The following data were taken from Netflix, Inc.’s 2010 annual report. All dollar amounts are in millions.
a. For each year, compute Netflix’s debt to assets ratio, return on assets ratio, and return on equity ratio. You will need to compute total liabilities.
b. Did the company’s level of financial risk increase or decrease from 2009 to 2010?
c. In which year did the company appear to manage its assets most efficiently?
d. Do the above ratios support the concept of financial leverage? Explain.