The following pages contain the consolidated balance sheets and statements of income and cash flows taken from the 2019 annual report of the retail powerhouse Amazon.

INSTRUCTIONS:
Analyze the statements by using the ROE model, and identify the factors driving Amazon's ROE. Focus on the primary components of the model: ROE, ROA, capital structure leverage, return on sales, and total asset turnover.

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AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) Year Ended December 31, 2017 2018 2019 Net product sales $118,573 $141,915 $160,408 Net service sales 59,293 90,972 120,114 Total net sales 177,866 232,887 280,522 Operating expenses: Cost of sales 111,934 139,156 165,536 Fulfillment 25,249 34,027 40,232 Technology and content 22,620 28,837 35,931 Marketing 10,069 13,814 18,878 General and administrative 3,674 4,336 5,203 Other operating expense (income), net 214 296 201 Total operating expenses 173,760 220,466 265,981 Operating income 4,106 12,421 14,541 Interest income 202 440 832 Interest expense (848) (1,417) (1,600) Other income (expense), net 346 (183) 203 Total non-operating income (expense) (300) (1,160) (565) Year Ended December 31, 2017 2018 2019 Income before income taxes 3,806 11,261 13,976 Provision for income taxes (769) (1,197) (2,374) Equity-method investment activity, net of tax (4) (14) Net income $ 3,033 $ 10,073 $11,588 Basic earnings per share $ 6,32 $ 20.68 $ 23.46 Diluted earnings per share $ 6.15 $ 20.14 $ 23.01 Weighted-average shares used in computation of earnings per share: Basic 480 487 494 Diluted 493 500 504