Microsoft Excel LibreOffice Calc

Netflix Inc. (NFLX)


Analysis of Property, Plant and Equipment

Difficulty: Advanced


Property, Plant and Equipment Accounting Policy

Property and equipment are carried at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the shorter of the estimated useful lives of the respective assets, generally up to 30 years, or the expected lease term for leasehold improvements, if applicable. Leased buildings are capitalized and included in property and equipment when Netflix was involved in the construction funding and did not meet the “sale-leaseback” criteria.

Source: 10-K (filing date: 2019-01-29).


Property, Plant and Equipment Disclosure

Netflix Inc., Statement of Financial Position, Property, Plant and Equipment

USD $ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Leasehold improvements 282,028  229,848  107,945  107,793  57,339 
Information technology 224,296  223,850  185,345  194,054  189,274 
Furniture and fixtures 63,667  49,217  32,185  30,914  25,758 
Buildings 73,468  40,681  40,681  40,681  40,681 
Corporate aircraft 62,560  30,039  –  –  – 
DVD operations equipment 53,416  59,316  70,152  88,471  89,144 
Machinery and equipment 1,692  –  –  –  – 
Land 6,125  –  –  –  – 
Capital work-in-progress 19,548  8,267  108,296  8,845  12,495 
Property and equipment, gross 786,800  641,218  544,604  470,758  414,691 
Accumulated depreciation (368,519) (321,814) (294,209) (297,346) (264,816)
Property and equipment, net 418,281  319,404  250,395  173,412  149,875 

Based on: 10-K (filing date: 2019-01-29), 10-K (filing date: 2018-01-29), 10-K (filing date: 2017-01-27), 10-K (filing date: 2016-01-28), 10-K (filing date: 2015-01-29).

Item Description The company
Property and equipment, gross Amount before accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures. Netflix Inc.’s property and equipment, gross increased from 2016 to 2017 and from 2017 to 2018.
Property and equipment, net Amount after accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business to produce goods and services and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures. Netflix Inc.’s property and equipment, net increased from 2016 to 2017 and from 2017 to 2018.

Property, Plant and Equipment Ratios (Summary)

Netflix Inc., Property, Plant and Equipment Ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Average age 47.21% 50.19% 54.02% 63.16% 63.86%

Based on: 10-K (filing date: 2019-01-29), 10-K (filing date: 2018-01-29), 10-K (filing date: 2017-01-27), 10-K (filing date: 2016-01-28), 10-K (filing date: 2015-01-29).

Ratio Description The company
Average age As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company’s fixed asset base is old or new. Newer assets are likely to be more efficient. Netflix Inc.’s average age of depreciable property, plant and equipment improved from 2016 to 2017 and from 2017 to 2018.

Average Age

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in thousands)
Accumulated depreciation 368,519  321,814  294,209  297,346  264,816 
Property and equipment, gross 786,800  641,218  544,604  470,758  414,691 
Land 6,125  –  –  –  – 
Ratio
Average age1 47.21% 50.19% 54.02% 63.16% 63.86%

Based on: 10-K (filing date: 2019-01-29), 10-K (filing date: 2018-01-29), 10-K (filing date: 2017-01-27), 10-K (filing date: 2016-01-28), 10-K (filing date: 2015-01-29).

2018 Calculations

1 Average age = 100 × Accumulated depreciation ÷ (Property and equipment, gross – Land)
= 100 × 368,519 ÷ (786,8006,125) = 47.21%

Ratio Description The company
Average age As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company’s fixed asset base is old or new. Newer assets are likely to be more efficient. Netflix Inc.’s average age of depreciable property, plant and equipment improved from 2016 to 2017 and from 2017 to 2018.