Netflix Inc (NFLX)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 41.54% | 39.37% | 41.64% | 38.89% | 38.28% |
| Operating profit margin | 20.62% | 17.82% | 20.86% | 18.34% | 12.92% |
| Pretax margin | 18.40% | 16.65% | 19.67% | 12.80% | 10.23% |
| Net profit margin | 16.04% | 14.21% | 17.23% | 11.05% | 9.26% |
Netflix Inc.'s profitability ratios have shown consistent improvement over the last five years. The gross profit margin has increased from 38.28% in 2019 to 41.54% in 2023, reflecting the company's ability to control the cost of sales and generate higher profits from its streaming services.
Moreover, the operating profit margin has steadily increased from 12.92% in 2019 to 20.62% in 2023, indicating improved efficiency in managing operating expenses and generating operating profits. This suggests that Netflix has been effectively controlling its operating costs while growing its revenue streams.
The pretax margin has also exhibited an upward trend, rising from 10.23% in 2019 to 18.40% in 2023. This indicates that the company has been able to efficiently manage its pre-tax profitability, generating higher earnings before accounting for taxes.
Furthermore, the net profit margin has shown significant improvement, increasing from 9.26% in 2019 to 16.04% in 2023. This suggests that the company has been successful in controlling its overall expenses and generating higher profits for its shareholders.
Overall, Netflix Inc. has demonstrated strong and improving profitability ratios over the past five years, indicating effective cost management and increasing profitability in its streaming business.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 14.27% | 11.59% | 13.89% | 11.67% | 7.67% |
| Return on assets (ROA) | 11.10% | 9.24% | 11.48% | 7.03% | 5.49% |
| Return on total capital | 19.88% | 16.99% | 21.63% | 14.76% | 12.03% |
| Return on equity (ROE) | 26.27% | 21.62% | 32.28% | 24.96% | 24.62% |
Profitability ratios provide insight into Netflix Inc.'s ability to generate earnings relative to its assets and capital. The operating return on assets (Operating ROA) has shown a positive upward trend, increasing from 7.67% in 2019 to 14.27% in 2023, indicating improved operational efficiency in utilizing its assets to generate operating income. Similarly, the return on assets (ROA) has displayed an upward trajectory, reaching 11.10% in 2023 from 5.49% in 2019, suggesting effective asset utilization in generating net income.
Moreover, the return on total capital has consistently risen from 11.66% in 2019 to 19.79% in 2023, depicting the company's ability to generate profits from both equity and debt capital. The return on equity (ROE) has showcased a steady growth, from 24.62% in 2019 to 26.27% in 2023, implying efficient utilization of shareholders' equity to generate net income.
Overall, the profitability ratios reflect Netflix's improving ability to generate profits from its assets and capital, indicating sound financial performance and management efficiency over the years.