THE CORPORATE FINANCE

Running head: CORPORATE FINANCE
Corporate Finance
Name of the Student:
Name of the University:
Author’s Note:

CORPORATE FINANCE1
Executive Summary:
This report is prepared to analysis the financial and operational performance of the Netflix a
listed company along with an analysis of its capital structure and dividend policies. Corporate
finance discuses about the capital structure, dividend policies and corporate strategies which
aims at maximising the shareholders’ wealth and helps in achieving the mission and vision of
the company. In this report the capital structure, dividend policies and corporate strategies of
the Netflix have been analysed taking information from the 2018 Annual report of the Netflix
along with some market related information. An in-depth analysis of the financial strategies
and comparative performance of the company has been conducted to find the investment
opportunities and challenges for the company. Various financing strategies have been
analysed and suggested for financing such investment and expansion opportunities for the
company. Though Netflix has been performing well financially for the last few years, still
there are some expansion opportunities which can be explored further. Lastly, the report
concludes with outlining the financial strength and weaknesses of the company along with
certain recommendations for improvement in the financial and operational performance of
the company.

CORPORATE FINANCE2
Table of Contents
1. Introduction:...........................................................................................................................3
2. Background to the company:.................................................................................................3
3. Analysis of capital structure and dividend policy of the Netflix:..........................................5
4. Capital needs and financing decisions:..................................................................................7
5. Application of the investment appraisal techniques:.............................................................9
Net present value method:....................................................................................................11
Internal rate of return method:.............................................................................................12
Discounted payback period method:....................................................................................12
Accounting rate of return method:.......................................................................................12
Profitability index method:..................................................................................................13
6. Conclusion and recommendation:........................................................................................13
References and bibliography:...................................................................................................15

CORPORATE FINANCE3
1. Introduction:
Corporate finance is a special branch of financial accounting and financial
management, which discusses about the need of capital for a company, sources of raising
capital and ensures its efficient utilisation towards achieving the objective of shareholders’
wealth maximisation. Every business organizations require capital to finance their investment
activities and to run their business with sustainability. Selection of such sources of capital
which will be minimizing the overall cost of capital and will help in maximising the
shareholders’ wealth is known as capital structure. In the next stage, investment of funds in
better investment opportunities is known as the capital budgeting and lastly, decisions
relating to the dividend pay-out is known as the dividend policy. Dividend policies also have
an immense importance in corporate strategies as it is directly related with the own sources of
capital (Yapa 2017).
In this report the need for capital and its sources for the Netflix have been analysed
based on the information available in their 2018 annual report. Based on last few years’
dividend pay-outs, the dividend policies of the Netflix has been analysed and the overall
corporate strategies have been analysed to arrive at a conclusion about the financial
performance and financial position of the company(Liand Trutnevyte2017).
2. Background to the company:
Netflix Inc. is an American company providing media services across the world. The
company was founded in the year 1997 with their primary service of providing video
streaming on a paid subscription basis. Later on with its success in the media services
industry, it become one of the leader in the media service industry across the world. They
kept their business patter same as it was started with earlier. As of 2019 they had more than