Netflix Inc (NFLX)
Return on total capital
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 10,630,280 | 9,680,870 | 8,877,700 | 8,050,000 | 6,905,220 | 5,791,799 | 5,501,609 | 5,445,979 | 5,970,139 | 6,500,482 | 6,557,452 | 6,544,052 | 6,605,722 | 6,569,043 | 5,776,193 | 5,215,833 | 3,966,846 | 3,590,377 | 3,704,817 | 3,133,016 |
| Long-term debt | US$ in thousands | 13,798,400 | 14,160,900 | 12,180,000 | 13,217,000 | 14,143,400 | 13,900,800 | 14,070,200 | 14,038,000 | 14,353,100 | 13,888,100 | 14,233,300 | 14,534,600 | 14,693,100 | 14,793,700 | 14,926,900 | 14,860,600 | 15,809,100 | 15,547,600 | 15,295,000 | 14,170,700 |
| Total stockholders’ equity | US$ in thousands | 24,743,600 | 22,720,700 | 22,112,700 | 21,365,400 | 20,588,300 | 22,107,600 | 22,832,200 | 21,828,200 | 20,777,400 | 20,528,100 | 19,076,000 | 17,544,000 | 15,849,200 | 15,314,600 | 13,863,900 | 12,884,100 | 11,065,200 | 10,333,300 | 9,334,750 | 8,409,290 |
| Return on total capital | 27.58% | 26.25% | 25.89% | 23.28% | 19.88% | 16.08% | 14.91% | 15.18% | 16.99% | 18.89% | 19.69% | 20.40% | 21.63% | 21.82% | 20.06% | 18.80% | 14.76% | 13.87% | 15.04% | 13.88% |
December 31, 2024 calculation
Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $10,630,280K ÷ ($13,798,400K + $24,743,600K)
= 27.58%
Netflix Inc's return on total capital has shown a fluctuating trend over the last few years. The ratio significantly increased from 13.88% as of March 31, 2020, to 27.58% on December 31, 2024. This indicates an improvement in the company's ability to generate returns relative to its total capital employed.
There was a noticeable growth in the return on total capital throughout 2021 and 2022, reaching a peak of 26.25% on September 30, 2024. This period likely reflects efficient capital utilization and improved profitability for Netflix.
However, the ratio dipped slightly in the first half of 2023 but rebounded strongly in the latter half of the year, maintaining an upward trajectory into 2024. This may indicate some temporary challenges faced by the company during that period but successful strategic initiatives taken to enhance capital efficiency.
Overall, the consistent upward trend in Netflix's return on total capital suggests the company has been effectively leveraging its capital resources to generate higher returns for its shareholders, showcasing a positive financial performance. Investors and stakeholders may view this trend as a positive indicator of the company's operational effectiveness and financial health.