The corporate finance projectname of the company netflix1

Reference no: EM13347714

The Corporate Finance Project

Name of the company: Netflix

1. Leverage and Coverage Ratios

	Most Recent Fiscal Year	Fiscal Year (-1)	Fiscal Year (-2)	Fiscal Year (-3)
Debt/Equity
Debt/Assets
Interest Expense/Long term Debt
Times Interest Earned (TIE)
Interest Coverage

2. Growth Rates

	Most Recent Fiscal Year	Fiscal Year (-1)	Fiscal Year (-2)	Fiscal Year (-3)
Annual Revenue Growth
Annual Net Income Growth
Annual Free Cash Flow Growth

What trends, if any, are apparent in these ratios?
Theoretically, is it possible for sales to increase while net income declines? Why or why not?
Theoretically, is it possible for net income to decline while free cash flow increases? Why or why not?

3 Distribution Policies

	Most Recent Fiscal Year	Fiscal Year (-1)	Fiscal Year (-2)	Fiscal Year (-3)
Dividend/Share
Dividend Yield
Payout Ratio

Based on this data, Explain the firm's dividend policy in the past four years. Is this policy best for the firm? Why or why not?
Would you recommend any change of policy for this firm? Why or why not?
The firm's distributions add share repurchases as well as cash dividends. Refer to the firm's statement of cash flows to search data on the aggregate dollar amount of dividends paid and shares repurchased, and report the results below. You will also need to evaluate distributions as percent of net income.

	Most Recent Fiscal Year	Fiscal Year (-1)	Fiscal Year (-2)	Fiscal Year (-3)
Dividends paid
Share repurchases
Net income
Distribution Ratio

d. Does this change your view of the firm's dividend policy? Would you recommend any change of policy for this firm? Why or why not?

Comparison to a Competing Firm

Competing firm: Dish network

4-1. What is the name of the competitor?

a. Which exchange is its stock traded on?

b. What is the ticker symbol of this firm's stock?

c. In which ways is this competitor firm a good match or basis of comparison for your firm?

d. In which ways is it not a good match?

4-2. Report this summary data on leverage for your firm and its competitor.

	Your Firm	The Competitor Firm
Debt/Equity
Debt/Assets
Interest Expense/Long term Debt
Times Interest Earned (TIE)
Interest coverage

Does it seems to you that your firm has an appropriate degree of leverage, or is over- or under-leveraged? Why?
What changes in leverage, if any, do you think could be appropriate for your firm to reduce its WACC?

4. Comparison of the firms' liquidity and operations: First, report this summary data on liquidity and activity for the two firms:

	Your Firm	The Competitor Firm
Liquidity
Current Ratio
Quick Ratio

Activity
Average collection period (ACP)
Inventory Days
Operating Cycle
Cash Conversion Cycle

Total Asset Turnover
Capital Expenditure/Sales
SG&A/Sales

Does your firm's liquidity compare favorably or unfavorably to those of the competitor? What areas of improvement, if any, are needed by your firm?
How does your firm's operations, as caluclated by the activity ratios, compare? What areas of improvement, if any, are needed by your firm?

4-Analysts' earnings estimates. On Mergent Horizon, find and report the following these data for your firm. If there are any missing estimates, indicate "na."

Comparison of Earnings Forecasts
	Your Firm	The Competitor
Earnings per share for the firm's current fiscal year
Ending date of the current fiscal year
Mean estimate of earnings per share for this year
Low estimate
High estimate
Number of analysts
EPS for the firm's next fiscal year
Ending date of the next fiscal year
Mean estimate of earnings per share for this year
Low estimate
High estimate
Number of analysts
Long term growth rates
Mean estimate for the next 5 years
Low estimate
High estimate
Number of analysts

Suppose the ranges of earnings estimates in these three cases relative to the mean estimates. What does this suggest about the reliability and certainty of these estimates?
Which of these two firms has the better outlook based on these projections? Why?
Do these forecasts look reasonable to you? Too optimistic or pessimistic? Why?

Reference no: EM13347714

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