Balance Sheet Analysis. In this section, use financial statements and accompanying notes to:

A. Analyze what the company's current and prior year liquidity and debt-to-equity ratios say about the company's financial health, justifying your

response. Consider the appropriate level of debt and how this year's performance compares to the previous year.

B.

Consider normalization adjustments when adjusting the balance sheet to be comparable to competitors, when creating the prospective balance

sheet, and when calculating the final company valuation as either a premium or discount. (Include your analysis spreadsheet in Excel as an

appendix.)

C.

Analyze the company's balance sheet for the current and previous year using a horizontal analysis. (Include your horizontal analysis spreadsheet

in Excel as an appendix.) Explain your findings.

D. Comparison. Analyze the competitor's balance sheet indicators for opportunities for the selected company to improve its own performance.

Justify your response using the financial statements of both the company and its competitor.

B Company Netflix Inc. Balance Sheets (in millions) December 31, 2014 through 2018 Assets 10 1 Current Assets 2 Cash and cash equivalents 3 Accounts receivable, net 4 Inventory 5 Other current assets 6 Total current assets 7 Property, plant & equipment, net 0 o Other assets Intangibles Other assets Total other assets M 122 2014 S 1.113.608 206,271 1,319,879 149.875 $ ratios 2015 2016 1,809,330 S 1,467,576 $ 215,127 260,202 2.024 457 1,727 778 173,412 250 395 prospective analysis discount ate op Commons analysis 2014 2013 2017 2.822,795 67.9 % 75.8 % 536,245 17.1 14.0 3,359 040 85.0 89.8 319.404 15.0 dif valuation summary 10.2 2015 82.3 % 9.8 92.1 79 74.2 % 132 874 127 2017 76.7 % 146 91.3 T AD Company Netflix Inc. Balance Sheets (in millions) December 31, 2014 through 2018 7 10 20 Other assets 21 Intangibles Other assets 2014 Common-size analysis 2013 2014 2015 2017 2015 20 Total other assets 24 25 Total Assets $ 1,469,754 $ 2,197,869 1.978.173 3 3,678,444 100 0% 100.0 % 100 0% 20 27 Liabilities and Stockholders' Equity 211 29 Current Liabilities Accounts payable S 30 201,581 $ 253,491 $ 312.842 $ 359.555 12.2 % 11.5% 13.7 % Accrued expenses & other current abilities Current portion of debt and leases 312.842 201.581 Total current liabilities 359 555 13.7 11.5 12.2 253.491 prospective analyses discount rate de valuation summary Summary- Start Here balance sheet income statement ratia 22 32 CH $ 2016 2017 100.1% 100.0 % 15.8 % 15.8 2016 98 YA8 F10 A.B. 1 Company Netflix Inc. 7 Balance Sheets (in millions) December 31, 2014 through 2018 Current Liabilities Accounts payable Accrued expenses & other current abilities Current portion of debt and leases Total current liabilities Long-Term Liabilities Long-term debt and lease obligations Other long-term liabilities Total long-term liabilities Total Liabilities Cinaktinidor Emi Summary Start Here 15 10 7 20 31 22 D 34 D 0 2014 5 S 2016 S 2017 Common-ire analysis 2014 2013 122 % 13.7 % 12:2 13.7 201.581 253,491 312.842 359.555 201.581 253,491 312.842 359,555 201.581 253,491 312.842 359.555 122 13.7 0 balance sheet income statement ratios prospective discount safe caution summary 2015 11.5 % 11.5 115 2016 R 15.8 N 15.8 15.8 61 2011 98 % 9.8 Undo 15 fx AB C 1 Company Netflix Inc. 2 Balance Sheets (in millions) 3 December 31, 2014 through 2018 Other long-term labilities Y38 Fort Total long-term liabalties Total Liabilities 41 42 Stockholders' Equity 43 Common stock, less treasury 44 Additional paid in capital) 45 Retained earnings Other comprehensive income (loss) Total Stockholders' Equity Summary 280538 4 D D 2014 201,581 60 1,042,810 819,284 H (4.446) 1.857-708 2,059,289 $ Start Here balance sheet income statement ratios 2015 16 Minde K 2010 M 2017 glei 253,491 312,842 1.324,809 1,599.762 941,925 1,128,603 (43,308) (48,565) 2.223 426 2.679,800 2.476.917 $ 2.992,642 prospective analysis discount ate M 359.555 1,871,396 1,731,117 3.501,956 $ 3.941.511. (20,557) CHE D Common-size analysis 2013 2014 12.2 13.7 87:3 71.0 620 55.7 04 (03) 149.7 126 41 1619 % 140.1 % O valuation surnaacy 2015 11.5 60.3 429 (2.0) 2016 101 2 112.7 % 9 1 158 80.9 14 57/1 Any (25) 135.5 151.3 % 2017 98 50.0 47 1 (0.6) 97.4 1072 % B Company Netflix Inc. Balance Sheets (in millions) December 31, 2014 through 2018 Assets 10 1 Current Assets 2 Cash and cash equivalents 3 Accounts receivable, net 4 Inventory 5 Other current assets 6 Total current assets 7 Property, plant & equipment, net 0 o Other assets Intangibles Other assets Total other assets M 122 2014 S 1.113.608 206,271 1,319,879 149.875 $ ratios 2015 2016 1,809,330 S 1,467,576 $ 215,127 260,202 2.024 457 1,727 778 173,412 250 395 prospective analysis discount ate op Commons analysis 2014 2013 2017 2.822,795 67.9 % 75.8 % 536,245 17.1 14.0 3,359 040 85.0 89.8 319.404 15.0 dif valuation summary 10.2 2015 82.3 % 9.8 92.1 79 74.2 % 132 874 127 2017 76.7 % 146 91.3 T AD Company Netflix Inc. Balance Sheets (in millions) December 31, 2014 through 2018 7 10 20 Other assets 21 Intangibles Other assets 2014 Common-size analysis 2013 2014 2015 2017 2015 20 Total other assets 24 25 Total Assets $ 1,469,754 $ 2,197,869 1.978.173 3 3,678,444 100 0% 100.0 % 100 0% 20 27 Liabilities and Stockholders' Equity 211 29 Current Liabilities Accounts payable S 30 201,581 $ 253,491 $ 312.842 $ 359.555 12.2 % 11.5% 13.7 % Accrued expenses & other current abilities Current portion of debt and leases 312.842 201.581 Total current liabilities 359 555 13.7 11.5 12.2 253.491 prospective analyses discount rate de valuation summary Summary- Start Here balance sheet income statement ratia 22 32 CH $ 2016 2017 100.1% 100.0 % 15.8 % 15.8 2016 98 YA8 F10 A.B. 1 Company Netflix Inc. 7 Balance Sheets (in millions) December 31, 2014 through 2018 Current Liabilities Accounts payable Accrued expenses & other current abilities Current portion of debt and leases Total current liabilities Long-Term Liabilities Long-term debt and lease obligations Other long-term liabilities Total long-term liabilities Total Liabilities Cinaktinidor Emi Summary Start Here 15 10 7 20 31 22 D 34 D 0 2014 5 S 2016 S 2017 Common-ire analysis 2014 2013 122 % 13.7 % 12:2 13.7 201.581 253,491 312.842 359.555 201.581 253,491 312.842 359,555 201.581 253,491 312.842 359.555 122 13.7 0 balance sheet income statement ratios prospective discount safe caution summary 2015 11.5 % 11.5 115 2016 R 15.8 N 15.8 15.8 61 2011 98 % 9.8 Undo 15 fx AB C 1 Company Netflix Inc. 2 Balance Sheets (in millions) 3 December 31, 2014 through 2018 Other long-term labilities Y38 Fort Total long-term liabalties Total Liabilities 41 42 Stockholders' Equity 43 Common stock, less treasury 44 Additional paid in capital) 45 Retained earnings Other comprehensive income (loss) Total Stockholders' Equity Summary 280538 4 D D 2014 201,581 60 1,042,810 819,284 H (4.446) 1.857-708 2,059,289 $ Start Here balance sheet income statement ratios 2015 16 Minde K 2010 M 2017 glei 253,491 312,842 1.324,809 1,599.762 941,925 1,128,603 (43,308) (48,565) 2.223 426 2.679,800 2.476.917 $ 2.992,642 prospective analysis discount ate M 359.555 1,871,396 1,731,117 3.501,956 $ 3.941.511. (20,557) CHE D Common-size analysis 2013 2014 12.2 13.7 87:3 71.0 620 55.7 04 (03) 149.7 126 41 1619 % 140.1 % O valuation surnaacy 2015 11.5 60.3 429 (2.0) 2016 101 2 112.7 % 9 1 158 80.9 14 57/1 Any (25) 135.5 151.3 % 2017 98 50.0 47 1 (0.6) 97.4 1072 %