Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Name of the company: Netflix

Leverage and Coverage Ratios

 

Most Recent Fiscal Year

Fiscal Year

(-1)

Fiscal Year

(-2)

Fiscal Year

(-3)

Debt/Equity

 

 

 

 

Debt/Assets

 

 

 

 

Interest Expense/Long term Debt

 

 

 

 

Times Interest Earned (TIE)

 

 

 

 

Interest Coverage

 

 

 

 

a. What trends, if any, are apparent in these ratios?

b. Are these favourable or unfavourable to the shareholders?

c. Are these favourable or unfavourable to the debt holders?

d. The debt/equity ratio from I-Matrix is based on book values.  If you were to compute the ratio on the basis of market values, would this ratio tend to be higher or lower than on the basis of book values? Why?

Growth Rates

 

Most Recent Fiscal Year

Fiscal Year

(-1)

Fiscal Year

(-2)

Fiscal Year

(-3)

Annual Revenue Growth

 

 

 

 

Annual Net Income Growth

 

 

 

 

Annual Free Cash Flow Growth

 

 

 

 

a. What trends, if any, are obvious in these ratios?

b. Hypothetically, is it probable for sales to rise while net income declines?  Why or why not?

c. Hypothetically, is it probable for net income to decline while free cash flow rises? Why or why not?

Distribution Policies

 

Most Recent Fiscal Year

Fiscal Year

(-1)

Fiscal Year

(-2)

Fiscal Year

(-3)

Dividend/Share

 

 

 

 

Dividend Yield

 

 

 

 

Payout Ratio

 

 

 

 

a. Based on this data, define the firm’s dividend policy in the precedent four years.  Is this policy suitable for the firm?  Why or why not?

b. Would you suggest any change of policy for this firm?  Why or why not?

c. The firm’s distributions comprise share repurchases as well as cash dividends. Refer to the firm’s statement of cash flows to find data on the total dollar amount of dividends paid and shares repurchased, and report the results below.  You will also need to find out distributions as percent of net income.

 

Most Recent Fiscal Year

Fiscal Year

(-1)

Fiscal Year

(-2)

Fiscal Year

(-3)

Dividends paid

 

 

 

 

Share repurchases

 

 

 

 

Net income

 

 

 

 

Distribution Ratio

 

 

 

 

Distribution Ratio

d. Does this change your view of firm’s dividend policy?  Would you suggest any change of policy for this firm?  Why or why not?

Part4. Comparison to a Competing Firm

Competing firm: Dish network

4-1. what is the name of competitor?

a. Which exchange is its stock traded on?

b. What is ticker symbol of this firm’s stock?

c. In which manners is this competitor firm a good match or basis of comparison for your firm?

d. In which manners is it not a better match? 

4-2. Report this summary data on leverage for your firm and its competitor.

 

Your Firm

The Competitor Firm

Debt/Equity

 

 

Debt/Assets

 

 

Interest Expense/Long term Debt

 

 

Times Interest Earned (TIE)

 

 

Interest coverage

 

 

a. Does it come into sight to you that your firm has an appropriate degree of leverage, or is over-or under leveraged?  Why?

b. What changes in leverage, if any, do you think would be appropriate for your firm to reduce its WACC?

4-3. Comparison of the firms’ liquidity and operations:  First, report this summary data on liquidity and activity for the two firms:

 

Your Firm

The Competitor Firm

Liquidity

Current Ratio

 

 

Quick Ratio

 

 

 

 

 

Activity

Average collection period (ACP)

 

 

Inventory Days

 

 

Operating Cycle

 

 

Cash Conversion Cycle

 

 

 

 

 

Total Asset Turnover

 

 

Capital Expenditure/Sales

 

 

SG&A/Sales

 

 


a. Does your firm's liquidity compare favourably or unfavourably to those of the competitor?  What areas of improvement, if any, are required by your firm?
b. How does your firm's operations, as evaluated by the activity ratios, compare?  What areas of improvement, if any, are needed by your firm?

4-4. Analysts’ earnings estimates. On Mergent Horizon, find and report the subsequent these data for your firm.  If there are any missing estimates, indicate "na."

Comparison of Earnings Forecasts

 

Your Firm

The Competitor

Earnings per share for the firm's current fiscal year

Ending date of the current fiscal year

 

 

Mean estimate of earnings per share for this year

 

 

Low estimate

 

 

High estimate

 

 

Number of analysts

 

 

EPS for the firm's next fiscal year

Ending date of the next fiscal year

 

 

Mean estimate of earnings per share for this year

 

 

Low estimate

 

 

High estimate

 

 

Number of analysts

 

 

Long term growth rates

Mean estimate for the next 5 years

 

 

Low estimate

 

 

High estimate

 

 

Number of analysts

 

 

a. Consider ranges of earnings estimates in these three cases relative to mean estimates. What does this recommend about the reliability and conviction of these estimates?

b. Which of these two firms has the better outlook based on these projections?  Why?

c. Do these forecasts look rational to you?  Too optimistic or pessimistic?  Why?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91694

Have any Question? 


Related Questions in Basic Finance

Following the end of world war ii in 1945 the reichsmark

Following the end of World War II in 1945, the Reichsmark, the German currency, lost so much value that a barter economy arose. During this period, many Germans used U.S. cigarettes as currency. Why might cigarettes, rat ...

In addition to the key words you should also be able to

In addition to the key words, you should also be able to define the following terms: within-subjects design between-subjects design independent-measures design assignment bias random assignment variance within treatments ...

The last decade has witnessed an unprecedented number of

The last decade has witnessed an unprecedented number of mega-mergers in the banking industry: Bank of America's acquisitions of Fleet Bank, MBNA, and U.S. Trust; Bank of New York's acquisition of Mellon Financial; and W ...

You are assigned a paper and excel backup on exxon company

You are assigned a paper and excel backup on EXXON company. You will utilize all the material we have covered to analyze and assess the corporate health of the company. I provide some leading questions to be answered in ...

The following appears in the 2000 10-k of international

The following appears in the 2000 10-K of International Business Machines: The company employs a number of strategies to manage these risks, including the use of derivative financial instruments. Derivatives involve the ...

Boeing is using world-class manufacturing facilities in

Boeing is using world-class manufacturing facilities in Japan to supply components for its new Dreamliner. Should Boeing consider building production plants in countries like India and China, where there are many excelle ...

Assignmentbackgroundfinancial literacy helps you to become

Assignment Background: Financial literacy helps you to become a better manager. Understanding the financial side of the business will make you more effective on the job and will make your work life more meaningful. The t ...

1 what are the five groups that must be fully engaged in

1. What are the five groups that must be fully engaged in the nation's war on terrorism? 2. What is the goal of emergency management in regards to the terrorism threat? 3. How much money did the federal government spend ...

1 in addition to the key words you should also be able to

1. In addition to the key words, you should also be able to define the following terms: statistical significance, or statistically significant practical significance or clinical significance 2. Describe the similarity be ...

1 what are some of the physical considerations that a

1. What are some of the physical considerations that a developer should be concerned with when purchasing land? How should such considerations be taken into account when determining the price that should be paid? 2. What ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro