Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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- Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Geographic Areas
- Enterprise Value to EBITDA (EV/EBITDA)
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Analysis of Debt
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Economic Profit
Netflix Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net operating profit after taxes (NOPAT)
- The NOPAT showed an overall increasing trend from 2020 to 2024, starting at approximately 3.69 billion USD and reaching around 8.60 billion USD by 2024. There was a significant increase between 2020 and 2021, followed by a decline in 2022. Subsequently, NOPAT recovered and continued to grow, indicating improving operational profitability over the period analyzed.
- Cost of capital
- The cost of capital remained relatively stable but exhibited a gradual upward trend throughout the years. It started at 16.39% in 2020 and increased to 16.92% in 2024, suggesting a slightly rising risk or required return by investors during this timeframe.
- Invested capital
- Invested capital increased consistently over the five-year period, from about 29.76 billion USD in 2020 to approximately 40.71 billion USD in 2024. This steady growth reflects expanding asset base or ongoing investments made by the company to support its operations and growth initiatives.
- Economic profit
- The economic profit showed significant volatility, beginning with a negative value of approximately -1.18 billion USD in 2020, followed by a positive peak in 2021 at about 511 million USD. However, it again declined into negative territory for 2022 and 2023 before rising sharply to a positive 1.71 billion USD in 2024. This fluctuation indicates periods where the company's returns did not cover its cost of capital, but by 2024, the company generated value above its capital costs.
Net Operating Profit after Taxes (NOPAT)
Netflix Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in deferred revenue.
3 Addition of increase (decrease) in equity equivalents to net income.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income.
7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
- Net Income
- The net income displayed a significant overall growth trend over the analyzed period. Starting at approximately 2.76 billion US dollars in 2020, it nearly doubled by 2021 reaching around 5.12 billion. A slight decline occurred in 2022 to about 4.49 billion, followed by a recovery in 2023 to roughly 5.41 billion. The most notable increase was observed in 2024, with net income rising sharply to approximately 8.71 billion, representing substantial profitability expansion toward the end of the period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT also exhibited a strong upward trend, beginning at roughly 3.69 billion US dollars in 2020. It increased markedly to about 6.08 billion in 2021 before experiencing a decrease in 2022 to around 4.99 billion. The figure rebounded slightly in 2023, reaching approximately 5.44 billion, and then surged considerably in 2024 to approximately 8.60 billion. This pattern reflects similar movements to net income, indicating consistent operational profitability progression, with a particularly strong performance in the final year.
- Summary of Trends
- Both net income and NOPAT show parallel trends with peaks in 2021, followed by declines in 2022 and subsequent recoveries. The data reflects a strong recovery and growth phase culminating in significant financial improvement in 2024. The increases in 2024 imply enhanced efficiency in core operations and improved bottom-line results. Minor fluctuations in the middle years suggest potential operational or market challenges that were ultimately overcome.
Cash Operating Taxes
Netflix Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The financial data reveals a consistent upward trend in both the provision for income taxes and cash operating taxes over the five-year period from 2020 to 2024.
- Provision for Income Taxes
- This figure increased steadily each year, starting at 437,954 thousand US dollars in 2020 and rising to 1,254,026 thousand US dollars in 2024. The growth suggests a rising taxable income base or changes in tax liabilities, with the most significant increase occurring between 2023 and 2024.
- Cash Operating Taxes
- Cash operating taxes also exhibited a persistent increase year over year, moving from 545,709 thousand US dollars in 2020 to 1,952,319 thousand US dollars in 2024. The increase was particularly sharp in the later years, indicating higher cash outflows related to taxation, which may impact liquidity considerations.
The concurrent rises in both provision for income taxes and cash operating taxes indicate growing tax obligations generally aligned with operational or profitability expansion. The substantial increases in the 2023 to 2024 period could warrant further analysis regarding tax planning, cash flow management, and potential impacts on net income and operational financing.
Invested Capital
Netflix Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of deferred revenue.
4 Addition of equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of capital work-in-progress.
7 Subtraction of short-term investments.
The financial data reveals several noteworthy trends related to the capital structure and equity position over the five-year period analyzed.
- Total reported debt & leases
- This liability category shows a general decline from 2020 to 2022, decreasing from approximately 18.51 billion USD to 16.93 billion USD. Following this reduction, the figure remains relatively stable in 2023 before experiencing an increase in 2024, reaching nearly 18.00 billion USD. The initial reduction could indicate active debt management or repayment, while the subsequent rise suggests renewed borrowing or lease obligations arising during the latest year.
- Stockholders’ equity
- Stockholders’ equity demonstrates a consistent and substantial increase throughout the period. Starting from approximately 11.07 billion USD in 2020, the equity nearly doubles by the end of 2022, reaching over 20.78 billion USD. It remains stable in 2023 and then attains a new peak in 2024, exceeding 24.74 billion USD. This upward trend indicates strong retained earnings growth, equity issuances, or other comprehensive income components that strengthen the company's net asset position.
- Invested capital
- Invested capital, representing the total capital deployed in business operations, follows an upward trajectory across all five periods. Beginning at roughly 29.76 billion USD in 2020, it increases steadily to over 40.71 billion USD by 2024. The growth in invested capital aligns with the rise in equity, supported by generally stable debt levels, implying ongoing investment in operational assets or acquisitions expanding the company's capital base.
- Summary
- Overall, the company exhibits a strengthening financial position characterized by rising equity and invested capital. While debt levels declined initially, a slight increase in the most recent year suggests a potential strategic shift or operational financing need. The equity surge significantly outpaces debt growth, indicative of robust internal capital generation or equity financing, thus potentially improving solvency and financial flexibility over time.
Cost of Capital
Netflix Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Senior Notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in thousands
2 Equity. See details »
3 Senior Notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Senior Notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in thousands
2 Equity. See details »
3 Senior Notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Senior Notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Senior Notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Senior Notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Senior Notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Senior Notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Senior Notes. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Netflix Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Charter Communications Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data presented reflects notable fluctuations in economic profit, invested capital, and economic spread ratio over the five-year period analyzed.
- Economic Profit
- The economic profit exhibits significant variability. It begins with a substantial negative value of -1,183,675 thousand US dollars at the end of 2020, then turns positive in 2021, reaching 510,623 thousand US dollars. However, this improvement is short-lived as economic profit reverts to negative figures in 2022 and 2023, amounting to -1,136,856 and -854,204 thousand US dollars, respectively. By 2024, economic profit strongly rebounds to a positive 1,711,073 thousand US dollars. This fluctuating pattern indicates periods of both unfavorable and favorable economic performance, with a strong recovery evident in the latest year.
- Invested Capital
- The invested capital demonstrates a consistent upward trend across the entire period. Starting from 29,762,011 thousand US dollars at the end of 2020, it increases steadily year-over-year, reaching 40,712,328 thousand US dollars by the end of 2024. This growth suggests ongoing investment and expansion in the company's capital base.
- Economic Spread Ratio
- The economic spread ratio mirrors the fluctuations seen in economic profit. It is negative at -3.98% in 2020, then improves to a positive 1.47% in 2021. The ratio decreases again in the following years, falling to -3.01% in 2022 and -2.25% in 2023. By 2024, the economic spread ratio rises significantly to 4.2%. This metric's variation suggests shifts in the company's ability to generate returns above its cost of capital, with a notable improvement in 2024.
Overall, the data reveals a trend of increasing invested capital alongside volatile economic profitability and spread ratios. The company faced challenges impacting economic profit negatively during 2020, 2022, and 2023 but demonstrated recovery and economic value creation in 2021 and particularly in 2024. The increase in the economic spread ratio in 2024 indicates improved efficiency in utilizing capital to generate returns exceeding its cost.
Economic Profit Margin
Netflix Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Alphabet Inc. | ||||||
| Charter Communications Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data demonstrates notable fluctuations in economic profit over the analyzed period. Economic profit initially shows a significant negative value in 2020, indicating losses below the cost of capital. A marked improvement occurs in 2021 with a positive economic profit, followed by a return to negative figures in 2022 and 2023. The year 2024 exhibits a strong recovery, with economic profit becoming substantially positive again, reflecting enhanced value creation.
Adjusted revenues display a steady upward trend throughout the years. Starting from approximately 25.2 billion US dollars in 2020, revenues increase consistently each year, peaking at around 39.1 billion US dollars by the end of 2024. This growth suggests improving business scale and market expansion over the period.
The economic profit margin mirrors the pattern observed in economic profit, with negative margins in most years except for 2021 and 2024 when margins turn positive. The margin reaches its highest level in 2024 at 4.38%, signaling improved operational efficiency or profitability relative to revenues in that year. This positive margin follows previous years with negative percentages, reinforcing the notion of a recent positive trend in value generation.
- Economic Profit
- Experienced significant volatility with negative values in most years except for 2021 and 2024, where positive economic profit suggests periods of value creation.
- Adjusted Revenues
- Showed continuous growth each year, increasing from about 25.2 billion to nearly 39.1 billion US dollars, indicating robust top-line expansion.
- Economic Profit Margin
- Follows a pattern consistent with economic profit, negative in 2020, 2022, and 2023, but positive in 2021 and 2024; the margin reached its peak in 2024 at 4.38%, indicating enhanced profitability relative to revenues.
Overall, the data suggests a company with growing revenues but challenges in consistently converting those revenues into economic profit until the latest period. The positive shift observed in 2024 points to potential improvements in cost management, pricing, or operational effectiveness, which warrant further analysis to confirm sustainability.