Amazon.com, Inc. (AMZN) is the worlds leading Internet retailer of merchandise and media. Amazon also designs and

Question:

Amazon.com, Inc. (AMZN) is the world€™s leading Internet retailer of merchandise and media. Amazon also designs and sells electronic products, such as e-readers. Netflix, Inc. (NFLX) is one of the world€™s leading Internet television networks. Both companies compete in the digital media and streaming space. However, Netflix is more narrowly focused in the digital streaming business than is Amazon. Sales and average book value of fixed assets information (in millions) are provided for Amazon and Netflix for a recent year as follows:

Netflix Amazon.com $135,987 25,476 $8,830 212 Sales Average book value of fixed assets

a. Compute the fixed asset turnover ratio for each company. Round to one decimal place.
b. Which company is more efficient in generating sales from fixed assets?
c. Interpret your results.

Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.

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