Netflix Financial Report and Financial Analysis: 2015 to 2019
Netflix Financial Report and Financial Analysis started with an in-depth review of Netflix's 10k Annual report, specifically, Netflix's income statement and balance sheet.
Next Paul Borosky, MBA., summarized their financial information and input it into a proprietary financial model, which shows their income statement and balance sheet trends as well as calculations for Netflix's financial ratios, and financial ratio trends covering 5 years.
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Netflix stock price started 2019 at $302.01. It ended the year with a stock price of $326.78. This is a growth rate annually of 8.17%. From an investor’s perspective, this growth rate is about average as compared to overall market returns.
Netflix has not paid out dividends in the last five years. The zero dividend payment policy may be due to the company’s need for internal growth. However, over the next several years, investors should expect some type of dividends to be paid once the organization reaches the mature phase of their business cycle.
Netflix Income Statement Summary
Research and Development
Netflix has steadily been increasing its investment in research and development. In the last four years, they have averaged about a 25% annual growth in this line item. This shows that the company has ample opportunities to develop and create innovative products and services in the next several years. However, if the organization starts to reduce their research and development, this may indicate to investors that the firm is lowering their expectations for future innovations.
Netflix Summary Income Statement 2019
|R & D||1,545,149||1,221,814||953,710||780,232||650,788|
Netflix Balance Sheet Summary
Long Term Debt
Netflix's long-term deposition has grown substantially as compared to total assets. In 2015, the company’s long-term debt as compared to total assets was approximately 23%. As of the end of 2019, the long-term debt as compared to total assets ballooned up to 43%. This shows that the firm is continually relying upon debt to maintain and grow operations. As their debt position increases, the company should expect elevated interest rates due to increased risk for the firm.
Netflix Summary Balance Sheet 2019
|Short Term Investment||-||-||-||266,206||501,385|
|LT Debt - Current||-||-||-||-||-|
|Total Current Liabilities||6,855,696||6,487,320||7,669,974||5,720,291||3,529,624|
|Total Equity & Liability||33,975,712||25,974,400||19,012,742||13,586,610||10,202,871|
Netflix Financial Ratio Summary and Analysis
The organization's cash ratio has increased from .51 in 2015 to .73 and 2019. This shows that the firm has substantial cash as compared to liabilities that may need to be paid. Another reason to rest assured that the firm is financially liquid in the short term.
Fixed Asset Turnover
The firm’s fixed asset turnover has fallen from 39 to 35.6. Again, Netflix is underutilizing its property and equipment. To improve upon the situation, the firm may seek to liquidate some fix assets. This action would improve the fixed asset turnover ratio. However, it would not change the total asset turnover underutilization.
Net Profit Margin
Netflix's net profit margin had increased from 1.8% in 2015 to 9.3% in 2019. As compared to other industry competitors, the firm’s net profit margin may be considered a bit below average. However, the growth rate is what is impressive. The net profit margin growth rate from 2018 to 2019 was 20.7%. For the previous year, the growth rate was 60%. If this growth rate is sustainable, then the firm’s net profit margin will exceed the industry average in the next several years.
Netflix 2019 Liquidity Ratios
|Net Working Capital||3,501,047||2,754,081|
Netflix 2019 Asset Utilization Ratios
|Total Asset Turnover||0.59||0.61|
|Fixed Asset Turnover||35.66||37.76|
|Days Sales Outstanding||-||-|
|Accounts Receivable Turnover||#DIV/0!||#DIV/0!|
|Working Capital Turnover||5.76||5.73|
|Average Days Inventory||#DIV/0!||#DIV/0!|
|Average Days Payable||0.08||0.08|
Netflix 2019 Profitability Ratios
|Return on Assets||5.49%||4.66%|
|Return on Equity||24.62%||23.12%|
|Net Profit Margin||9.26%||7.67%|
|Gross Profit Margin||86.84%||85.00%|
|Operating Profit Margin||12.92%||10.16%|
|Basic Earning Power||7.67%||6.18%|
Netflix 2019 Long-term Debt
|Times Interest Earned||4.16||3.82|