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Netflix is a popular streaming service. In 2018, they had 139 million paid memberships worldwide. In exchange for a monthly fee, users (and their friends and family) can access a wide-range of TV shows and movies. Many other companies have started to provide streaming services, notably Hulu, Amazon Prime, and Disney Plus. In 2018, they have a Net Income of $1.2 billion, but a Cash From Operations of -$2.7 billion. (Source: Netflix Financial Statements from 2018).You can read this article for reference: https://www.cnbc.com/2019/04/23/netflix-offers-another-2-billion-in-debt-to-fuel-content-spending.html. The article talks about Netflix raising $2 billion in debt to fuel its operating and investing activities (they use a term, "free cash flow," which is Cash from Operations + Cash from Investing--basically the cash a business requires to stay in business).
Question 1: Does this difference between Net Income and Cash From Operations (or Free Cash Flow) concern you? Feel free to speculate as to why there might be such a large difference. (the answer is in the Statement of Cash Flows from Netflix)
Question 2: Why is it important for a business to have a positive Free Cash Flow (CFO + CFI), not just a positive net change in cash (CFO + CFI + CFF)? If Netflix is losing cash from its operations and investing activities, how does Netflix stay in business?
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