Netflix Analysis Project
The following topics must be addressed in the report. Groups should use lecture materials, the textbook, and online resources to address these topics satisfactorily. These topics do not need to be addressed in a particular order, but the presentation of the analysis should flow logically.
Review Chapter 13 of your textbook which will aid you in addressing many of the questions.
Evaluating the Business
- What is the nature of your company’s business? How does the company “make money” and does the 10-k indicate that it operates in multiple segments – if so, identify the segments?
- Define SIC code. Use your companies SIC code in EDGAR to identify competing companies. Post a screen shot of some of those competitors.
- Who are the company’s external auditors ? What are two types of opinion letters the company received?
Income Statement
- Construct a common-size income statement for your company’s two most recent years .
- Review the revenue recognition policies. Using your common-size figures, identify time trends.
- Locate the revenue recognition footnote in the 10K. How does the company recognize revenues for some of its major products? Do you believe this makes sense?
- What are the major expenses?
- Analyze footnotes and assess the firm’s effective tax rate. Is it reasonable and consistent?
Balance Sheet
- Construct a common-size balance sheet for your company’s two most recent years .
- Using your common-size statement, what is the proportion of current and noncurrent assets. Does this asset composition seem appropriate?
- Is there a discussion of bad debt in the footnotes? How much detail is provided? Are there large customers that increase credit risk?
- What is inventory for your firm? Locate and describe the inventory costing method in the footnotes. Is there a preference amongst your group members for a particular cost flow assumption?
- What significant intangible assets does your company have?
- How is the company financed? Using your common-size figures, what proportion is from non owners?
- Does the firm have treasury stock? Determine the main reason for holding treasury stock.
- Using your common-size figures, were there any significant changes to the balance sheet in recent years?