Netflix Inc (NFLX)
Days of sales outstanding (DSO)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Receivables turnover | 20.57 | 13.04 | 32.50 | 33.68 | 38.42 | |
| DSO | days | 17.74 | 27.99 | 11.23 | 10.84 | 9.50 |
December 31, 2023 calculation
DSO = 365 ÷ Receivables turnover
= 365 ÷ 20.57
= 17.74
To analyze Netflix Inc.'s days of sales outstanding (DSO) over the past five years, we can observe its trend and interpret the implications. The days of sales outstanding measure the average number of days it takes for Netflix to collect revenue after making a sale.
From 2019 to 2023, the DSO has shown a consistent increasing trend, indicating that Netflix has been taking longer to collect its receivables from customers. This may be indicative of changes in the company's credit policies, shifts in customer payment behavior, or alterations in the sales mix that result in longer collection periods.
The increase in DSO could potentially signal decreased efficiency in collecting outstanding sales, which could lead to cash flow challenges if not managed effectively. Therefore, it is important for Netflix to closely monitor and manage its DSO to ensure timely collection of receivables and maintain healthy cash flows.
It's noteworthy that the DSO has almost doubled from 2019 to 2023, reflecting a significant change in Netflix's collection efficiency. This increasing trend should be thoroughly evaluated to identify the underlying causes and assess potential impacts on the company's financial health and liquidity position.