Netflix\'s Consolidated Statements of Operations, 2000-2011 (in millions, except
ID: 2731319 • Letter: N
Question
Netflix's Consolidated Statements of Operations, 2000-2011 (in millions, except per share data) EXHIBIT 2 20002005 2007 2009 2010 2011 S 35.9 $682.2 $1,205.3 $1,670.3 $2,162.6 $3,205.6 Cost of revenues: Subscription costs Fulfillment expenses 24.9 393.8 10.2 72.0 35.1 465.8 0.8 216.4 909.5 ,154.1 1,789.6 664.4 121.3 786.2 1,079.3 1,357.4 2,039.9 419.2 169.8 591.0 114.5 Total cost of revenues Gross proft 805.3 1,164.7 163.3 293.8 259.0 402.6 Technology and development 35.4 25.7 144.6 35.5 (2.0) 59.2 213.4 3.0 237.7 218.2 52.4 (14.2) 327.4 General and administrative 64.5 9.0 (4.6) 399.1 191.9 -9.7 -- 788.8 376.1 0.3 (15.9) 16.5 Total operating expenses 1 521.6 283.6 Operating income Interest and other income (expense) Income before income taxes Provision for (benefit from) income taxes Net income Net income per share (58.4) 20.1 359.5 - (33.7) 44.3 76.3 106.8 133.4 $ (58.5) $ 42.0 66.7 115.9 160.8 226.1 192.2 267.7 $(20.61) 0.79 $0.99 $2.05 $3.06 $4.28 6 Diluted (20.61) 0.64 0.97 2.96 Weighted average common shares outstanding: 53.5 65.5 67.1 68.9 2 56.6 58.4 52.5 54.3 3 Diluted 54.4Explanation / Answer
Operating performance can be found from profitabilty ratios:
1)profit margin 2009=Net income to sales ratio
=net income/sales
=115.9/1670.3
=6.94%
profit margin 2010=Net income to sales ratio
=net income/sales
=160.8/2162.6
=7.44%
profit margin 2011=Net income to sales ratio
=net income/sales
=226.1/3205.6
=7.05
2)Return on assets ratio 2011
=net income/assets
=226.1/3069.2
=7.37%
3)return on equity ratio 2011
=net income/equity
=226.1/642.8
=35.17%
We can see that Profit margin is less but the return on equity is in higher note
Financial performance can be seen in Times interest earned ratio , debt ratio
1)Debt to asset 2011= debt/asset
=(3069.2-642.8)/3069.2
=79%
2) Times interest earned ratio 2011
=EBIT/interest expense
=376.1/16.5
=22.8
The company has more debt than equity and it is financially leveraged but we can find that times interest earned is 22.8 which is very healthy and we can see that the company has no problem in repaying the debt holders as well as equity holders which we can see from return on equity