Netflix Inc. (NASDAQ:NFLX)

The quarterly financial ratios reveal varying liquidity trends over the analyzed periods. The current ratio shows an overall fluctuating pattern, indicating changing levels of short-term asset coverage relative to current liabilities. Beginning at 0.82 in March 2020, the ratio improved to above 1.20 for several quarters in 2020 and early 2021, signaling strengthened liquidity. Subsequent fluctuations brought the ratio down near or below 1.0 in certain quarters toward the end of 2021 and mid-2024. However, there is a general tendency to return above 1.0 in later quarters, reaching as high as 1.34 in June 2025, which suggests intermittent improvement in the company's ability to meet short-term obligations.

Similar fluctuations are observed in the quick ratio, which excludes inventory from current assets, thus providing insight into more liquid asset coverage. After commencing at 0.66 in March 2020, it reached a peak around 1.06 in the third quarter of 2020, followed by a gradual decline with some recovery in certain periods. The lowest points appeared near 0.66 in September 2024, while the highest points mostly clustered around 1.00 or slightly below, indicating moderate liquidity but occasional challenges in covering immediate liabilities without reliance on inventory.

The cash ratio, measuring the most liquid assets relative to current liabilities, mirrors the quick ratio precisely, implying that the quick assets are largely composed of cash or cash equivalents over the periods. This identical movement suggests limited variation in other quick assets apart from cash, and the overall pattern confirms moderate to adequate cash holdings relative to current liabilities with some volatility.

In summary, liquidity ratios over the reported quarters reveal moderate liquidity strength with periodic fluctuations. The company experienced periods with strong short-term asset coverage but also intervals where coverage dipped closer to minimal thresholds. The parallel trends in quick and cash ratios indicate a stable composition of liquid assets, predominantly cash, in managing immediate obligations. These variations may reflect strategic management of working capital or responses to operational and market conditions impacting short-term financial stability.

Current Ratio

Fluctuated between a low of 0.82 and a high of 1.34, indicating varying capability to cover current liabilities.

Quick Ratio

Varied from 0.66 to approximately 1.06, showing moderate liquidity excluding inventory.

Cash Ratio

Identical to the quick ratio throughout, highlighting cash and cash equivalents as main quick assets.

The quarterly financial data reveals several notable trends in the short-term liquidity position as indicated by current assets, current liabilities, and the current ratio over the observed periods.

Current Assets

Current assets showed an overall upward movement from approximately 6.45 billion USD in the first quarter of 2020 to higher values exceeding 11 billion USD in multiple quarters during 2023 and 2024. However, there was some volatility, with occasional declines, notably in the fourth quarter of 2020 and first quarters of 2022 and 2024. The highest current assets were recorded in the second quarter of 2024, reaching nearly 13.1 billion USD, signaling strengthening liquidity resources before minor setbacks in subsequent quarters.

Current Liabilities

Current liabilities demonstrated a relatively stable pattern with fluctuations but without a clear long-term increasing or decreasing trend. They ranged mostly between 7.5 billion and 10.7 billion USD. An increase was observable in late 2023 and into 2024, peaking near 10.7 billion USD in the third and fourth quarters of 2024. This suggests periodic rises in short-term obligations coinciding with stronger asset positions but ending with a decline in mid-2025.

Current Ratio

The current ratio, a key indicator of short-term liquidity and the ability to meet short-term liabilities, exhibited variability consistent with movements in current assets and liabilities. Starting below 1.0 at 0.82 in early 2020, the ratio improved quickly to peak above 1.25 in 2020 and early 2021, indicating a stronger liquidity buffer during that period. There was a notable dip to below 1.0 in the fourth quarter of 2021 and again mid-2024, reflecting tighter liquidity conditions. Subsequently, the ratio rebounded to exceed 1.3 by the end of 2024 and mid-2025, signifying an improved ability to cover current liabilities comfortably.

Overall, the company demonstrated an ability to enhance liquidity over the observed period, as reflected in rising current assets and fluctuating current liabilities. The current ratio's movements suggest episodic stresses in liquidity but a general trend toward improved short-term financial health, especially evident in late 2023 through mid-2025.

Total quick assets

The total quick assets show notable fluctuations over the periods. Starting at approximately 5.15 billion US dollars in March 2020, there was a general upward trend through September 2020, reaching about 8.39 billion. Subsequently, the value oscillated with a mild decline toward the end of 2021, falling to around 6.03 billion by December 2021. A recovery phase is observed in early 2023, with peak values surpassing 8.57 billion in June 2023. In the latter periods, there is variability, with a significant spike hitting about 9.22 billion in September 2024, followed by a decrease toward mid-2025 to approximately 8.39 billion. This pattern indicates intermittent liquidity strengthening with short-term volatility.

Current liabilities

Current liabilities exhibit a generally increasing trend from 7.85 billion in March 2020 to a peak of over 10.75 billion in December 2024. There is a steady buildup over the quarters with some minor fluctuations, particularly noticeable around the end of 2021 and early 2022, where liabilities momentarily dip but then continue to increase significantly through mid-2024. The liabilities level slightly decreases again by mid-2025 to 8.94 billion. The overall trend suggests a growing short-term financial obligation profile, potentially impacting liquidity pressures.

Quick ratio

The quick ratio values highlight varying liquidity conditions over the quarters. It starts at a low of 0.66 in March 2020 and improves to over 1.06 during the second and third quarters of 2020 and early 2021, indicating stronger liquidity during that period. Following this peak, the ratio declines to a low of approximately 0.66 in mid-2024, reflecting relatively weaker liquidity positions. There are intermittent improvements thereafter, with the ratio rebounding close to 0.94 by mid-2025. These movements correspond with the trends in quick assets and current liabilities, suggesting that liquidity has been challenged at times by rising liabilities, despite periods of strong quick asset holdings.

Summary

The financial data reveals a dynamic liquidity environment characterized by a general increase in current liabilities over the analyzed periods. Quick assets showed a capacity to rebound periodically but did not consistently outpace liabilities, resulting in fluctuating quick ratios that reflect varied liquidity strength. The peaks in quick assets and quick ratio during mid-2020 and mid-2023 indicate episodes of improved short-term financial health, while the later periods highlight some strain associated with increasing liabilities. Overall, the company maintained a quick ratio below or near 1.0 for most periods, implying a moderate liquidity risk profile requiring careful monitoring of working capital management.

Total Cash Assets

The total cash assets displayed a general upward trend from March 31, 2020, to September 30, 2020, increasing from approximately 5.15 billion USD to 8.39 billion USD. Following this peak, cash assets fluctuated and declined notably by December 31, 2021, reaching a low around 6 billion USD. Subsequently, cash assets started to recover, with significant rebounds in the first half of 2023, peaking again at about 8.58 billion USD in June 30, 2023. After some decline during late 2023 and early 2024, a strong increase is observed towards the third and fourth quarters of 2024, culminating in levels close to 9.2 billion USD by September 30, 2024. However, this positive momentum seems to moderate slightly in 2025, with cash assets stabilizing around 8.4 to 8.3 billion USD.

Current Liabilities

Current liabilities exhibited a somewhat stable but gradually increasing pattern over the entire period. Starting from around 7.85 billion USD in the first quarter of 2020, the amount saw slight fluctuations but primarily an upward trajectory, reaching over 10.7 billion USD by September 30, 2024. Notably, after peaking in late 2024, there is a decline observed in 2025, with liabilities decreasing to approximately 8.9 billion USD by June 30, 2025. This reduction may indicate efforts to manage short-term obligations more effectively in the recent quarters.

Cash Ratio

The cash ratio, representing the company's ability to cover current liabilities with cash assets, mirrored the trends in cash assets and liabilities. Initially, the ratio increased from 0.66 in March 2020 to just above 1.06 in March 2021, suggesting improved liquidity. However, a sharp decline followed, reaching lows around 0.66 by June 2024, indicating a tightening liquidity situation despite relatively high cash levels due to a faster growth in current liabilities. The ratio then recovered slightly, nearing 0.94 by June 2025. This fluctuation reflects a period of cash-flow management challenges but recent improvements suggest enhanced liquidity controls.