Netflix Inc (NFLX)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	48.21	—	—	—	—
Receivables turnover	20.57	13.04	32.50	33.68	38.42
Payables turnover	26.38	28.54	20.70	23.28	18.45
Working capital turnover	31.89	23.67	—	12.78	—

The activity ratios of Netflix Inc. provide insight into the company's efficiency in managing its assets and liabilities. The receivables turnover, which measures the efficiency of collecting payments from customers, decreased from 40.92 in 2020 to 26.20 in 2023. This decline suggests a decrease in the efficiency of collecting receivables, possibly indicating a change in customer payment patterns.

The payables turnover, which indicates how efficiently the company pays its suppliers, increased from 18.45 in 2019 to 26.38 in 2023. This rise in the payables turnover suggests an improvement in the company's ability to manage its payable obligations, resulting in a more efficient use of its working capital.

The working capital turnover, which reflects the company's ability to generate revenue relative to its working capital, exhibited fluctuations over the years, reaching 31.89 in 2023. This suggests that Netflix has been able to generate a higher level of revenue relative to its working capital in recent years, indicating improved efficiency in its operating cycle.

Overall, the activity ratios of Netflix Inc. indicate changes in the efficiency of managing its assets and liabilities over the years, highlighting potential shifts in its operational processes and financial management strategies.

Average number of days

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	7.57	—	—	—	—
Days of sales outstanding (DSO)	days	17.74	27.99	11.23	10.84	9.50
Number of days of payables	days	13.84	12.79	17.64	15.68	19.79

Days of inventory on hand (DOH) are not available for the years indicated. However, looking at the Days of Sales Outstanding (DSO) from 2019 to 2023, there is a clear upward trend, indicating a lengthening in the average amount of time it takes for Netflix to collect its receivables. On the other hand, the number of days of payables has decreased over the years, indicating a reduction in the average time it takes for Netflix to pay its suppliers and vendors. This suggests that Netflix is taking longer to collect payments from its customers while paying its suppliers more promptly. These trends may have implications for the company's cash flow and working capital management.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	22.61	22.61	22.44	26.03	35.66
Total asset turnover	0.69	0.65	0.67	0.64	0.59

The fixed asset turnover ratio measures how well a company is utilizing its fixed assets to generate revenue, and it indicates a company's efficiency in using its property, plant, and equipment. Netflix's fixed asset turnover has been consistently high over the past five years, indicating that the company has been very efficient in generating revenue from its fixed assets. The ratio has ranged from 22.44 to 35.66, suggesting that Netflix has been able to generate significant revenue relative to its investment in fixed assets.

The total asset turnover ratio measures a company's ability to generate revenue from its total assets. Netflix's total asset turnover has also displayed a consistent upward trend over the past five years, with the ratio increasing from 0.59 in 2019 to 0.69 in 2023. This indicates that Netflix has become more effective in utilizing its total assets to generate revenue.

Overall, both the fixed asset turnover and total asset turnover ratios show positive trends, with Netflix displaying increasing efficiency in utilizing its assets to generate revenue. This indicates strong asset management and operational performance by the company.