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Using information on JNJ and NFLX from Yahoo Finance apply Merton's distance to default formula and show work.

NFLX

Income Statement

All numbers in thousands

Revenue	12/31/2015	12/31/2014	12/31/2013
Total Revenue	6,779,511	5,504,656	4,374,562
Cost of Revenue	4,591,476	3,752,760	3,117,203
Gross Profit	2,188,035	1,751,896	1,257,359
Operating Expenses
Research Development	650,788	472,321	378,769
Selling General and Administrative	1,231,421	876,927	650,243
Non Recurring	-	-	-
Others	-	-	-
Total Operating Expenses	-	-	-
Operating Income or Loss	305,826	402,648	228,347
Income from Continuing Operations
Total Other Income/Expenses Net	-31,225	-3,060	-28,131
Earnings Before Interest and Taxes	274,601	399,588	200,216
Interest Expense	132,716	50,219	29,142
Income Before Tax	141,885	349,369	171,074
Income Tax Expense	19,244	82,570	58,671
Minority Interest	-	-	-
Net Income From Continuing Ops	122,641	266,799	87,274
Non-recurring Events
Discontinued Operations	-	-	-
Extraordinary Items	-	-	-
Effect Of Accounting Changes	-	-	-
Other Items	-	-	-
Net Income
Net Income	122,641	266,799	112,403
Preferred Stock And Other Adjustments	-	-	-
Net Income Applicable To Common Shares	122,641	266,799	112,403

Cash Flow

All numbers in thousands

Period Ending	12/31/2015	12/31/2014	12/31/2013
Net Income	122,641	266,799	112,403
Operating Activities, Cash Flows Provided By or Used In
Depreciation	3,547,045	2,781,798	2,241,680
Adjustments To Net Income	-4,592,012	-3,168,777	-2,357,062
Changes In Accounts Receivables	-	-	-
Changes In Liabilities	172,560	198,267	66,610
Changes In Inventories	-	-	-
Changes In Other Operating Activities	327	-61,604	34,200
Total Cash Flow From Operating Activities	-749,439	16,483	97,831
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures	-91,248	-69,726	-54,143
Investments	-8,074	100,316	-141,837
Other Cash flows from Investing Activities	-79,870	-73,456	-59,988
Total Cash Flows From Investing Activities	-179,192	-42,866	-255,968
Financing Activities, Cash Flows Provided By or Used In
Dividends Paid	-	-	-
Sale Purchase of Stock	60,351	53,464	115,143
Net Borrowings	1,499,455	398,907	279,458
Other Cash Flows from Financing Activities	-	-	-
Total Cash Flows From Financing Activities	1,640,277	541,712	476,264
Effect Of Exchange Rate Changes	-15,924	-6,686	-3,453
Change In Cash and Cash Equivalents	695,722	508,643	314,674

Balance Sheet

All numbers in thousands

Period Ending	12/31/2015	12/31/2014	12/31/2013
Current Assets
Cash And Cash Equivalents	1,809,330	1,113,608	604,965
Short Term Investments	501,385	494,888	595,440
Net Receivables	-	-	-
Inventory	-	-	-
Other Current Assets	3,121,125	2,318,557	1,858,358
Total Current Assets	5,431,840	3,927,053	3,058,763
Long Term Investments	-	-	-
Property Plant and Equipment	173,412	149,875	133,605
Goodwill	-	-	-
Intangible Assets	4,312,817	2,773,326	2,091,071
Accumulated Amortization	-	-	-
Other Assets	284,802	192,246	129,124
Deferred Long Term Asset Charges	-	-	-
Total Assets	10,202,871	7,042,500	5,412,563
Current Liabilities
Accounts Payable	393,880	271,327	162,453
Short/Current Long Term Debt	-	-	-
Other Current Liabilities	3,135,744	2,391,827	1,991,750
Total Current Liabilities	3,529,624	2,663,154	2,154,203
Long Term Debt	2,371,362	885,849	500,000
Other Liabilities	2,078,459	1,635,789	1,424,799
Deferred Long Term Liability Charges	-	-	-
Minority Interest	-	-	-
Negative Goodwill	-	-	-
Total Liabilities	7,979,445	5,184,792	4,079,002
Stockholders' Equity
Misc. Stocks Options Warrants	-	-	-
Redeemable Preferred Stock	-	-	-
Preferred Stock	-	-	-
Common Stock	1,324,809	1,042,870	60
Retained Earnings	941,925	819,284	552,485
Treasury Stock	-	-	-
Capital Surplus	-	-	777,441
Other Stockholder Equity	-43,308	-4,446	3,575
Total Stockholder Equity	2,223,426	1,857,708	1,333,561
Net Tangible Assets	-2,089,391	-915,618	-757,510

JNJ

Balance Sheet

All numbers in thousands

Period Ending	1/3/2016	12/28/2014	12/31/2013
Current Assets
Cash And Cash Equivalents	13,732,000	14,523,000	20,927,000
Short Term Investments	24,644,000	18,566,000	8,279,000
Net Receivables	10,734,000	10,985,000	15,320,000
Inventory	8,053,000	8,184,000	7,878,000
Other Current Assets	3,047,000	3,486,000	4,003,000
Total Current Assets	60,210,000	55,744,000	56,407,000
Long Term Investments	-	-	-
Property Plant and Equipment	15,905,000	16,126,000	16,710,000
Goodwill	21,629,000	21,832,000	22,798,000
Intangible Assets	25,764,000	27,222,000	27,947,000
Accumulated Amortization	-	-	-
Other Assets	4,413,000	3,232,000	4,949,000
Deferred Long Term Asset Charges	5,490,000	6,202,000	3,872,000
Total Assets	133,411,000	130,358,000	132,683,000
Current Liabilities
Accounts Payable	20,743,000	21,393,000	20,823,000
Short/Current Long Term Debt	7,004,000	3,638,000	4,852,000
Other Current Liabilities	-	-	-
Total Current Liabilities	27,747,000	25,031,000	25,675,000
Long Term Debt	12,857,000	15,122,000	13,328,000
Other Liabilities	19,095,000	18,006,000	15,638,000
Deferred Long Term Liability Charges	2,562,000	2,447,000	3,989,000
Minority Interest	-	-	-
Negative Goodwill	-	-	-
Total Liabilities	62,261,000	60,606,000	58,630,000
Stockholders' Equity
Misc. Stocks Options Warrants	-	-	-
Redeemable Preferred Stock	-	-	-
Preferred Stock	-	-	-
Common Stock	3,120,000	3,120,000	3,120,000
Retained Earnings	103,879,000	97,245,000	89,493,000
Treasury Stock	-22,684,000	-19,891,000	-15,700,000
Capital Surplus	-	-	-
Other Stockholder Equity	-13,165,000	-10,722,000	-2,860,000
Total Stockholder Equity	71,150,000	69,752,000	74,053,000
Net Tangible Assets	23,757,000	20,698,000	23,308,000

JNJ Income Statement

All numbers in thousands

Revenue	1/3/2016	12/28/2014	12/31/2013
Total Revenue	70,074,000	74,331,000	71,312,000
Cost of Revenue	21,536,000	22,746,000	22,342,000
Gross Profit	48,538,000	51,585,000	48,970,000
Operating Expenses
Research Development	9,046,000	8,494,000	8,183,000
Selling General and Administrative	21,203,000	21,954,000	21,830,000
Non Recurring	733,000	178,000	580,000
Others	-	-	-
Total Operating Expenses	-	-	-
Operating Income or Loss	17,556,000	20,959,000	18,377,000
Income from Continuing Operations
Total Other Income/Expenses Net	2,192,000	137,000	-2,424,000
Earnings Before Interest and Taxes	19,748,000	21,096,000	15,953,000
Interest Expense	552,000	533,000	482,000
Income Before Tax	19,196,000	20,563,000	15,471,000
Income Tax Expense	3,787,000	4,240,000	1,640,000
Minority Interest	-	-	-
Net Income From Continuing Ops	15,409,000	16,323,000	13,831,000
Non-recurring Events
Discontinued Operations	-	-	-
Extraordinary Items	-	-	-
Effect Of Accounting Changes	-	-	-
Other Items	-	-	-
Net Income
Net Income	15,409,000	16,323,000	13,831,000
Preferred Stock And Other Adjustments	-	-	-
Net Income Applicable To Common Shares	15,409,000	16,323,000	13,831,000

Cash Flow

All numbers in thousands

Period Ending	1/3/2016	12/28/2014	12/31/2013
Net Income	15,409,000	16,323,000	13,831,000
Operating Activities, Cash Flows Provided By or Used In
Depreciation	3,746,000	3,895,000	4,104,000
Adjustments To Net Income	-1,215,000	-681,000	307,000
Changes In Accounts Receivables	-433,000	-247,000	-632,000
Changes In Liabilities	-3,000	955,000	1,821,000
Changes In Inventories	-449,000	-1,120,000	-622,000
Changes In Other Operating Activities	2,224,000	-654,000	-1,395,000
Total Cash Flow From Operating Activities	19,279,000	18,471,000	17,414,000
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures	-3,463,000	-3,714,000	-3,595,000
Investments	-6,679,000	-10,794,000	-865,000
Other Cash flows from Investing Activities	2,407,000	2,203,000	-643,000
Total Cash Flows From Investing Activities	-7,735,000	-12,305,000	-5,103,000
Financing Activities, Cash Flows Provided By or Used In
Dividends Paid	-8,173,000	-7,768,000	-7,286,000
Sale Purchase of Stock	-3,995,000	-5,342,000	-889,000
Net Borrowings	1,379,000	850,000	2,028,000
Other Cash Flows from Financing Activities	-57,000	-57,000	56,000
Total Cash Flows From Financing Activities	-10,846,000	-12,260,000	-6,091,000
Effect Of Exchange Rate Changes	-1,489,000	-310,000	-204,000
Change In Cash and Cash Equivalents	-791,000	-6,404,000	6,016,000

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