Netflix Case Essay

1950 Words 8 Pages
CASE ANALYSIS: NETFLIX

IDENTIFICATION
Overview
Netflix, Inc. is the world’s largest online subscription service for distributing the rental of movies and TV episodes by streaming the content through the Internet, and which customers also have the availability of receiving their rentals directly via mail. Subscribers given the option of eight different subscription plans, each pertaining unlimited streaming per month with a varying amount of titles allowed out at a time. Each subscriber has the ability to choose to stream the content over a high-speed internet connection, receive a physical disc copy of the rented content through postal delivery, or both. As of July 2010, Netflix had provided its services to approximately 15 million
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The core element needing to be analyzed is how can Netflix overcome the risk of dependency on an indirect, continuously evolving adjunct of technology?
Other issues Netflix is faced with is formulating the best actions and objectives to follow in regards to expanding globally, overcoming rivals, maintaining overall attractiveness and dismissing long-term obligations associated with the physical DVD market.

ANALYSIS AND EVALUATION
Accounting/Finance
Netflix’s financials are overall strong, in respect to the general evaluation of the numerals and in comparison to the 2009 RMA data in reference to Retail – Electronic Shopping (NAICS 454111), its respective industry (Table 1). Netflix’s Return-on-Assets ratios, for each year from 2005 through 2009, yielded substantially higher values, ranging from 18.1 – 17.0 percent, than the industry average of minus 0.3 percent. This suggests Netflix is effectively using their assets to produce profits; additionally inferring their high profitability. The liquidity of Netflix, inferred from the current ratio, is relatively high, with all values succeeding 1.5. This high liquidity value gives precedent that Netflix has a low credit risk and their ability in obtaining sufficient sales to cover payments to its creditors.
A disadvantage presented through Netflix’s financial analysis shows their average debt-to-equity ratio of .952 surpasses the industry’s low value of .02. Hereby, it is to assume that Netflix leverages its

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