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I'm completely new to looking at company financial statements for analysis, so please correct any misconceptions I have here. I'm having trouble with reading an Income Statement. I am looking at the Income Statements provided by Amazon between 2016 and 2019 using MSN.com (link will be provided), and I'm not sure how the Operating Expenses were calculated for 2016 (or any of the other years for that matter). My confusion makes further calculations even more difficult.

For Example:

In 2016, Amazon's Gross Profit after subtracting Cost of Revenue from Total Revenue ($135,987) comes out to $47,722.0 million (so far, this makes mathematical sense). When looking at the Operating Expenses, it shows $131,801.0 million. This is where it gets confusing. The breakdown of Operating Expenses should be SGA and Research costs, which when totaled comes out to $43,369 ($27,284 + $16,085), which means that it should be Gross Profit ($47,722) - Total Operating Expenses ($43,369) = $4,353. I assume this is how I would do this?

But that's not it at all, the Operating Expenses are shown to be $131,801. Where did that number come from? This makes understanding how Amazon spent its $47,722 million Gross Profit on Operating Expenses confusing and just complicates the picture for me.

Hopefully, I explained the problem well enough.

Here is a picture of what I'm looking at with highlighted sections:

Screenshot

And here is a link to the original page: https://www.msn.com/en-us/money/stockdetails/financials/nas-amzn/fi-a1nhlh

Any guidance would be greatly appreciated. Thanks in advance!

1 Answer 1

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The difference between the results you got ($4,353 mm) and the actual number ($4,186 mm) is the Other operating expense ($167 mm) but MSN didn't state it.

To verify my answer, visit $AMZN's annual report on US Stock exchange website. Use find Other operating expense, net. you will find that Other operating expense, net in 2016 was $167 mm.

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  • Thank you, Uncle Maher! That helps a lot. I really appreciate your help!
    – Sam Moran
    Nov 29, 2020 at 15:20
  • @SamMoran You are welcome. I am happy that did. Kindly accept it as answer by clicking on the Check mark. Thank you. Nov 30, 2020 at 9:58

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