Netflix Inc. (NASDAQ:NFLX)

An examination of short-term operating activity ratios reveals several noteworthy trends between 2021 and 2025. Generally, a decreasing efficiency in receivables management is apparent, while payables management demonstrates more stability. Working capital turnover exhibits fluctuations over the period.

Receivables Turnover

The receivables turnover ratio decreased from 36.92 in 2021 to 22.24 in 2025. This indicates a declining ability to efficiently collect receivables. A dip to 26.20 in 2023 was followed by a slight recovery to 29.21 in 2024, but the downward trend resumed in the final year. This suggests a lengthening of the time it takes to convert receivables into cash.

Payables Turnover

Payables turnover showed an initial increase from 20.70 in 2021 to 28.54 in 2022, suggesting improved efficiency in paying suppliers. The ratio then stabilized around the mid-twenties, fluctuating between 26.38 and 23.38 for 2023 and 2024, before rising slightly to 25.84 in 2025. Overall, the company maintains a relatively consistent pace of paying its suppliers.

Working Capital Turnover

Working capital turnover became available from 2022, starting at 23.67. It increased significantly to 31.89 in 2023, indicating improved efficiency in utilizing working capital to generate sales. However, this was followed by a substantial decrease to 16.63 in 2024, and a partial recovery to 22.16 in 2025. This volatility suggests fluctuations in the relationship between sales and working capital investment.

Average Receivable Collection Period

The average receivable collection period lengthened from 10 days in 2021 to 16 days in 2025. This aligns with the decreasing receivables turnover ratio, confirming that it is taking longer to collect payments from customers. The period increased steadily, with a jump from 11 days in 2022 to 14 days in 2023, and then continued to rise.

Average Payables Payment Period

The average payables payment period decreased from 18 days in 2021 to 13 days in 2022, indicating faster payments to suppliers. It then stabilized around 14 days for 2023 and 2025, with a slight increase to 16 days in 2024. The company generally maintains a consistent, relatively short payment period to its suppliers.

In summary, the observed trends suggest a weakening in receivables management, coupled with stable payables management. The working capital turnover ratio demonstrates considerable fluctuation, requiring further investigation to understand the underlying drivers.

An examination of the financial information reveals trends in receivables turnover over a five-year period. Revenues demonstrate consistent growth throughout the period, while trade receivables also increased, though not at a constant rate. The receivables turnover ratio, calculated from these figures, exhibits a generally decreasing trend, with some fluctuation.

Receivables Turnover Trend

The receivables turnover ratio decreased from 36.92 in 2021 to 31.97 in 2022, representing a decline of approximately 13.4%. A further decrease was observed in 2023, falling to 26.20. The ratio experienced a slight recovery in 2024, increasing to 29.21, but then continued its downward trajectory, reaching 22.24 in 2025. This represents the lowest value observed during the analyzed period.

The growth in revenues outpaced the growth in trade receivables initially, contributing to the initial decline in the turnover ratio. However, the substantial increase in trade receivables between 2024 and 2025, coupled with a comparatively smaller increase in revenues, accelerated the decline in the ratio during that period. This suggests a lengthening of the collection period for receivables.

Revenue and Receivables Relationship

Revenues increased steadily from US$29,697,844 thousand in 2021 to US$45,183,036 thousand in 2025. Trade receivables also increased, moving from US$804,320 thousand in 2021 to US$2,031,476 thousand in 2025. While both metrics grew, the proportional increase in receivables was greater than the proportional increase in revenue, particularly in the later years of the period.

The decreasing receivables turnover ratio may indicate a weakening in the company’s ability to efficiently collect its receivables. Further investigation into the company’s credit policies and collection procedures may be warranted to understand the underlying causes of this trend and to assess any potential impact on cash flow.

The accounts payable turnover ratio exhibits fluctuations over the five-year period. While cost of revenues generally increased, the relationship with accounts payable and the resulting turnover ratio varied annually.

Payables Turnover Trend

The payables turnover ratio increased from 20.70 in 2021 to 28.54 in 2022, indicating a more efficient use of credit terms with suppliers. This suggests the company paid its suppliers more frequently during this period. A subsequent decrease to 26.38 in 2023 suggests a slight moderation in payment frequency. Further decline to 23.38 in 2024 indicates a slower rate of paying suppliers. The ratio then increased again in 2025, reaching 25.84, suggesting a return towards the levels observed in 2023.

Relationship to Cost of Revenues

Cost of revenues consistently increased throughout the period, rising from US$17,332,683 thousand in 2021 to US$23,275,329 thousand in 2025. Accounts payable also generally increased, though not at the same rate as cost of revenues. The initial decrease in accounts payable from 2021 to 2022, coupled with the increase in cost of revenues, contributed to the significant rise in the payables turnover ratio in 2022. The subsequent increases in accounts payable in 2023 and 2024 partially offset the continued growth in cost of revenues, leading to the observed declines in the turnover ratio.

Accounts Payable Levels

Accounts payable decreased substantially from 2021 to 2022, falling from US$837,483 thousand to US$671,513 thousand. This was followed by increases in 2023 and 2024, reaching US$899,909 thousand. The increase leveled off in 2025, with accounts payable at US$900,612 thousand. These fluctuations in accounts payable levels directly influence the calculated payables turnover ratio.

Overall, the payables turnover ratio demonstrates a dynamic relationship with both cost of revenues and the absolute level of accounts payable. The observed changes suggest shifts in the company’s payment practices and/or its negotiation of credit terms with suppliers.

The working capital turnover ratio exhibits fluctuations over the observed period. Initially unavailable for 2021, the ratio begins at 23.67 in 2022 and increases to 31.89 in 2023. A subsequent decline is noted in 2024, with the ratio falling to 16.63, before recovering to 22.16 in 2025.

Working Capital

Working capital demonstrates a significant shift from a negative value of -419,141 in 2021 to a positive 1,335,499 in 2022. It then decreases to 1,057,478 in 2023, followed by a substantial increase to 2,344,979 in 2024. The most recent year, 2025, shows a slight decrease to 2,039,261.

Revenues

Revenues consistently increase throughout the period. From 29,697,844 in 2021, revenues grow to 31,615,550 in 2022, 33,723,297 in 2023, 39,000,966 in 2024, and reach 45,183,036 in 2025. This represents a continuous upward trend in sales.

Working Capital Turnover – Trend Analysis

The initial increase in the working capital turnover ratio from 2022 to 2023 suggests improved efficiency in utilizing working capital to generate revenue. However, the substantial decrease in 2024 indicates a less efficient use of working capital, potentially due to a larger investment in working capital relative to revenue growth. The partial recovery in 2025 suggests a move towards improved efficiency, but the ratio remains below the 2023 peak.

The observed fluctuations in the working capital turnover ratio, coupled with the increasing revenue trend, suggest a dynamic relationship between working capital management and sales generation. Further investigation into the components of working capital (accounts receivable, inventory, and accounts payable) would be necessary to fully understand the drivers behind these changes.

An examination of the short-term activity ratios reveals a shifting pattern in the management of receivables. Specifically, the receivables turnover and average receivable collection period exhibit notable changes over the five-year period.

Receivables Turnover

The receivables turnover ratio demonstrates a general decreasing trend. Beginning at 36.92 in 2021, the ratio declined to 31.97 in 2022, and further to 26.20 in 2023. A slight recovery to 29.21 was observed in 2024, but this was followed by a further decrease to 22.24 in 2025. This suggests a growing inefficiency in converting receivables into cash over time, although the 2024 figure indicates a potential temporary stabilization before the final decline.

Average Receivable Collection Period

Correspondingly, the average receivable collection period has increased over the period. Starting at 10 days in 2021, it rose to 11 days in 2022 and 14 days in 2023. A slight decrease to 12 days occurred in 2024, mirroring the receivables turnover, but the period lengthened again to 16 days in 2025. This indicates that, on average, it is taking longer to collect payments from customers. The increasing collection period aligns with the decreasing receivables turnover, reinforcing the observation of a potential slowdown in cash conversion from sales.

The combined trends suggest a potential weakening in the company’s ability to efficiently manage its accounts receivable. Further investigation into the reasons behind these changes, such as alterations in credit policies, customer payment behavior, or the composition of sales, would be beneficial.

The average payables payment period exhibited relative stability over the five-year period, fluctuating within a narrow range. While the payables turnover ratio demonstrated more pronounced variation, the resulting impact on the payment period remained contained.

Average Payables Payment Period

The average payables payment period began at 18 days in 2021, decreasing to 13 days in 2022. It then experienced a slight increase to 14 days in 2023, followed by a rise to 16 days in 2024. The period concluded at 14 days in 2025, mirroring the 2023 value. This suggests a generally consistent ability to manage payment obligations, with minor yearly variations.

Payables Turnover Ratio

The payables turnover ratio increased from 20.70 in 2021 to 28.54 in 2022, indicating a faster rate of paying suppliers. A subsequent decrease to 26.38 in 2023 was followed by a further decline to 23.38 in 2024. The ratio recovered slightly to 25.84 in 2025. Despite these fluctuations, the ratio remained above the 2021 level throughout the period. The inverse relationship between the payables turnover and the average payment period is evident; as turnover increased, the payment period decreased, and vice versa.

Overall, the observed trends suggest a consistent, though not static, approach to managing accounts payable. The company generally maintained a short payment period, and while the speed of paying suppliers varied, it did not result in substantial shifts in the overall time taken to settle obligations.