Netflix Inc. (NASDAQ:NFLX)

The financial metrics demonstrate generally positive trends over the five-year period, with some notable differences between reported and adjusted figures. Asset turnover, liquidity, leverage, and profitability all exhibit changes worthy of consideration. The adjusted ratios generally present a slightly different, and often more conservative, picture than the reported values.

Asset Turnover

Both the reported and adjusted total asset turnover ratios show an increasing trend from 2021 to 2025. The adjusted ratio begins at 0.67 and rises to 0.85, indicating improving efficiency in asset utilization. The difference between reported and adjusted values remains relatively small throughout the period.

Liquidity

The reported current ratio increased from 0.95 in 2021 to 1.22 in 2023, before slightly decreasing to 1.19 in 2025. The adjusted current ratio shows a similar pattern, starting at 1.11 and reaching 1.42 in 2024, then declining to 1.41. The adjustments consistently result in a higher current ratio, suggesting a stronger short-term liquidity position when accounting for the adjustments made.

Leverage

Reported debt to equity decreased consistently from 0.97 to 0.54, indicating a reduction in financial risk. The adjusted debt to equity ratio follows a similar trend, starting at 1.07 and ending at 0.64, though it begins at a higher level. Both reported and adjusted debt to capital ratios also decreased over the period, from 0.49 to 0.35 and 0.52 to 0.39 respectively, reinforcing the trend of decreasing leverage. Financial leverage, both reported and adjusted, also decreased, from 2.81 to 2.09 and 2.63 to 2.03 respectively, further supporting the observation of reduced reliance on debt financing.

Profitability

The reported net profit margin experienced fluctuations, decreasing from 17.23% in 2021 to 14.21% in 2022, then increasing significantly to 24.30% in 2025. The adjusted net profit margin mirrors this trend, though the magnitudes of the changes are slightly different. Both reported and adjusted return on equity (ROE) followed a similar pattern, with a decline in 2022 followed by substantial increases in subsequent years, reaching 41.26% and 37.24% respectively in 2025. Return on assets (ROA) also increased over the period, from 11.48% to 19.75% reported and 11.98% to 18.39% adjusted, indicating improved profitability relative to asset base. The adjustments to net profit margin and ROA generally result in lower values, suggesting that the adjustments reduce the reported profitability.

In summary, the financial position appears to be strengthening over the observed period, characterized by improving asset utilization, consistent decreases in leverage, and increasing profitability. The adjustments applied to the financial items generally result in more conservative values, but the overall trends remain consistent between the reported and adjusted metrics.

The adjusted total asset turnover ratio for the period demonstrates an increasing trend. Initially, the ratio stood at 0.67 in 2021, experienced a slight decrease to 0.66 in 2022, and then exhibited consistent growth through 2025.

Overall Trend

From 2021 to 2025, the adjusted total asset turnover ratio increased from 0.67 to 0.85. This indicates improving efficiency in utilizing assets to generate revenue over the observed period.

Year-over-Year Changes

A minor decline was observed between 2021 and 2022, with the ratio decreasing from 0.67 to 0.66. However, subsequent years show positive changes: an increase from 0.66 to 0.71 in 2023, from 0.71 to 0.75 in 2024, and a more substantial increase to 0.85 in 2025.

Comparison with Reported Ratio

The adjusted total asset turnover ratio closely mirrors the reported total asset turnover ratio throughout the period. Both ratios show a similar pattern of initial fluctuation followed by a consistent upward trend. The difference between the reported and adjusted ratios remains relatively small across all years, suggesting that the adjustments made to revenues and total assets do not significantly alter the overall interpretation of asset utilization efficiency.

Revenue and Asset Relationship

The growth in the adjusted total asset turnover ratio is supported by increases in both adjusted revenues and adjusted total assets. However, the rate of revenue growth appears to be exceeding the rate of asset growth, particularly in the later years, contributing to the improved turnover ratio.

The consistent increase in the adjusted total asset turnover ratio from 2023 to 2025 suggests a strengthening ability to generate sales from its asset base. This positive trend warrants further investigation to understand the underlying drivers of this improved efficiency.

The reported current ratio exhibited fluctuation over the five-year period, while the adjusted current ratio demonstrated a consistent upward trend. A review of the figures reveals increasing current assets alongside fluctuating current liabilities, with the adjusted current ratio showing a more optimistic liquidity picture than the reported ratio.

Reported Current Ratio

The reported current ratio began at 0.95 in 2021, increased to 1.17 in 2022, then decreased slightly to 1.12 in 2023. Further increases were observed in 2024 and 2025, reaching 1.22 and 1.19 respectively. This indicates a generally improving, but somewhat volatile, ability to cover short-term liabilities with short-term assets.

Adjusted Current Ratio

The adjusted current ratio showed a clear upward trajectory. Starting at 1.11 in 2021, it rose to 1.39 in 2022, and continued to increase to 1.34 in 2023. The upward trend persisted in 2024, reaching 1.42, and remained strong in 2025 at 1.41. This suggests a strengthening liquidity position when considering the adjustments made to current liabilities.

Current Assets

Current assets increased from US$8,069,825 thousand in 2021 to US$9,266,473 thousand in 2022, and continued to grow to US$9,918,133 thousand in 2023. A significant increase was observed in 2024, reaching US$13,100,379 thousand, followed by a slight decrease to US$13,020,191 thousand in 2025. This indicates a general expansion of short-term assets over the period.

Current Liabilities

Current liabilities decreased from US$8,488,966 thousand in 2021 to US$7,930,974 thousand in 2022. They then increased to US$8,860,655 thousand in 2023, and continued to rise to US$10,755,400 thousand in 2024, before reaching US$10,980,930 thousand in 2025. This demonstrates a general increase in short-term obligations over the latter part of the observed period.

Adjusted Current Liabilities

Adjusted current liabilities followed a similar pattern to current liabilities, decreasing from US$7,279,624 thousand in 2021 to US$6,666,313 thousand in 2022, increasing to US$7,417,686 thousand in 2023, and then rising to US$9,234,587 thousand in 2024, and finally US$9,205,200 thousand in 2025. The adjustments made to current liabilities appear to moderate the overall increase in short-term obligations.

The divergence between the reported and adjusted current ratios suggests that the adjustments to current liabilities have a material impact on the assessment of the company’s short-term liquidity. The consistent increase in the adjusted current ratio indicates a strengthening liquidity position, despite the increase in overall current liabilities.

The adjusted debt to equity ratio exhibited fluctuations over the five-year period. Initially, the ratio stood at 1.07 in 2021, then decreased through 2025, ending at 0.64. Total debt and stockholders’ equity both increased over the period, but the adjusted figures demonstrate a different dynamic than the reported figures.

Adjusted Debt to Equity Ratio - Overall Trend

A general decreasing trend is observed in the adjusted debt to equity ratio from 2021 to 2025. The ratio decreased from 1.07 to 0.64, indicating a relative strengthening of the equity position compared to debt when considering the adjustments made to both figures.

Adjusted Debt to Equity Ratio - Year-over-Year Changes

From 2021 to 2022, the adjusted debt to equity ratio decreased significantly, from 1.07 to 0.78. This decrease continued, albeit at a slower pace, from 2022 to 2023, moving from 0.78 to 0.80. A further decrease was noted from 2023 to 2024, with the ratio falling to 0.72. The most substantial decrease occurred between 2024 and 2025, where the ratio declined to 0.64.

Comparison with Reported Debt to Equity

The reported debt to equity ratio also decreased over the period, from 0.97 in 2021 to 0.54 in 2025. However, the adjusted ratio consistently remained higher than the reported ratio throughout the observed period. This suggests that the adjustments made to both debt and equity have a material impact on the perceived leverage of the entity.

Adjusted Total Debt and Stockholders’ Equity

Adjusted total debt remained relatively stable, fluctuating between US$16.93 billion and US$18.12 billion. Adjusted stockholders’ equity demonstrated a consistent upward trend, increasing from US$16.91 billion in 2021 to US$26.44 billion in 2025. This growth in equity, coupled with relatively stable debt, contributed to the observed decrease in the adjusted debt to equity ratio.

The consistent decline in the adjusted debt to equity ratio suggests an improving financial position from a leverage perspective, although the adjustments applied to the figures are critical to this conclusion. The growth in adjusted equity appears to be the primary driver of this trend.

The adjusted debt to capital ratio exhibits a fluctuating pattern over the five-year period. While the reported debt to capital ratio consistently decreased, the adjusted ratio presents a more nuanced picture. Total debt remained relatively stable, with a slight increase in 2024 before decreasing again in 2025. Total capital generally increased throughout the period, though with some variation.

Adjusted Debt to Capital Ratio - Overall Trend

The adjusted debt to capital ratio began at 0.52 in 2021, decreased to 0.44 in 2022, and then increased slightly to 0.45 in 2023. A further decrease to 0.42 was observed in 2024, followed by a decline to 0.39 in 2025. This indicates a general trend towards decreasing leverage when considering the adjustments made to both debt and capital figures.

Adjusted Total Debt

Adjusted total debt increased from US$18,116,570 thousand in 2021 to US$16,931,564 thousand in 2022, representing a decrease. It remained relatively consistent through 2023 and 2024, at US$16,973,374 thousand and US$17,994,974 thousand respectively, before decreasing to US$16,975,837 thousand in 2025. The fluctuations are minimal, suggesting a stable debt position after the initial decrease.

Adjusted Total Capital

Adjusted total capital increased steadily from US$35,027,065 thousand in 2021 to US$38,712,085 thousand in 2022. A slight decrease to US$38,130,106 thousand was noted in 2023, followed by increases to US$43,081,796 thousand in 2024 and US$43,412,252 thousand in 2025. This consistent growth in capital contributes to the overall trend of decreasing adjusted debt to capital.

Comparison to Reported Debt to Capital

The reported debt to capital ratio shows a more consistent decline from 0.49 in 2021 to 0.35 in 2025. The adjusted debt to capital ratio, while also generally decreasing, exhibits more volatility. This suggests that the adjustments made to debt and capital have a moderating effect on the observed leverage, preventing a more rapid decline as indicated by the reported ratio.

In summary, the adjusted debt to capital ratio indicates a generally improving leverage position, though with some year-to-year variation. The increases in adjusted total capital appear to be the primary driver of this trend, while adjusted total debt remains relatively stable.

The financial leverage metrics demonstrate a generally decreasing trend over the five-year period. Both reported and adjusted financial leverage ratios exhibit declines, suggesting a strengthening of the company’s financial position relative to its asset base.

Total Assets & Stockholders’ Equity

Total assets increased from 2021 to 2024, reaching US$53,630,374 thousand, before a more moderate increase to US$55,596,993 thousand in 2025. Stockholders’ equity followed a similar pattern, growing from US$15,849,248 thousand in 2021 to US$26,615,488 thousand in 2025. These increases in both components contribute to the observed changes in leverage.

Reported Financial Leverage

Reported financial leverage decreased consistently from 2.81 in 2021 to 2.09 in 2025. This indicates a reduction in the proportion of assets financed by debt, or other non-equity liabilities, relative to equity. The rate of decline slowed between 2022 and 2023, but resumed in subsequent years.

Adjusted Financial Leverage

Adjusted financial leverage mirrors the trend observed in the reported ratio, declining from 2.63 in 2021 to 2.03 in 2025. The adjusted leverage ratio consistently remains lower than the reported leverage ratio throughout the period. This suggests that the adjustments made to total assets and stockholders’ equity result in a more conservative assessment of the company’s leverage position. The difference between the reported and adjusted ratios remained relatively stable over the period.

Adjusted Total Assets & Equity

Adjusted total assets show a similar growth trajectory to reported total assets, increasing from US$44,436,568 thousand in 2021 to US$53,534,915 thousand in 2025. Adjusted stockholders’ equity also increased, moving from US$16,910,495 thousand to US$26,436,415 thousand over the same period. The adjustments applied appear to be consistently reducing both asset and equity values, but maintaining the overall growth trend.

Overall, the decreasing trend in both reported and adjusted financial leverage ratios suggests improving financial health and a reduced reliance on external financing. The consistency between the trends in both ratios, and the consistent difference between them, indicates a stable and predictable impact from the adjustments made to the financial figures.

The adjusted net profit margin exhibited fluctuations over the five-year period. Initial values were relatively high, followed by a decline, and then a subsequent recovery towards the end of the observed timeframe. A detailed examination of the trends is presented below.

Overall Trend

The adjusted net profit margin began at 17.87% in 2021. It decreased to 13.37% in 2022, representing a notable decline. A modest recovery occurred in 2023, with the margin increasing to 14.86%. Further improvement was observed in 2024, reaching 22.48%, and while still strong, the margin decreased slightly to 21.67% in 2025.

Comparison to Reported Net Profit Margin

The adjusted net profit margin consistently exceeded the reported net profit margin across all years. The difference between the two margins varied annually, suggesting the impact of adjustments to net income and revenues. The largest difference was observed in 2022, where the adjusted margin was 0.86 percentage points higher than the reported margin. The smallest difference was in 2025, at 0.63 percentage points.

Year-over-Year Changes

From 2021 to 2022, the adjusted net profit margin experienced a decrease of 4.50 percentage points. A subsequent increase of 1.49 percentage points was noted from 2022 to 2023. The most substantial year-over-year increase occurred between 2023 and 2024, with a rise of 7.62 percentage points. Finally, a decrease of 0.81 percentage points was observed from 2024 to 2025.

Revenue and Net Income Relationship

Adjusted revenues demonstrated a consistent upward trend throughout the period. Adjusted net income also increased overall, though not uniformly. The combination of increasing revenues and fluctuating net income contributed to the observed changes in the adjusted net profit margin. The largest increase in adjusted net income occurred between 2024 and 2025, but the corresponding increase in adjusted revenue was proportionally larger, resulting in a slight decrease in the adjusted net profit margin.

In summary, while the adjusted net profit margin experienced some volatility, it generally trended upwards over the five-year period, particularly between 2022 and 2024. The adjustments made to net income and revenues appear to have a material impact on the reported profitability of the entity.

The period between 2021 and 2025 demonstrates fluctuating performance in key financial metrics. Net income experienced a decline from 2021 to 2022, followed by recovery and substantial growth through 2025. Stockholders’ equity generally increased over the five-year period, though with some year-over-year variation. Reported return on equity (ROE) mirrored the net income trend, initially decreasing, then increasing significantly. A similar pattern is observed in the adjusted figures, though the magnitudes differ.

Adjusted Return on Equity (ROE)

Adjusted ROE began at 31.47% in 2021, decreasing to 19.45% in 2022. This decline corresponds with the decrease in adjusted net income during the same period. A subsequent increase to 23.81% was noted in 2023, coinciding with a rise in adjusted net income. Further growth was observed in 2024, reaching 35.02%, and continued into 2025, achieving 37.24%.

The adjusted ROE consistently tracks the reported ROE, but remains lower in each year. This suggests that the adjustments made to net income and stockholders’ equity have a dampening effect on the calculated return. The difference between reported and adjusted ROE appears relatively stable over the period.

The growth in both net income and stockholders’ equity from 2023 to 2025 appears to be the primary driver of the increasing ROE values. While 2022 represents a period of contraction, the subsequent years demonstrate a strong recovery and expansion. The consistent, though lower, values of adjusted ROE suggest the adjustments are systematically reducing the reported return, potentially reflecting non-recurring items or accounting choices.

Net Income and Stockholders’ Equity Relationship

The relationship between net income and stockholders’ equity is evident in the ROE figures. Increases in net income, without corresponding increases in equity, lead to higher ROE, and vice versa. The growth in stockholders’ equity provides a base for the increasing net income to generate higher returns.

Overall, the financial performance indicates a period of volatility followed by substantial improvement. The adjusted ROE provides a potentially more conservative view of profitability, highlighting the impact of specific adjustments to reported earnings and equity.

The adjusted return on assets (ROA) exhibited fluctuations over the five-year period. While generally tracking the reported ROA, notable differences are observed in the magnitude and trajectory of the metric. An initial assessment reveals a period of relative stability followed by increasing profitability.

Overall Trend

The adjusted ROA began at 11.98% in 2021, decreased to 8.76% in 2022, and then demonstrated a consistent upward trend through 2025, reaching 18.39%. This indicates improving profitability relative to the adjusted asset base over the latter portion of the analyzed period.

Year-over-Year Changes

A significant decrease in adjusted ROA occurred between 2021 and 2022, falling by 3.22 percentage points. This decline coincided with a decrease in adjusted net income. Subsequent years showed positive growth; from 2022 to 2023, the adjusted ROA increased by 1.79 percentage points, and from 2023 to 2024, it rose substantially by 6.23 percentage points. The growth continued, albeit at a slower pace, with a 1.61 percentage point increase from 2024 to 2025.

Relationship to Adjusted Net Income and Assets

The adjusted ROA’s trajectory closely mirrors the changes in adjusted net income. The decrease in 2022 is directly attributable to the lower adjusted net income reported for that year. The subsequent increases in adjusted ROA are correlated with the growth in adjusted net income observed in 2023, 2024, and 2025. Adjusted total assets generally increased over the period, but the rate of increase in net income outpaced the increase in assets, contributing to the rising ROA.

Comparison to Reported ROA

The adjusted ROA consistently differed from the reported ROA across all years. The adjusted ROA was generally higher than the reported ROA in 2021, 2023, 2024, and 2025, while lower in 2022. These differences suggest that adjustments made to net income and total assets had a material impact on the calculated return on assets.

In conclusion, the adjusted ROA demonstrates a recovery and subsequent growth trend following a dip in 2022. The increasing adjusted ROA, coupled with the growth in adjusted net income, suggests improving efficiency in generating profits from the adjusted asset base.