Question

which company has more debt alibaba or amazon? please give reasons why?

Answer 1

Amazon has higher debt capital of total $28 billion in its books of accounts whereas Alibaba has almost $18 billion of debt in its books of accounts.

But, when we are looking from the total perspective of the debt to Capital ratio than overall debt to Capital ratio of Amazon is almost 30% in comparison to Alibaba 25%, so Amazon is having a higher debt to Capital ratio because it is taking higher amount of debt capital in order to maximize its overall rate of return and it is a growing company so it can be justified with growing debt capital because it is making higher rate of return in order to deal with the interest payment.

Reasons associated with higher debt capital is the higher growth of Amazon and more global than Alibaba because Alibaba has a highest concentration in China.