,530
  38,937
  45,838
  53,221
  61,074
  69,388
  78,152
  85,691
  95,339
  105,425
  115,951
  126,921
  138,344
  150,230
  162,593
  175,449
  188,820
  202,726
  217,194
  232,251
  247,927
  264,255
  281,271
  299,012
  317,519
  336,833
  356,999
Issuance/(repayment) of debt, $m
  23,399
  25,977
  28,484
  30,955
  33,377
  35,745
  38,057
  40,315
  42,526
  44,698
  46,844
  48,976
  51,108
  53,254
  55,430
  57,651
  59,930
  62,282
  64,721
  67,261
  69,914
  72,693
  75,611
  78,679
  81,909
  85,313
  88,902
  92,688
  96,682
  100,896
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  23,399
  25,977
  28,484
  30,955
  33,377
  35,745
  38,057
  40,315
  42,526
  44,698
  46,844
  48,976
  51,108
  53,254
  55,430
  57,651
  59,930
  62,282
  64,721
  67,261
  69,914
  72,693
  75,611
  78,679
  81,909
  85,313
  88,902
  92,688
  96,682
  100,896
Total cash flow (excl. dividends), $m
  39,686
  47,220
  55,113
  63,485
  72,314
  81,583
  91,278
  101,389
  111,913
  122,850
  132,536
  144,315
  156,533
  169,206
  182,352
  195,995
  210,159
  224,875
  240,170
  256,081
  272,640
  289,887
  307,862
  326,606
  346,165
  366,584
  387,914
  410,206
  433,515
  457,896
Retained Cash Flow (-), $m
  -8,622
  -9,511
  -10,429
  -11,333
  -12,220
  -13,087
  -13,933
  -14,760
  -15,570
  -16,365
  -17,151
  -17,931
  -18,712
  -19,498
  -20,294
  -21,107
  -21,941
  -22,803
  -23,696
  -24,626
  -25,597
  -26,614
  -27,683
  -28,806
  -29,989
  -31,235
  -32,549
  -33,935
  -35,397
  -36,940
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  31,064
  37,709
  44,685
  52,152
  60,094
  68,496
  77,344
  86,629
  96,344
  106,485
  115,385
  126,384
  137,822
  149,708
  162,058
  174,888
  188,218
  202,072
  216,475
  231,455
  247,043
  263,273
  280,179
  297,800
  316,176
  335,349
  355,366
  376,272
  398,117
  420,955
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  29,783
  34,521
  38,888
  42,942
  46,580
  49,710
  52,253
  54,145
  55,344
  55,826
  54,795
  53,933
  52,402
  50,260
  47,577
  44,443
  40,953
  37,214
  33,331
  29,411
  25,552
  21,845
  18,363
  15,168
  12,300
  9,784
  7,627
  5,821
  4,346
  3,170
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Amazon.com, Inc. offers a range of products and services through its Websites. The Company operates through three segments: North America, International and Amazon Web Services (AWS). The Company's products include merchandise and content that it purchases for resale from vendors and those offered by third-party sellers. It also manufactures and sells electronic devices. The Company, through its subsidiary, Whole Foods Market, Inc., offers healthy and organic food and staples across its stores. The Company also offers a range of products like whole trade bananas, organic avocados, organic large brown eggs, organic responsibly-farmed salmon and tilapia, organic baby kale and baby lettuce, animal-welfare-rated 85% lean ground beef, creamy and crunchy almond butter, organic gala and fuji apples, organic rotisserie chicken.

FINANCIAL RATIOS  of  Amazon.com, Inc. (AMZN)

Valuation Ratios
P/E Ratio 355
Price to Sales 6.2
Price to Book 43.7
Price to Tangible Book
Price to Cash Flow 51.2
Price to Free Cash Flow 86.7
Growth Rates
Sales Growth Rate 27.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 46.8%
Cap. Spend. - 3 Yr. Gr. Rate 14.4%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 78.9%
Total Debt to Equity 100.4%
Interest Coverage 14
Management Effectiveness
Return On Assets 3.4%
Ret/ On Assets - 3 Yr. Avg. 1.5%
Return On Total Capital 7.2%
Ret/ On T. Cap. - 3 Yr. Avg. 2.7%
Return On Equity 14.5%
Return On Equity - 3 Yr. Avg. 5.7%
Asset Turnover 1.8
Profitability Ratios
Gross Margin 35.1%
Gross Margin - 3 Yr. Avg. 32.5%
EBITDA Margin 9%
EBITDA Margin - 3 Yr. Avg. 7.3%
Operating Margin 3.1%
Oper. Margin - 3 Yr. Avg. 1.8%
Pre-Tax Margin 2.9%
Pre-Tax Margin - 3 Yr. Avg. 1.4%
Net Profit Margin 1.7%
Net Profit Margin - 3 Yr. Avg. 0.7%
Effective Tax Rate 36.6%
Eff/ Tax Rate - 3 Yr. Avg. -17.8%
Payout Ratio 0%

AMZN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMZN stock intrinsic value calculation we used $232887 million for the last fiscal year's total revenue generated by Amazon.com, Inc.. The default revenue input number comes from 0001 income statement of Amazon.com, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AMZN stock valuation model: a) initial revenue growth rate of 19.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for AMZN is calculated based on our internal credit rating of Amazon.com, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Amazon.com, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AMZN stock the variable cost ratio is equal to 84.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $23275 million in the base year in the intrinsic value calculation for AMZN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.9% for Amazon.com, Inc..

Corporate tax rate of 27% is the nominal tax rate for Amazon.com, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AMZN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AMZN are equal to 26.8%.

Life of production assets of 4.5 years is the average useful life of capital assets used in Amazon.com, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AMZN is equal to -14.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $43549 million for Amazon.com, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 491.205 million for Amazon.com, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Amazon.com, Inc. at the current share price and the inputted number of shares is $866.9 billion.

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