My first part is showing how our strategic investments boost our activity First, our gross profit on net sales ratio for 2010 is equal to about 20% like its main competitor, Staples, except that Amazon sales are three times superior to Staples sales. In fact, for 5 years, our average growth in sales has been 34% against 25% for the industry. This higher progression is due to investments in all aspects of the customer experience, including: lowering prices, improving availability, offering faster delivery and increasing product categories.

Then, our operating income to net sales ratio remained stable to 4% against 6% for Staples. This ratio stability is explained by the fact that we increased our operating expenses by making investments in marketing for online marketing channels and television advertising, and investments in technology and content for payroll of new engineers and technology infrastructure. However, our net profit on net sales ratio is slightly decreasing to 3% but remains at the level of the Staples one.

This fall is also due to income taxes in progress of $100 million between 2009 and 2010. Indeed, our tax rate is subject to significant variation due to the numerous taxable jurisdictions to which our business is related. Concerning our inventory turnover ratio, it is decreasing to 10 because of our continuing focus on in-stock inventory availability and our investment in new geographies and product lines. But thanks to sophisticated inventory forecasting, our ratio is still superior to both industry and Staples ratios of 8.

Our working capital turnover ratio of 10 benefits from its fast inventory turn. Moreover, Amazon has managed to build a retail business with a negative operating cashflow cycle, which means Amazon gets paid by customers before they have to pay their suppliers. That’s why our Receivables Turnover Ratio of 36 is largely superior to industry ratio of 26. Now my second part shows our Efficient Debt Management to strengthen our liquidity and solvency position Concerning the equity to debt ratio, it is near zero for two reasons.

Firstly, we have had a tight capital management because before 2005 our increasing debt combined with increasing losses drove our shareholder equity to be negative. Secondly, the company seeks to efficiently manage shareholder dilution while maintaining the flexibility to issue shares for strategic purposes, such as: -financings, -acquisitions, -and aligning employee compensation with shareholders’ interests (restricted stock) Then, the analysis of our current assets to total debt ratio shows a better liquidity position for Amazon with a ratio of 115% against 93% for Staples.

The higher Amazon ratio may due to its cash and cash equivalents level because we generally invest our excess cash in short term investments. Concerning our times interest earned ratio, it is increasing to 39 against 7 for Staples. This progression is due to a lesser increase of the interests compared to the EBIT since our weighted average interest rate is 5. 5% in 2010 against 6. 4% in 2009. Moreover, our total coverage ratio is also in progress on account of repayments of long-term debt which are in diminution of $251 million over 2010.

Long-term debt relates to amounts borrowed to fund certain international operations. And eventually, for 5 years, our debt ratio has decreased to 64% against 90%. Indeed, our fixed assets have largely progressed because we seek to efficiently invest in several areas of technology and content, including: seller platforms and expansion of new and existing product categories, as well as in technology infrastructure to enhance the customer experience.