Microsoft Excel LibreOffice Calc

Netflix Inc. (NASDAQ:NFLX)


Return on Capital (ROC)

Advanced level

Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company’s debt and equity structure. It measures business productivity performance.


Return on Invested Capital (ROIC)

Netflix Inc., ROIC calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in thousands)
Net operating profit after taxes (NOPAT)1 2,494,304  1,651,757  698,849  350,945  236,693 
Invested capital2 24,144,190  17,072,770  10,832,398  6,418,756  4,681,790 
Performance Ratio
ROIC3 10.33% 9.67% 6.45% 5.47% 5.06%
Benchmarks
ROIC, Competitors4
Charter Communications Inc. 3.84% 3.27% 2.19% 2.17% 1.49%
Comcast Corp. 8.16% 7.36% 9.13% 7.92% 8.00%
Walt Disney Co. 9.47% 15.25% 12.78% 15.18% 13.28%

Based on: 10-K (filing date: 2020-01-29), 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).

1 NOPAT. See details »

2 Invested capital. See details »

3 2019 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 2,494,304 ÷ 24,144,190 = 10.33%

4 Click competitor name to see calculations.

Performance ratio Description The company
ROIC A measure of the periodic, after tax, cash-on-cash yield earned in the business. Netflix Inc.’s ROIC improved from 2017 to 2018 and from 2018 to 2019.

Decomposition of ROIC

Netflix Inc., decomposition of ROIC

Microsoft Excel LibreOffice Calc
ROIC = OPM1 × TO2 × 1 – CTR3
Dec 31, 2019 10.33% = 14.43% × 0.84 × 85.05%
Dec 31, 2018 9.67% = 11.64% × 0.93 × 89.07%
Dec 31, 2017 6.45% = 7.81% × 1.10 × 75.36%
Dec 31, 2016 5.47% = 5.97% × 1.39 × 65.82%
Dec 31, 2015 5.06% = 5.38% × 1.46 × 64.19%

Based on: 10-K (filing date: 2020-01-29), 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).

1 Operating profit margin (OPM). See calculations »

2 Turnover of capital (TO). See calculations »

3 Effective cash tax rate (CTR). See calculations »

The primary reason for the increase in return on invested capital (ROIC) over 2019 year is the increase in profitability measured by operating profit margin (OPM) ratio.


Operating Profit Margin (OPM)

Netflix Inc., OPM calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in thousands)
Net operating profit after taxes (NOPAT)1 2,494,304  1,651,757  698,849  350,945  236,693 
Add: Cash operating taxes2 438,458  202,748  228,481  182,256  132,053 
Net operating profit before taxes (NOPBT) 2,932,762  1,854,505  927,330  533,200  368,746 
 
Revenues 20,156,447  15,794,341  11,692,713  8,830,669  6,779,511 
Add: Increase (decrease) in deferred revenue 163,846  142,277  175,150  96,751  72,135 
Adjusted revenues 20,320,293  15,936,618  11,867,863  8,927,420  6,851,646 
Profitability Ratio
OPM3 14.43% 11.64% 7.81% 5.97% 5.38%
Benchmarks
OPM, Competitors4
Charter Communications Inc. 13.58% 12.10% 9.95% 13.62% 10.51%
Comcast Corp. 19.82% 20.86% 22.39% 21.54% 22.24%
Walt Disney Co. 24.38% 26.20% 26.20% 27.51% 27.01%

Based on: 10-K (filing date: 2020-01-29), 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).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2019 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenues
= 100 × 2,932,762 ÷ 20,320,293 = 14.43%

4 Click competitor name to see calculations.

Profitability ratio Description The company
OPM The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. Netflix Inc.’s OPM improved from 2017 to 2018 and from 2018 to 2019.

Turnover of Capital (TO)

Netflix Inc., TO calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in thousands)
Revenues 20,156,447  15,794,341  11,692,713  8,830,669  6,779,511 
Add: Increase (decrease) in deferred revenue 163,846  142,277  175,150  96,751  72,135 
Adjusted revenues 20,320,293  15,936,618  11,867,863  8,927,420  6,851,646 
 
Invested capital1 24,144,190  17,072,770  10,832,398  6,418,756  4,681,790 
Efficiency Ratio
TO2 0.84 0.93 1.10 1.39 1.46
Benchmarks
TO, Competitors3
Charter Communications Inc. 0.33 0.32 0.30 0.21 0.26
Comcast Corp. 0.50 0.44 0.52 0.51 0.51
Walt Disney Co. 0.42 0.75 0.69 0.75 0.77

Based on: 10-K (filing date: 2020-01-29), 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).

1 Invested capital. See details »

2 2019 Calculation
TO = Adjusted revenues ÷ Invested capital
= 20,320,293 ÷ 24,144,190 = 0.84

3 Click competitor name to see calculations.

Efficiency ratio Description The company
TO The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. Netflix Inc.’s TO deteriorated from 2017 to 2018 and from 2018 to 2019.

Effective Cash Tax Rate (CTR)

Netflix Inc., CTR calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in thousands)
Net operating profit after taxes (NOPAT)1 2,494,304  1,651,757  698,849  350,945  236,693 
Add: Cash operating taxes2 438,458  202,748  228,481  182,256  132,053 
Net operating profit before taxes (NOPBT) 2,932,762  1,854,505  927,330  533,200  368,746 
Tax Rate
CTR3 14.95% 10.93% 24.64% 34.18% 35.81%
Benchmarks
CTR, Competitors4
Charter Communications Inc. 14.93% 15.66% 27.40% 23.33% 45.30%
Comcast Corp. 18.28% 19.69% 22.14% 28.59% 30.07%
Walt Disney Co. 7.19% 22.15% 29.74% 26.05% 36.31%

Based on: 10-K (filing date: 2020-01-29), 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).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2019 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 438,458 ÷ 2,932,762 = 14.95%

4 Click competitor name to see calculations.

Tax rate Description The company
CTR Effective cash tax rate on operating income. Netflix Inc.’s CTR decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.