Netflix Inc (NFLX)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 46.06% | 41.54% | 39.37% | 41.64% | 38.89% |
| Operating profit margin | 26.71% | 20.62% | 17.82% | 20.86% | 18.34% |
| Pretax margin | 25.55% | 18.40% | 16.65% | 19.67% | 12.80% |
| Net profit margin | 22.34% | 16.04% | 14.21% | 17.23% | 11.05% |
Netflix Inc has shown a consistent improvement in its profitability ratios over the past five years. The Gross Profit Margin has seen a steady increase from 38.89% in 2020 to 46.06% in 2024, indicating the company's ability to generate more profits from its revenue after accounting for the cost of goods sold.
The Operating Profit Margin also demonstrates a positive trend, rising from 18.34% in 2020 to 26.71% in 2024, reflecting Netflix's effective management of operating expenses and overhead costs to boost profitability.
Furthermore, the Pretax Margin has shown a notable improvement, increasing from 12.80% in 2020 to 25.55% in 2024. This indicates that Netflix has been able to enhance its profitability before accounting for taxes through operational efficiencies and strategic decision-making.
Lastly, the Net Profit Margin has experienced substantial growth, climbing from 11.05% in 2020 to 22.34% in 2024. This signifies that after considering all expenses, including taxes, Netflix has been able to significantly increase its bottom-line profitability, reflecting strong financial performance and effectiveness in generating profit for shareholders.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 19.42% | 14.27% | 11.59% | 13.89% | 11.67% |
| Return on assets (ROA) | 16.24% | 11.10% | 9.24% | 11.48% | 7.03% |
| Return on total capital | 27.03% | 19.88% | 16.99% | 21.63% | 14.76% |
| Return on equity (ROE) | 35.21% | 26.27% | 21.62% | 32.28% | 24.96% |
From the provided data, we can observe the following trends in Netflix Inc's profitability ratios:
1. Operating Return on Assets (Operating ROA):
- Netflix's Operating ROA has seen fluctuations over the years, ranging from 11.67% in 2020 to 19.42% in 2024. This ratio indicates how efficiently the company is generating operating income from its assets.
2. Return on Assets (ROA):
- Netflix's ROA shows an upward trend, increasing from 7.03% in 2020 to 16.24% in 2024. This ratio reflects the company's overall profitability in relation to its total assets.
3. Return on Total Capital:
- The Return on Total Capital for Netflix has also been on the rise, going from 14.76% in 2020 to 27.03% in 2024. This ratio measures the return the company is generating on both debt and equity capital invested in the business.
4. Return on Equity (ROE):
- Netflix's ROE has shown a similar increasing pattern, climbing from 24.96% in 2020 to 35.21% in 2024. ROE indicates how well the company is utilizing shareholders' equity to generate profits.
Overall, Netflix has demonstrated consistent improvements in its profitability ratios over the years, showcasing efficient use of assets and capital to generate returns for its investors.