Netflix Financial Statements and Financial Ratios Analyzed from 2016 to 2020
Thanks for visiting my Netflix Financial Report page. On this page, you will be able to find preliminary information about Netflix's current financial performance as well as some historical track records and trends.
For a more detailed examination of Netflix's financial performance, please check out the "Financial Report". In this report, written by myself, Paul Borosky, MBA., Doctoral Candidate, and published author, you will find:
- Summarized income statement for the last 5 years.
- Summarized balance sheet for the last 5 years.
- Summary analysis by myself of the important income statement, balance sheet, and financial ratio trends, and other happenings.
- Five year’s worth of over ten common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
- Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
- Professional financial analysis tips are provided in each section to help YOU conduct your OWN financial analysis!
- Each section includes an “in other words” segment. This is where I use plain English to explain concepts.
Enjoy the preliminary information and for a more detailed analysis, buy the financial report!
Paul Borosky, MBA. (Updated 2021)
Sample Financial Report
Netflix: Brief Summary
Netflix headquarters is located in Los Gatos, CA. The company competes in the communications services sector—specifically, the entertainment industry. At present, the organization employs approximately 9,400 individuals. Netflix’s main revenue generator is the sale of monthly subscriptions to their movie streaming services. A secondary revenue generator for the firm is the rental of DVDs.
From a financial perspective, Netflix’s market capitalization is about $242 billion as of August 2021. Their beta is .75. This indicates that the company’s stock is slightly less risky as compared to the overall market. Their stock price range for the last 52 weeks has been between $458.60 to $593.29. In the last year, the company has not paid out dividends. This indicates that the firm is still in an expansionary business cycle.
Netflix Financial Report Sources
“Netflix 2020 Company Analysis: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA., and owner of Quality Business Plan. In this book, the author selected Netflix's 2020 10k, 2017 10k annual report, 2016 10k annual report, 2018 10k annual report, and Netflix's 2019 10k annual report as the basis for information gathering.
Section 1: Netflix Income Statement Analyzed 2016 to 2020
In this section, I walk through a broad definition as to what an income statement is and why it is important. From this, I then discuss and define income statement line items, such as revenues, gross profits, etc. in detail. After each line item is defined and discussed, I finally offer a summary analysis of Netflix's important income statement line item trends from 2016 to 2020, in most cases.
Netflix Revenue Growth:
Netflix ended 2016 with revenues at approximately $8.8 billion. In the next four years, the organization would substantially increase its revenues ending 2020 at $24.9 billion. On average, revenue growth was approximately 30% annually. In my humble opinion, double-digit revenue by a multi-national organization such as this is impressive. However, as more organizations enter the streaming market, like Disney, subscriber growth should slow substantially.
Netflix 2020 Income Statement Summary
|R & D||1,829,600||1,545,149||1,221,814||953,710||780,232|
Section 2: Netflix Balance Sheet Analyzed from 2016 to 2020
For Netflix balance sheet, I again go through each important line item from the balance sheet. In reviewing each line item, I will define Netflix's balance sheet line item, such as cash, property, plant and equipment, and liabilities between 2016 to 2020. Next, I then offer a summary analysis of Netflix’s important balance sheet line items.
In 2016, Netflix’s cash position was $1.4 billion. In the next several years, the organization would substantially increase its cash position ending 2020, at $8.2 billion. The substantial growth in their cash position shows that the firm may not be utilizing short-term investment opportunities optimally. A better strategy would be for the organization to set a target cash position as compared to sales. Any additional funds above this cash target position should then be divested into short-term investments. By doing this, the organization is fully utilizing its cash position for revenue-generating opportunities in the form of dividends or interest payments.
Netflix Summary Balance Sheet 2020
|Short Term Investment||-||-||-||-||266,206|
|LT Debt - Current||-||-||-||-||-|
|Total Current Liabilities||7,805,785||6,855,696||6,487,320||7,669,974||5,720,291|
|Total Equity & Liability||39,280,359||33,975,712||25,974,400||19,012,742||13,586,610|
Section 3: Netflix Financial Ratios Analyzed from 2016 to 2020
For this section, I have chosen several different financial ratios to review for Netflix from 2016 to 2020. In reviewing each of Netflix’s financial ratios, I first start with defining the financial ratio. Next, I supply the financial formula for calculating the specific ratio. Finally, I offer a brief analysis of Netflix’s Important Financial ratios.
Netflix Current Ratio
Netflix’s current ratio ended 2016 at 1.0. In the next two years, the organization would improve its current ratio ending 2018 at 1.49. However, in 2019, the organization’s current ratio would fall to .9. Fortunately, in 2020, the company would improve its current ratio ending the year at 1.25.
When organizations continually receive cash flows on a daily basis, such as retailers and restaurants, having a low current ratio, such as .7 or .8, has become commonplace. Netflix may be an excellent candidate to enjoy the opportunities presented with lower current ratios. However, it seems like the firm is bypassing opportunities to hold less cash and current assets as compared to current liabilities.
Netflix Fixed Asset Turnover
Netflix fixed asset turnover ended 2016 at 35.2. In the next two years, the organization fixed asset turnover would increase substantially, ending 2018 at 37.7. However, in the last two years, the organization’s fixed asset turnover would continually fall, ending 2020 at 26.0.
The continued and sustained fall and underutilization of fixed assets show that the firm’s revenue growth expectations may not be met in the long term. If this trend continues, the company needs to sell off underperforming assets to better utilize their current fixed assets under management.
Netflix Liquidity Ratios 2020
|Net Working Capital||6,447,171||3,501,047|
Netflix Asset Utilization 2020
|Total Asset Turnover||0.64||0.59|
|Fixed Asset Turnover||26.03||35.66|
|Days Sales Outstanding||-||-|
|Accounts Receivable Turnover||#DIV/0!||#DIV/0!|
|Working Capital Turnover||3.88||5.76|
|Average Days Inventory||#DIV/0!||#DIV/0!|
|Average Days Payable||0.10||0.08|
Netflix Profitability Ratios 2020
|Return on Assets||7.03%||5.49%|
|Return on Equity||24.96%||24.62%|
|Net Profit Margin||11.05%||9.26%|
|Gross Profit Margin||38.89%||38.28%|
|Operating Profit Margin||18.34%||12.92%|
|Basic Earning Power||11.67%||7.67%|
Netflix Long-term Debt
|Times Interest Earned||5.97||4.16|