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Analysis and Interpretation of ROE and RNOA with No Noncontrolling Interest

The $2018$ balance sheets and income statement for Netflix Inc. follow. Refer to these financial statements to answer the requirements.

NETFLIX INC. Consolidated Statements of Earnings

For Year Ended December $31,$ $ thousands $2018$

Revenues $$15,955,550$

Cost of revenues $9,967,538$

Marketing $2,530,678$

Technology and development $1,221,814$

General and administrative $791,503$

Operating income $1,444,017$

Other income $($expense$)$

Interest expense $(420,493)$

Interest and other income $202,934$

Income before income taxes $1,226,458$

Provision for income taxes $15,216$

Net income $$1,211,242$

NETFLIX INC. Consolidated Balance Sheets

in thousands, except par value $20182017$

Current assets

Cash and cash equivalents $$3,955,692$ $$2,822,795$

Current content assets, net $5,151,1864,472,143$

Other current assets $909,675536,245$

Total current assets $10,016,5537,831,183$

Noncurrent content assets, net $14,960,95410,532,264$

Property and equipment, net $579,490319,404$

Other noncurrent assets $901,030813,518$

Total assets $$26,458,027$ $$19,496,369$

Current liabilities

Current content liabilities $$4,686,019$ $$4,334,250$

Accounts payable $724,194359,555$

Accrued expenses $477,417476,303$

Deferred revenue $922,108618,622$

Total current liabilities $6,809,7385,788,730$

Noncurrent content liabilities $3,920,2353,329,796$

Long$-$term debt $10,360,0586,499,432$

Other noncurrent liabilities $129,231135,246$

Total liabilities $21,219,26215,753,204$

Stockholders$$ equity

Preferred stock, $$0\mathrm{.}001$ par value $00$

Common stock, $$0\mathrm{.}001$ par value $2,315,9882,032,605$

Accumulated other comprehensive loss $(19,582)(20,557)$

Retained earnings $2,942,3591,731,117$

Total shareholders$$ equity $5,238,7653,743,165$

Total liabilities and shareholders$$ equity $$26,458,027$ $$19,496,369$

Combined federal and state statutory tax rate $22\%$

$($a$)$ Compute net operating profit after tax $($NOPAT$)$ for $2018.$ Assume that the combined federal and state statutory tax rate is $22\%.$

NOPAT

Answer

$112,333\mathrm{.}26$

$($b$)$ Compute net operating assets $($NOA$)$ for $2018$ and $2017.$

Year NOA

$2018$ Answer

$20,249,385$

$2017$ Answer

$0$

$($c$)$ Compute RNOA, net operating profit margin $($NOPM$)$ and net operating asset turnover $($NOAT$)$ for $2018.$ Do not use NOPM x NOAT to calculate RNOA. Do not round until your final answer.

Numerator Denominator RNOA

Answer

$0$

Answer

$0$

Numerator Denominator NOPM

Answer

$0$

Answer

$0$

Numerator Denominator NOAT

Answer

$0$

Answer

$0$

$($d$)$ Compute net nonoperating obligations $($NNO$)$ for $2018$ and $2017.$ Confirm the relation: NOA $=$ NNO $+$ Total equity.

Year NNO

$2018$ Answer

$0$

$2017$ Answer

$0$

Year NNO Total equity NOA

$2018$ Answer

$0$

Answer

$0$

$0$

$2017$ Answer

$0$

Answer

$0$

$0$

$($e$)$ Compute return on equity $($ROE$)$ for $2018.$

Numerator Denominator ROE

Answer

$0$

Answer

$0$

$($f$)$ Infer the nonoperating return component of ROE for $2018.$ Use above answers to calculate.

ROE RNOA Nonoperating component of ROE

Answer

$0$

Answer

$0$

$0$

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