Attached is Amazon's most recent 10-K. This is the filing required by the SEC each year, and contains the audited annual financial statements. PDF page 37 contains Amazon's cash flow statement, and PDF page 38 contains the income statement. The figures are quite staggering. As we can see, Amazon finished the year with $36 billion of cash in the bank, and had net income of $11.6 billion. We can see that the year over year increase in income is $1.5 billion/ a roughly 15% increase, and a year-over-year cash increase of $4.3 billion.

How is it possible cash increased more than income? Examine the statement of cash flows. Based on your observations, what category is driving Amazon's positive cash flow (operating activities, investing activities, or financing activities)? Then, within that category, is it clear how Amazon generates most of its cash?

(IL LLLLLIULIS Year Ended December 31, 2017 2018 19,934 $ 21,856 $ 2019 32,173 $ 3,033 10,073 11,588 11,478 4,215 202 (292) (29) 15,341 5,418 274 219 441 21,789 6,864 164 (249) 796 (3,583) (4,780) 7,100 283 738 18,365 (1,314) (4,615) 3,263 472 1,151 30,723 (3,278) (7,681) 8,193 (1,383) 1,711 38,514 CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other Stock-based compensation Other operating expense (income), net Other expense (income), net Deferred income taxes Changes in operating assets and liabilities: Inventories Accounts receivable, net and other Accounts payable Accrued expenses and other Unearned revenue Net cash provided by used in) operating activities INVESTING ACTIVITIES Purchases of property and equipment Proceeds from property and equipment sales and incentives Acquisitions, net of cash acquired, and other Sales and maturities of marketable securities Purchases of marketable securities Net cash provided by (used in) investing activities FINANCING ACTIVITIES: Proceeds from long-term debt and other Repayments of long-term debt and other Principal repayments of finance leases Principal repayments of financing obligations Net cash provided by (used in) financing activities Foreign currency effect on cash, cash equivalents, and restricted cash Net increase (decrease) in cash, cash equivalents, and restricted cash CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD SUPPLEMENTAL CASH FLOW INFORMATION: (11,955) 1,897 (13,972) 9,677 (12,731) (27,084) (13,427) 2,104 (2,186) 8,240 (7,100) (12,369) (16,861) 4,172 (2,461) 22,681 (31,812) (24,281) 16,228 (1,301) (4,799) (200) 9,928 713 1,922 21,856 768 (668) (7,449) (337) (7,686) (351) 10,317 32,173 2,273 (2,684) (9,628) (27) (10,066) $ 4,237 36,410 $ $ 328 S 854 $ 875 Cash paid for interest on long-term debt Cash paid for operating leases Cash paid for interest on finance leases Cash paid for interest on financing obligations Cash paid for income taxes, net of refunds Assets acquired under operating leases Property and equipment acquired under finance leases Property and equipment acquired under build-to-suit arrangements 200 119 957 3,361 647 39 381 194 1,184 881 7,870 13,723 1,362 10,615 9,637 3,541 3,641 AMAZON.COM, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share data) $ 2017 118,573 59,293 177,866 Year Ended December 31, 2018 $ 141,915 $ 90,972 232,887 2019 160,408 120,114 280,522 111,934 25,249 22,620 10,069 3,674 214 139,156 34,027 28,837 13,814 4,336 296 165,536 40,232 35,931 18,878 5,203 201 265,981 14,541 832 (1,600) 173,760 220,466 12,421 Net product sales Net service sales Total net sales Operating expenses: Cost of sales Fulfillment Technology and content Marketing General and administrative Other operating expense (income), net Total operating expenses Operating income Interest income Interest expense Other income (expense), net Total non-operating income (expense) Income before income taxes Provision for income taxes Equity-method investment activity, net of tax Net income Basic earnings per share Diluted earnings per share Weighted-average shares used in computation of earnings per share: Basic Diluted 4,106 202 440 (848) 346 203 (1,417) (183) (1,160) 11,261 (1,197) (300) 3,806 (769) (4) 3,033 6.32 6.15 (565) 13,976 (2,374) (14) 11,588 23.46 23.01 $ $ $ 10,073 20.68 20.14 $ $ $ 480 487 494 493 500 504