Netflix Inc. (NASDAQ:NFLX)

Current Ratio

The current ratio exhibits moderate fluctuations over the observed periods. It started at 1.27 and showed a downward trend until December 31, 2021, reaching a low of 0.95. From that point onwards, the ratio generally improved, reaching a peak of 1.33 in June 30, 2023. After a slight decline to 0.95 on June 30, 2024, it trended upwards again, reaching 1.34 by December 31, 2024, and maintained a level above 1.30 in subsequent quarters. This pattern suggests periodic fluctuations in short-term liquidity but overall indicates an improving capacity to cover short-term obligations in the later periods.

Quick Ratio

The quick ratio follows a similar trajectory to the current ratio but remains consistently lower, reflecting the exclusion of inventory from current assets. It began at 1.06 and declined to 0.71 by December 31, 2021, indicating reduced immediate liquidity. From early 2022 through 2023, it showed a recovery, peaking at 0.99 by June 30, 2023. A decline to 0.66 occurred by June 30, 2024, followed by a gradual recovery to 0.96 by September 30, 2025. This indicates variability in liquid asset availability relative to current liabilities, with some periods of tight liquidity but an overall improving trend in recent quarters.

Cash Ratio

The cash ratio mirrors the quick ratio exactly across all periods, implying cash and cash equivalents constitute the bulk of liquid assets considered in the quick ratio. The trend shows an initial decrease from 1.06 to 0.71 by December 31, 2021, followed by a recovery phase with a peak at 0.99 in mid-2023. After a drop to 0.66 in mid-2024, it improved steadily to near 0.96 by the latest quarter. This pattern suggests that the company's most liquid assets have fluctuated but have generally strengthened in the most recent timeframe, supporting a modestly improved liquidity position.

Current Assets Trend

Current assets show some fluctuation over the periods analyzed. After a decline from March 2021 (10,107,508 thousand USD) to December 2021 (8,069,825 thousand USD), current assets experience a gradual recovery, reaching a peak in June 2024 (13,103,379 thousand USD). Although there is some variability, the general trend from early 2023 to the end of the series is upward, indicating an improvement in liquidity resources available within each quarter.

Current Liabilities Trend

Current liabilities remain relatively stable with mild fluctuations, generally oscillating between approximately 7,500,000 and 10,700,000 thousand USD. An initial decline is seen in the first half of 2022, followed by a gradual increase, peaking in late 2024 (around 10,755,400 thousand USD), before slightly decreasing in the most recent quarters. This suggests ongoing management of short-term obligations without dramatic changes in the level of liabilities.

Current Ratio Analysis

The current ratio exhibits variability but generally remains above 1.0 after initially dipping below at the end of 2021 (0.95). It reaches a higher range of around 1.26 to 1.34 during the mid to latter part of the observed period, indicating an overall enhancement in short-term liquidity. This suggests that the company’s ability to cover current liabilities with current assets has improved compared to the earlier quarters where the ratio was closer to or below 1. The fluctuations in the current ratio correspond to changes in current assets and liabilities, reflecting a dynamic but managing liquidity position.

Overall Financial Position Insights

The combination of increasing current assets alongside relatively stable current liabilities and an improving current ratio suggests favorable liquidity management. Although some quarters show decreases notably around the end of 2021 and mid-2024, the trend indicates that the company has successfully strengthened its short-term financial health in recent periods. There is no evidence of liquidity distress, and the company appears to maintain a sound balance between assets and liabilities to support ongoing operational needs.

The analyzed data reveals several notable trends in liquidity and short-term financial position over the observed periods. The focus is on total quick assets, current liabilities, and the quick ratio, which collectively provide insight into the company's ability to meet short-term obligations with its most liquid assets.

Total Quick Assets

Total quick assets exhibit some fluctuations over the quarters but generally remain within a range between approximately 5.8 billion and 9.3 billion US dollars. Initially, there is a gradual decline from about 8.4 billion at the beginning of 2021 down to around 6 billion by the end of 2021, followed by relative stability and slight recovery during 2022. From early 2023 onward, total quick assets show increased volatility but with a noticeable upward trend towards the end of the period, reaching over 9.3 billion US dollars in late 2025.

Current Liabilities

Current liabilities demonstrate a similar pattern of variability but with a general tendency to increase over time. Starting near 7.9 billion US dollars in early 2021, liabilities decline modestly mid-2021, then rise steadily through 2022 and 2023, peaking above 10.7 billion by mid-2024. Although there are minor reductions towards the end of the dataset, the level remains elevated in the subsequent quarters, generally above 8.9 billion US dollars.

Quick Ratio

The quick ratio, representing liquid asset coverage of current liabilities, clearly reflects the interplay between quick assets and liabilities. It starts slightly above 1.0 in early 2021, indicating sufficient liquidity to cover obligations without relying on inventory. However, this ratio declines significantly to around 0.7 by late 2021, signaling a reduced liquidity buffer. The ratio stabilizes somewhat near 0.75 to 0.8 during 2022, followed by an improvement in early 2023, with values approaching or slightly below 1.0. Subsequent periods show oscillations mostly in the range of 0.66 to 0.96, suggesting fluctuating but generally moderate liquidity levels without a strong consistent upward or downward trajectory.

Overall, the liquidity position exhibits periods of tightening, particularly evident in late 2021, followed by phases of recovery and moderate stability. The company's quick assets have occasionally outpaced increases in current liabilities but not consistently enough to maintain a quick ratio above 1.0 across all quarters. This implies cautious monitoring of short-term liquidity is warranted, particularly during times when the quick ratio approaches or falls below 0.7, which could indicate potential stress in meeting immediate liabilities solely through liquid resources.

The analysis of the quarterly financial data reveals several key trends in the liquidity and cash position over the examined periods.

Total cash assets

The total cash assets exhibit fluctuations throughout the periods. Initially, cash assets decreased from approximately 8.4 billion USD in the first quarter of 2021 to around 6.0 billion USD by the end of 2021, indicating a downward trend during that year. In 2022, the cash amounts remained relatively stable, ranging between 5.8 billion and 6.1 billion USD, before increasing significantly in the first half of 2023, reaching highs near 8.6 billion USD. This upward movement suggests an improvement in cash reserves. However, there is another drop in the second half of 2023 and early 2024, followed by a recovery with peaks close to 9.2 billion USD in the third quarter of 2024. The final quarters show some variability but generally maintain levels above 8.0 billion USD, with the most recent period around 9.3 billion USD, indicating a strengthening cash position towards the end of the timeline.

Current liabilities

Current liabilities have shown a generally increasing trend over the periods analyzed. Starting around 7.96 billion USD in early 2021, liabilities slightly fluctuated but remained below 8.5 billion USD throughout 2021. In 2022, liabilities experienced marginal decreases mid-year but then increased again, surpassing 8.3 billion USD by the end of the year. The trend continued upward into 2023 and 2024, with liabilities reaching over 10 billion USD in the middle quarters of 2024, indicating a growing short-term financial obligation. The latter periods show some reductions but liabilities remain high, in the vicinity of 9.7 billion to 8.9 billion USD, suggesting persistent elevated current liabilities.

Cash ratio

The cash ratio, which measures the company's ability to cover current liabilities with its cash holdings, fluctuated in correlation with the cash assets and liabilities changes. It started slightly above 1.0 at 1.06 in early 2021, reflecting a strong liquidity position. This ratio declined through 2021 to a low of 0.71 at year-end, indicating a weakening liquidity buffer. Throughout 2022, the cash ratio maintained a relatively stable but low level around 0.76 to 0.79. In 2023, it improved during the first half with values close to 0.94 and 0.99, before dipping to 0.81 by the end of the year. The ratio decreased again through mid-2024, reaching 0.66, the lowest point in the timeframe, before recovering to around 0.86 to 0.89 in later quarters. The latest values are between 0.94 and 0.96, showing a restoration toward better, though still below 1.0, liquidity coverage.

Overall, the data reflect a financial environment characterized by substantial cash holding variations and a steady increase in short-term liabilities, impacting liquidity ratios. Periods of strong cash reserves improved cash ratio metrics, while increases in current liabilities challenged liquidity, especially when cash assets simultaneously declined. Although the company has made progress restoring its liquidity, the cash ratio consistently remains under 1.0 in many periods, which suggests that cash alone may not fully cover current obligations at all times.