Calculate the financial ratios such as liquidity ratios

Assignment Help Corporate Finance

Reference no: EM13747200

Calculate the financial ratios such as :Liquidity Ratios, Profitiabilty Ratios, Activity Ratios, Leverage Ratios and another ratios you think it is important make the financial analysis and discussion coparing between two years and your recommendation.

In 2011, Netflix surpassed US$3.2 billion in sales, an annual revenue growth of 50% over 2010 (US$2.1 billion). Subscriber growth was the most important metric for Netflix because its revenue growth was directly correlated to its subscriber growth. Netflix grew from 12 million subscribers in 2009 to 20 million in 2010, and then to 27 million in 2012. International operations were set to expand to become a major source of sales growth for the company in the coming years.

However, by 2012, Netflix faced challenges from its pricing changes in the United States and its expansion into international markets, even stating that it expected revenue per subscriber to drop from its 2011 level of US$11.5634 as subscribers choose the streaming only option of US$7.99 over the more expensive streaming and DVD delivery option. For future revenue growth, Netflix needed to increase its subscribers numbers both domestically and internationally.

Netflix, Inc. Consolidated Statements of		Year ended December 31
Netflix, Inc. Consolidated Statements of		2011	2010	2009
Operations⁵s (in thousands, except	Revenues Cost of revenues:	$3,204,577	$2,162,625	$1,670,269
per-share data)	Subscription	1,789,596	1,154,109	909,461
	Fulfillment expenses	250,305	203,246	169,810
	Total cost of revenues	2,039,901	1,357,355	1,079,271
	Gross profit	1,164,676	805,270	590,998
	Operating expenses:
	Marketing	402,638	293,839	237,744
	Technology and development	259,033	163,329	114,542
	General and administrative	117,937	64,461	46,773
	Legal settlement	9,000
	Total operating expenses	788,608	521,629	399,059
	Operating income	376,068	283,641	191,939
	Other income (expense):
	Interest expense	(20,025)	(19,629)	(6,475)
	Interest and other income	3,479	3,684	6,728
	Income before income taxes	359,522	267,696	192,192
	Provision for income taxes	133,396	106,843	76,332
	Net income	$226,126	$160,853	$115,860
	Net income per share:
	Basic	$4.28	$3.06	$2.05
	Diluted	$4.16	$2.96	$1.98
	Weighted-average common shares outstanding:
	Basic	52,847	52,529	56,560
	Diluted	54,369	54,304	58,416

EXHIBIT 2 Netflix, Inc. Consolidated Balance Sheets⁵⁵	As of December 31
		2011	2010
(in thousands, except share and	Assets Current assets:
per-share data)	Cash and cash equivalents	$508,053	$194,499
	Short-term investments	289,758	155,888
	Current content library, net	919,709	181,006
	Prepaid content	56,007	62,217
	Other current assets	57,330	43.621
	Total current assets	1.830,857	637,231
	Non-current content library, net	1,046,934	180,973
	Property and equipment, net	136,353	128,570
	Other non-current assets	55,052	35,293
	Total assets	$3,069,196	$982,067
	Liabilities and stockholders' equity
	Current liabilities:
	Content accounts payable	$924,706	$168,695
	Other accounts payable	87,860	54,129
	Accrued expenses	63,693	38,572
	Deferred revenue	148,796	127,183
	Total current liabilities	1,225,055	388,579
	Long-term debt	200,000	200,000
	Long-term debt due to related party	200,000	-
	Non-current content liabilities	739,628	48,179
	Other non-current liabilities	61,703	55,145
	Total liabilities	2,426,386	691,903
	Commitments and contingencies (Note 5)
	Stockholders' equity:
	Preferred stock, $0.001 par value; 10,000,000 shares authorized at December 31, 2011 and 2010; no shares
	issued and outstanding at December 31, 2011 and 2010		-
	Common stock, $0.001 par value; 160,000,000 shares authorized at December 31, 2011 and 2010; 55,398,615 and 52,781,949 issued and outstanding at December 31, 2011 and 2010, respectively	55	53
	Additional paid-in capital	219,119	51,622
	Accumulated other comprehensive income	706	750
	Retained earnings	422,930	237,739
	Total stockholders' equity	642,810	290,164
	Total liabilities and stockholders' equity	$3,069,196	$982,067

EXHIBIT 3

Netflix, Inc. Consolidated Statements of Cash Flows55 (in thousands)

Year Ended December 31
	2011	2010	2009
Cash flows from operating activities:
Net income	$226,126	$160,853	$115,860
Adjustments to reconcile net income to net cash provided by operating activities:
Additions to streaming content library	(2,320,732)	(406,210)	(64,217)
Change in streaming content liabilities	1,460,400	167,836	(4,014)
Amortization of streaming content library	699,128	158,100	48,192
Amortization of DVD content library	96,744	142,496	171,298
Depreciation and amortization of property, equipment. and intangibles	43,747	38,099	38,044
Stock-based compensation expense	61,582	27,996	12,618

Year Ended December 31
	2011	2010	2009
Excess tax benefits from stock-based compensation	(45,784)	(62,214)	(12,683)
Other non-cash items	(4,050)	(9,128)	(7,161)
Deferred taxes	(18,597)	(962)	6,328
Gain on sale of business			(1,783)
Changes in operating assets and liabilities:
Prepaid content	6,211	(35,476)	(5,643)
Other current assets	(4,775)	(18,027)	(5,358)
Other accounts payable	24,314	18,098	1,537
Accrued expenses	68,902	67,209	13,169
Deferred revenue	21,613	27,086	16,970
Other non-current assets and liabilities	2,883	645	1,906
Net cash provided by operating activities	317,712	276,401	325,063
Cash flows from investing activities:
Acquisition of DVD content library	(85,154)	(123,901)	(193,044)
Purchases of short-term investments	(223,750)	(107,362)	(228,000)
Proceeds from sale of short-term investments	50,993	120,857	166,706
Proceeds from maturities of short-term investments	38,105	15,818	35,673
Purchases of property and equipment	(49,682)	(33,837)	(45,932)
Proceeds from sale of business			7,483
Other assets	3,674	12,344	11,035
Net cash used in investing activities	(265,814)	(116,081)	(246,079)
Cash flows from financing activities:
Principal payments of lease financing obligations	(2,083)	(1,776)	(1,158)
Proceeds from issuance of common stock upon exercise of options	19,614	49,776	35,274
Proceeds from public offering of common stock, net of issuance costs	199,947
Excess tax benefits from stock-based compensation	45,784	62,214	12,683
Borrowings on line of credit, net of issuance costs			18,978
Payments on line of credit			(20,000)
Proceeds from issuance of debt, net of issuance costs	198,060		193,917
Repurchases of common stock	(199,666)	(210,259)	(324,335)
Net cash provided by (used in) financing activities	261,656	(100,045)	(84,641)
Net increase (decrease) in cash and cash equivalents	313,554	60,275	(5,657)
Cash and cash equivalents, beginning of year	194,499	134,224	139,881
Cash and cash equivalents, end of year	$508,053	S194,499	$134,224
Supplemental disclosure:
Income taxes paid	$79,069	$56,218	$58,770
Interest paid	19,395	20,101	3,878

Reference no: EM13747200

Questions Cloud

Estimating project cash flows : Listed below are factors that may be essential for inclusion when estimating project cash flows. The factors may be required to correctly calculate either the initial investment, the operating cash flows, or the terminal value that would be analy..

Do you think mining experience would have helped 49 eras : do you think mining experience would have helped the average 49 eras?

Brief overview of chosen organization and your role in it : Submit written project proposal containing the following: A brief overview of the chosen organization and your role in it, Preliminary problem statement in the form of a researchable question

Write an essay on likely shape of human civilization : Write an imaginative essay on the likely shape of human civilization in the year 5000. Human civilization will be transformed to tribalism, Security and people will be struggling to find food and other basics for daily needs.

Calculate the financial ratios such as liquidity ratios : Calculate the financial ratios such as :Liquidity Ratios, Profitiabilty Ratios, Activity Ratios, Leverage Ratios and another ratios you think it is important make the financial analysis and discussion coparing between two years and your recommenda..

Is the argument for the causal relationship convincing : Statistics are routinely used by journalists to explain and support claims. The news media often uncritically report on or even distort the findings of scientific studies..Is the argument for the causal relationship convincing

Explain the intellectual contributions of islam : Expalin the Intellectual Contributions of Islam. Although Islam was tied to the spread of imperialism from early in its story, it is also tied to innovation and discovery.

Why did scorpio and his family lose influence on rome : Why did scorpio and his family lose influence on rome.

Problem related to the financial ratios : 1. Liquidity ratios. Edison, Stagg, and Thornton have the following financial information at the close of business on July 10:

User Account

All Pages