Financial Analysis Paper

1676 words - 7 pages

Table of Contents
Introduction……………………………………………………………………………………………………...2
Summary of Operations……………………………………………………………………………………..2
Net Sales………………………………………………………………………………………………...2
Gross Margin…………………………………………………………………………………………..2
Operating Margin……………………………………………………………………………………2
Income before Taxes……………………………………………………………………………….2
Net Income…………………………………………………………………………………………......3
Summary of Operations Data Assessment/Interpretation…………………………3
Financial Position………………………...……………………………………………………………………4
Working Capital………………………………………………………….………………………......4
Net Property, Plant & Equipment…………...……………………………………………......4
Total Assets…………………………………………………………………………………………….4
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Through this, Netflix has developed multiple sales mainly through people who don’t want to pay for cable.

II. Summary of Operations ($000)

A. Net Sales:
DEC 2011 DEC 2012 DEC 2013
1.16 B 0.98B 1.29B

B. Gross Margin:
DEC 2011 DEC 2012 DEC 2013
36.25% 27.15% 29.52%

C. Operating Margin:
DEC 2011 DEC 2012 DEC 2013
27.39% 2.32% 7.58%

D. Income before Taxes:
DEC 2011 DEC 2012 DEC 2013
1.29B 983.42M 1.29B

E. Net Income:
DEC 2011 DEC 2012 DEC 2013
226.13M 17.15M 112.4M

F. Summary of Operations Data Assessment/Interpretation
Overall the company did pretty well for the years 2011 and 2013. Year 2012 something had to have happened to make the net sales, gross margin, operating margin, income before taxes, and net income all drop tremendously.

Our net sales aren’t in the best shape over the past three years. With our net sales being 1.29B for 2013, 0.98B for 2012, and 1.16B for 2011. Netflix needs to figure out how to be able to get an increase between 2012 and 2013 and how to keep it continuing. Netflix represents roughly 29.52% in 2013, 27.15% in 2012, and 36.25% in 2011. The higher the gross profit, the more the company represents the proportion of each dollar of the revenue.

“Operating margin gives analysts an idea of how much a company makes before taxes and interest on each dollar of sales” (Investopedia, 2014). The operating margin for 2013 is 0.07584, 2012’s was 0.02323, and 2011 was 0.27389. Looking at this makes you wonder what else the company could have done to make more of a operational profit.

Gross income for 2013 was 1.29B; while 2012 was 983.42M, and 2011 was 1.16B. There is no excuse why 2012 decreased so much and 2011 & 2013 have about the same numbers for the gross income.

The net income has decreased since 2011. 2011 was 226.13M, 2012 was 17.15M, and 112.4M for 2013. The net income provides us with great detail that Netflix did something wrong in 2012 where the company only made 17.15M and our current trend is at least 100M each year. Figuring out what the company messed up on is a huge must to keep our net income skyrocketed and help our company thrive.

III. Financial Position ($000)
A. Working Capital = Current assets – Current liabilities
DEC 2011 DEC 2012 DEC 2013
0.6B 0.56B 0.91B

B. Net property, Plant & Equipment
DEC 2011 DEC 2012 DEC 2013
136.35M 131.68M 133.61M

C. Total Assets
DEC 2011 DEC 2012 DEC 2013
1.83B 2.24B 3.06B

D. Long Term Assets
DEC 2011 DEC 2012 DEC 2013
0 0 0

E. Stock Holders’ Equity
DEC 2011 DEC 2012 DEC 2013
0.64B 0.75B 1.33B

F. Financial Position Data Assessment/Interpretation Summary
Netflix financially messed something up with the year 2012 with the working capital. They did fine when it came to the net property, plant & equipment also total assets for the year 2012.

IV. Financial Ratios
A. Liquidation
DEC 2011 DEC 2012 DEC 2013
0.6B 0.4B 0.6B

B. Leverage
DEC 2011 DEC 2012 DEC 2013
0.8M 0.3M 0.2M

C....

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