Netflix - Financial Health Analysis Commentary
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attachment_1.xlsxRatios 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 |
