Situation Analysis Of Shale Gas Industry

Running head: FINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSIS
Name of the Student
Name of the University
Author Note

FINANCIAL STATEMENT ANALYSIS1
Executive Summary
Netflix is one of the largest firms in the world operating in the entertainment and mass media
industry on a worldwide basis. It works on a subscription based business model providing the
best in class entertainment to its users on demand. It provides a wide-range of online library
comprising of numerous movies, television shows and original content. The aim of the report
is to provide an inside on Netflix’s financial data. The aim is accomplished through a
thorough analysis comprising of financial ratios, trend analysis, company valuations based on
dividend models and free cash flow model.

FINANCIAL STATEMENT ANALYSIS2
Table of Contents
Tear Sheet...................................................................................................................................3
Company profile.........................................................................................................................4
Macro-economic analysis...........................................................................................................5
Industry analysis.........................................................................................................................8
Competitor analysis....................................................................................................................9
Business model and corporate strategy....................................................................................11
Analysis of financial statements...............................................................................................11
Ratio analysis.......................................................................................................................11
Trend analysis......................................................................................................................14
Company valuation..............................................................................................................15
Conclusion................................................................................................................................17
References and bibliography....................................................................................................18

FINANCIAL STATEMENT ANALYSIS3
Tear Sheet
Basic Financial profile
Last closing price of Netflix: $364.08 (02 April, 2020)
52- Week high and low: high- $387.78 (18 Feb, 2020), low- $254.59 (24 Sep, 2019)
Market capitalization: $164.77 Billion (01 April, 2020)
Total shares outstanding: 435374 shares (2018)
Enterprise value: $174.51 billion (01 April, 2020)
Beta of the stock: 1.23
Estimates
Sales: $15794341 million (2018)
EBITDA: $1226458 million (2018)
EPS: $2.78 (2018)
Employee data: 6700 employees (2019)
Abbreviated Financials
Gross profits: $5826803 million (2018)
Net Income: $1211242 million (2018)
Total Assets: $25974400 million (2018)
Total Liabilities and Shareholder’s Fund: $25974400 million (2018)

FINANCIAL STATEMENT ANALYSIS4
Company profile
Netflix, INC. is one of the world’s largest media services provider company that has
it’s headquarter located in Los Gatos, California. It was founded by Marc Randolph and Reed
Hastings in 1997 and since then it has grown in size manifold and became one of the largest
media services company throughout the world (S22.q4cdn.com 2019). It has its operations
spread throughout the world except Syria, North Korea, Mainland China and Crimea owing
to sanctions imposes by the Government of U.S.A. It has its production hubs located at New
Mexico, New York City, Buckinghamshire, U.K. and Madrid, Spain. It operates in the mass
media and entertainment industry that deals in film, television and web-series production and
distribution. It is one of premier members of the “Motion Pictures Association (MPA). It
operates in different parts of the world through regional offices located in Brazil, South
Korea, India, The Netherlands and many more. It popularizes its business through free
subscriptions to new users for a month and post which paid subscriptions starts. As per the
records, Netflix have paid subscriptions over 167 million where the United States alone
accounts for 60 million subscribers and users on free trial accounts over 154 million.
Netflix initially started business with DVD sales and rented service which was sent
over mail. Netflix started with its new business idea in 2007, where it entered into streaming
media business (Netflixinvestor.com 2020). It was relatively new idea by that time and took
considerable time till 2010 to popularize and since then Netflix have never looked back. In
2010, Netflix was pursuing its two line of businesses, one it was trying to establish its new
idea of streaming media business and at the same time retaining its old business of Blu-ray
and DVD rental business. As of 2010, it had entered into streaming of its contents not only in
the United States but also spreading its petals in different countries like the Canada,

FINANCIAL STATEMENT ANALYSIS5
Caribbean and the Latin America. It entered into the content production industry by 2012
developing its first series- “Lilyhammer.” Netflix in its revolutionary time did not restrict
itself into Television series and Films but also involved itself into one more innovative idea
of “Netflix Original” contents which was streamed exclusively in its online library along with
other produced films and television series. As of 2016, it had entered into more than 190
countries, offering more than 126 Original Series and numerous films unlike any other
existing cable networks or channels. It soon became popular offsetting many other rival firms
operating in the same industry anywhere within its 190 country of operation. Understanding
the need and preference, it started to develop and produce regional contents as well along
with its international content and owing to this it had incurred a total long-term debt of $21.9
billion as of 2017 and had taken another long-term debt of $2 billion which will fund its
newly announced projects in 2018 (S22.q4cdn.com 2018). The debts might look too high
however, the trend suggests that it has a great potential to raise at least double revenue than
its investment. As of 2020, it had close to 3000 film titles under its belt for streaming in
U.S.A.
Macro-economic analysis
Macro-economic analysis can be effectively done with the help of four major factors
that forms the part of the PEST analysis which stands for Political factors, Economic factors,
Social factors and Technological factors (BOGA 2019). These factors that defines and
analyses Netflix’s macro-economic environment are as follows:
Political factors
Political factors are considered as one of the important factor that impacts the
business, its profitability and market orientation to a great extent (Vogel 2014). Netflix has its
operations spread over 190 countries around the world and owing to its operation it has to