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Amazon.com Inc. Message Board

  • WhyCantI WhyCantI Jan 9, 1998 6:25 AM Flag

    What is $15.3m in "accounts payable"?

    In the last SEC 10-Q (a.k.a. Quarterly Report) AMZN reported $15.3m in "accounts payable". As I understand it, "accounts payable" means bills it owes but has not yet paid. Is this just for books it has sold yet not paid for? Does AMZN owe $15.3m for books to publishers?

    If so, that seems like an awfully high percentage of sales to still owe! Comments?

    Cheers,
    s/WhyCantI/

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    • "Does AMZN owe $15.3m for books to publishers?"

      Probably not the entire $15.3m, but almost all of it. Publishers typically allow up to 90 days to pay for books since many titles will sit on the shelf a long time before being sold. Books also have a high return rate, so it's easier on bookstores and publishers to wait a while to see if the book will sell before paying for it.

      "If so, that seems like an awfully high percentage of sales to still owe!"

      Not in this industry, for reasons described above. However, for a company with no incoming cash flow, it is very significant. If AMZN was making money, it wouldn't be a big deal. But AMZN still has yet to earn a single dollar, which means they must be sure to have enough cash on hand to pay off these accounts. AMZN may have a lot of cash, but $15.3m has already been spent.

      That fact will push up the date of a secondary stock offering. Moreover, half of all money earned from a secondary must be used to pay off the $75-$100 million credit line, as outlined in their contract with DMG. No earnings, diminishing cash, increasing debt -- that sounds like a company heading towards bankruptcy.

 
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