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Analyzing a company and making comparisons

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Assess the financial position of the Netflix 2011 financial statement in comparison to Redbox their competitor. The emphasis is on cash flow for this analysis.

1. Compute the return on assets, profit margin and asset utilization rate of both companies.
2. Assess Netflix's competitive financial position.
3. Compute the free cash flow of both companies.
4. Assess Netflix's relative cash position and comment on its receipt and use of cash during the year.

Please also provide links to all sources of financial information.

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Solution Summary

An analysis of a company is provide in order to make comparisons between competitors.

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1. Netflix
ROA=Net Income/Total Assets=$226,126,000/$3,069,196,000=0.074=7.4%
Net Profit Margin=Net Income/Revenue=$226,126,000/$3,204,577,000=0.071=7.1%
Asset utilization=Revenue/Total Assets=$3,204,577,000/$3,069,196,000=1.04

Redbox (Coinstar)
ROA=Net Income/Total Assets=$114,951,000/$1,467,950,000=0.078=7.8%
Net Profit Margin=Net Income/Revenue=$114,951,000/$1,845,372,000=0.062=6.2%
Asset Utilization=Revenue/Total Assets=$1,845,372,000/$1,467,950,000=1.26

2. Netflix's competitive position relative to Redbox (Coinstar) is slightly weaker. Netflix's return on assets is a lower 7.4% compared to Redbox's 7.8%. Netflix also has a much lower asset utilization at just over 1 compared to Redbox's 1.26. Although Netflix's net profit margin is higher (indicating lower operating ...

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