11 Jun This is a financial health analysis about Netflix and its financial statements of the last 5 years. Write a minimum of four (4) pages of high quality well-writt
Question
This is a financial health analysis about Netflix and its financial statements of the last 5 years. Write a minimum of four (4) pages of high quality well-written APA formatted standard.
1. Start by briefly providing some high-level comments on Netflix’s financial statements for the last five years.
2. Use the various ratio analysis already calculated in the (excel file attached) and other forms of analyses like trend analysis to identify 2-3 financial opportunities or challenges.
3. Investigate a couple of news and press releases focused on the organization to better understand the underlying factors influencing those issues.
Instructions:
-4 pages minimum with double spacing
-Font: Times New Roman, Size 12
-At least six (6) peer-reviewed sources (include DOI in reference page) (Use them to define terms/concepts)
-In-text citations
-No plagiarism (IMPORTANT)
Ratios Analysis
| Liquidity and Efficiency | 2021 | 2020 | 2019 | 2018 | 2017 | |||
| Current Ratio | Current Assets/Current Liabilities | 0.95 | 1.25 | 0.90 | 1.49 | 1.40 | ability to pay current liabilities. | |
| Acid-Test Radio | Cash+ST Investments-Current Receivables/Current Liabilities | 0.62 | 0.97 | 0.56 | 0.47 | 0.42 | excludes inventory and prepaid expenses (2021&2020) | (referred to as its liquidity) |
| Accounts Receivable Turnover | Net sales/Average Acc Receivable Net | |||||||
| Inventory Turnover | COGS/Average Inventory | |||||||
| Days' Sales Uncollected | Acc Reveivable Net/Net Sales x 365 | |||||||
| Days' Sales in Inventory | Ending Inventory/COGS x 365 | |||||||
| Total Assets Turnover | Net Sales/Average Total Assets | 0.67 | 0.64 | 0.59 | 0.61 | 0.61 | ||
| Solvency (Ana) | ||||||||
| Debt Ratio | Total Liabilities/Total Assets | 0.64 | 0.72 | 0.78 | 0.80 | 0.81 | ||
| Equity Ratio | Total Equity/Total Assets | 0.36 | 0.28 | 0.22 | 0.20 | 0.19 | ||
| Debt-to-Equity Ratio | Total Liabilities/ Total Equity | 1.81 | 2.55 | 3.48 | 3.96 | 4.31 | ||
| Times Interest Earned | Income before Interest Expense & Income Taxes/Interest Expense | -8.09 | -5.97 | -4.16 | -3.82 | -3.52 | ||
| Profitability | ||||||||
| Profit Margin Ratio | Net Income/Net Sales | 0.17 | 0.11 | 0.09 | 0.08 | 0.05 | ||
| Gross Margin Ratio | Net Sales-COGS/Net Sales | 0.42 | 0.39 | 0.38 | 0.37 | 0.31 | ||
| Return on Total Assets | Net Income/Average Total Assets | 0.11 | 0.07 | 0.05 | 0.05 | 0.03 | ||
| Return on Stockholders' Equity | Net Income/Stockholder's Equity | 0.32 | 0.25 | 0.25 | 0.24 | 0.16 | ||
| Book Value per Common Share | Shareholders Equity to Common Shares/Average shares outstanding | 35.76 | 25.10 | 17.32 | 12.03 | 8.29 | ||
| Basic Earning per Share | Net Income-Preferred Dividends/Weights Average Common Shares Outstanding | $11.55 | $6.26 | $4.26 | $2.78 | $1.29 | ||
| Market Prospects (Ana) | ||||||||
| Price-Earnings Ratio | Share Price/Earning per Share | 51.15 | 79.16 | 66.19 | 130.45 | 140.83 | P/E Ratio in the entertainment/production industry is very volatile therefore, the big changes during the past 5 years. | |
| Dividend Yield | Annual Cash dividends per Share/Market Price per Share | n/a | n/a | n/a | n/a | n/a | Netflix has never paid or declared any cash dividends on their capital stock | |
| https://s22.q4cdn.com/959853165/files/doc_financials/2021/q4/da27d24b-9358-4b5c-a424-6da061d91836.pdf |
P&L
| NETFLIX, INC. | |||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||
| (in thousands, except per share data) | |||||
| 2021 | 2020 | 2019 | 2018 | 2017 | |
| Revenues | $29,697,844 | $24,996,056 | $20,156,447 | $15,794,341 | $11,692,713 |
| Cost of revenues | $17,332,683 | $15,276,319 | $12,440,213 | $9,967,538 | $8,033,000 |
| Marketing | $2,545,146 | $2,228,362 | $2,652,462 | $2,369,469 | $1,436,281 |
| Technology and development | $2,273,885 | $1,829,600 | $1,545,149 | $1,221,814 | $953,710 |
| General and administrative | $1,351,621 | $1,076,486 | $914,369 | $630,294 | $431,043 |
| Operating income | $6,194,509 | $4,585,289 | $2,604,254 | $1,605,226 | $838,679 |
| Other income (expense): | |||||
| Interest expense | -$765,620 | -$767,499 | -$626,023 | -$420,493 | -$238,204 |
| Interest and other income (expense) | $411,214 | -$618,441 | $84,000 | $41,725 | -$115,154 |
| Income before income taxes | $5,840,103 | $3,199,349 | $2,062,231 | $1,226,458 | $485,321 |
| Provision for (benefit from) income taxes | -$723,875 | -$437,954 | -$195,315 | $15,216 | $73,608 |
| Net income | $5,116,228 | $2,761,395 | $1,866,916 | $1,241,674 | $558,929 |
| Earnings per share: | |||||
| Basic | $11.55 | $6.26 | $4.26 | $2.78 | $1.29 |
| Diluted | $11.24 | $6.08 | $4.13 | $2.68 | $1.25 |
| Weighted-average common shares outstanding: | 443,155 | 440,922 | 437,799 | 435,374 | 431,885 |
| Weighted-average number of shares | 455,372 | 454,208 | 451,765 | 451,000 | 447,000 |
| Average Share Price | 590.80 | 495.55 | 281.95 | 362.64 | 181.67 |
Balance Sheet
| NETFLIX, INC. | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| (in thousands, except share and per share data) | |||||||
| As of December 31, | |||||||
| 2021 | 2020 | 2019 | 2018 | 2017 | |||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | 6,027,804 | 8,205,550 | 5,018,437 | 3,794,483 | 2,822,795 | ||
| Current content assets, net | 0 | 5,151,186 | 4,310,934 | ||||
| Other current assets | 2,042,021 | 1,556,030 | 1,160,067 | 748,466 | 536,245 | ||
| Total current assets | 8,069,825 | 9,761,580 | 6,178,504 | 9,694,135 | 7,669,974 | ||
| Content assets, net | 30,919,539 | 25,383,950 | 24,504,567 | 14,951,141 | 10,371,055 | ||
| Property and equipment, net | 1,323,453 | 960,183 | 565,221 | 418,281 | 319,404 | ||
| Other non-current assets | 4,271,846 | 3,174,646 | 2,727,420 | 910,843 | 652,309 | ||
| Total assets | 44,584,663 | 39,280,359 | 33,975,712 | 25,974,400 | 19,012,742 | ||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities: | |||||||
| Current content liabilities | 4,292,967 | 4,429,536 | 4,413,561 | 4,681,562 | 4,173,041 | ||
| Accounts payable | 837,483 | 656,183 | 674,347 | 562,985 | 359,555 | ||
| Accrued expenses and other liabilities | 1,449,351 | 1,102,196 | 843,043 | 481,874 | 315,094 | ||
| Deferred revenue | 1,209,342 | 1,117,992 | 924,745 | 760,899 | 618,622 | ||
| Short-term debt | 699,823 | 499,878 | |||||
| Total current liabilities | 8,488,966 | 7,805,785 | 6,855,696 | 6,487,320 | 5,466,312 | ||
| Non-current content liabilities | 3,094,213 | 2,618,084 | 3,334,323 | 3,759,026 | 3,329,796 | ||
| Long-term debt | 14,693,072 | 15,809,095 | 14,759,260 | 10,360,058 | 6,499,432 | ||
| Other non-current liabilities | 2,459,164 | 1,982,155 | 1,444,276 | 129,231 | 135,246 | ||
| Total liabilities | 28,735,415 | 28,215,119 | 26,393,555 | 20,735,635 | 15,430,786 | ||
| Commitments and contingencies (Note 7) | |||||||
| Stockholders’ equity: | |||||||
| Preferred stock, $0.001 par value; 10,000,000 shares authorized at December 31, 2021 and December 31, 2020; no shares issued and outstanding at December 31, 2021 and December 31, 2020 | — | ||||||
| Common stock, 0.001 par value; 4,990,000,000 shares authorized at December 31, 2021 and December 31, 2020; 443,963,107 and 442,895,261 issued and outstanding at December 31, 2021 and December 31, 2020, respectively | 4,024,561 | 3,447,698 | 2,793,929 | 2,315,988 | 1,871,396 | Common stock, $0.001 par value; 4,990,000,000 shares authorized at December 31, 2019 and December 31, 2018, respectively; 438,806,649 and 436,598,597 issued and outstanding at December 31, 2019 and December 31, 2018, respectively | Common stock, $0.001 par value; 4,990,000,000 shares authorized at December 31, 2018 and December 31, 2017, respectively; 436,598,597 and 433,392,686 issued and outstanding at December 31, 2018 and December 31, 2017, respectively |
| Treasury stock at cost (1,564,478 shares at December 31, 2021) | -824,190 | 0 | 0 | 0 | |||
| Accumulated other comprehensive income (loss) | -40,495 | 44,398 | -23,521 | -19,582 | -20,557 | ||
| Retained earnings | 12,689,372 | 7,573,144 | 4,811,749 | 2,942,359 | 1,731,117 | ||
| Total stockholders’ equity | 15,849,248 | 11,065,240 | 7,582,157 | 5,238,765 | 3,581,956 | ||
| Total liabilities and stockholders’ equity | 44,584,663 | 39,280,359 | 33,975,712 | 25,974,400 | 19,012,742 | ||
| 0 | 0 | 0 | 0 | 0 | |||
| Other Current Assets | 2021 | 2020 | Not available | ||||
| Trades Receivables | 804,320 | 610,819 | |||||
| Prepaid Expenses | 323,818 | 203042 | |||||
| Other | 913,883 | 742,169 | |||||
| Total other current assets | 2,042,021 | 1,556,030 |
