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Financial Ratio Analysis
FIN/575
, 2
Financial Ratio Analysis
Netflix, Amazon and Lifetouch Inc. are three companies that will be compared in this
paper. Both Netflix and Amazon have a huge footprint within their markets and are slightly
similar as they both offer video streaming, but Lifetouch Inc. is a completely different market.
Lifetouch was on the verge of closing before being saved and merging with Shutterfly (Zacks
Equity Research, 2018). The three companies will help to give some insight into how different
the financial ratios can be from being a huge brand in the video streaming market, the retail
market, and the photography market. This paper will take the financial statements of Netflix to
explain the liquidity, solvency, and profitability of Netflix. Then, calculate its current ratio, profit
margin, and after-tax ROE then compares them to Amazons.
Netflix
Netflix started as a movie and TV show mail delivery service in 1997, which mainstreamed
into a gigantic tv show and movie streaming service that has over 167 million users all over the
world (Investopedia, 2020). This is a completely different company compared to Amazon which
offers goods, but in a way, it is also the same. Amazon started offering streaming of movies,
original movies, and music in 2006 with its membership to Prime (Stevens, 2011). Netflix was
already ruling the market with its streaming, but Amazon offered a package deal with its
membership that Netflix still could not touch, not only free shipping, but video and music
streaming were also included within its membership (Stevens, 2011). Their customers have all
access to this while Netflix can only offer video streaming.
When Netflix started to gain influence and strength it also started a new era and the end of
their competition Blockbusters Entertainment. Netflix offered something that Blockbuster
couldn't, it offered people who weren't able to go to a store the chance to order the movie or TV
Financial Ratio Analysis
FIN/575
, 2
Financial Ratio Analysis
Netflix, Amazon and Lifetouch Inc. are three companies that will be compared in this
paper. Both Netflix and Amazon have a huge footprint within their markets and are slightly
similar as they both offer video streaming, but Lifetouch Inc. is a completely different market.
Lifetouch was on the verge of closing before being saved and merging with Shutterfly (Zacks
Equity Research, 2018). The three companies will help to give some insight into how different
the financial ratios can be from being a huge brand in the video streaming market, the retail
market, and the photography market. This paper will take the financial statements of Netflix to
explain the liquidity, solvency, and profitability of Netflix. Then, calculate its current ratio, profit
margin, and after-tax ROE then compares them to Amazons.
Netflix
Netflix started as a movie and TV show mail delivery service in 1997, which mainstreamed
into a gigantic tv show and movie streaming service that has over 167 million users all over the
world (Investopedia, 2020). This is a completely different company compared to Amazon which
offers goods, but in a way, it is also the same. Amazon started offering streaming of movies,
original movies, and music in 2006 with its membership to Prime (Stevens, 2011). Netflix was
already ruling the market with its streaming, but Amazon offered a package deal with its
membership that Netflix still could not touch, not only free shipping, but video and music
streaming were also included within its membership (Stevens, 2011). Their customers have all
access to this while Netflix can only offer video streaming.
When Netflix started to gain influence and strength it also started a new era and the end of
their competition Blockbusters Entertainment. Netflix offered something that Blockbuster
couldn't, it offered people who weren't able to go to a store the chance to order the movie or TV
