Netflix Inc (NFLX)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.12 | 1.17 | 0.95 | 1.25 | 0.90 |
| Quick ratio | 0.99 | 1.07 | 0.82 | 1.15 | 0.81 |
| Cash ratio | 0.81 | 0.76 | 0.71 | 1.05 | 0.73 |
The liquidity ratios provide insight into Netflix Inc.'s ability to meet its short-term obligations. The current ratio, which measures the company's ability to pay its short-term liabilities with its short-term assets, has fluctuated over the years, with a notable decrease in 2021 compared to 2020.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, follows a similar trend to the current ratio. This indicates that the company's ability to meet its short-term liabilities without relying on selling inventory has also fluctuated.
Meanwhile, the cash ratio, which specifically assesses the company's ability to cover its current liabilities with its cash and cash equivalents, has shown some variability over the years, with a notable decrease in 2021 compared to 2020.
Overall, the liquidity ratios suggest that Netflix Inc. experienced fluctuations in its short-term liquidity position in recent years. It would be worth further investigation to understand the factors contributing to these fluctuations and assess the company's ability to effectively manage its short-term financial obligations.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 11.48 | 15.20 | -6.40 | -4.84 | -10.28 |
The cash conversion cycle (CCC) for Netflix Inc. has displayed varying trends over the past five years. In 2019, the CCC stood at -19.79 days, indicating that the company was able to convert its investments in inventory and accounts receivable into cash very quickly. Subsequently, there was a significant improvement in 2020, with the CCC decreasing to -6.76 days, suggesting further efficiency in cash management and working capital. This trend continued in 2021, as the CCC reduced to -7.75 days, indicating a continued focus on streamlining the conversion of resources into cash.
However, there was a notable shift in 2022, with the CCC increasing to -1.37 days, signifying a slight decrease in efficiency in the cash conversion process. Finally, in 2023, the CCC improved to 0.09 days, albeit remaining positive, indicating a further slowdown in the cash conversion cycle.
Overall, despite the recent uptick in the CCC, Netflix Inc. has historically demonstrated a strong ability to swiftly convert its resources into cash, contributing to its liquidity and financial resilience. It is essential for the company to closely monitor this metric and evaluate the impact of any operational or market-related changes on its cash conversion efficiency.