Question 26 Following is the income statement for NetFlix Inc. for the year ende
ID: 2654964 • Letter: Q
Question
Question 26
Following is the income statement for NetFlix Inc. for the year ended December 31, 2011. Prepare forecasted income statements for the company for 2012 and 2013.
NETFLIX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
Year ended December 31,
2011
2010
2009
Revenues
$3,204,577
$2,162,625
$1,670,269
Cost of revenues:
Subscription
1,789,596
1,154,109
909,461
Fulfillment expenses
250,305
203,246
169,810
Total cost of revenues
2,039,901
1,357,355
1,079,271
Gross profit
1,164,676
805,270
590,998
Operating expenses:
Marketing
402,638
293,839
237,744
Technology and development
259,033
163,329
114,542
General and administrative
117,937
64,461
46,773
Legal settlement
9,000
-
-
Total operating expenses
788,608
521,629
399,059
Operating income
376,068
283,641
191,939
Other income (expense):
Interest expense
(20,025)
(19,629)
(6,475)
Interest and other income
3,479
3,684
6,728
Income before income taxes
359,522
267,696
192,192
Provision for income taxes
133,396
106,843
76,332
Net income
$ 226,126
$160,853
$115,860
Use the following assumptions to develop the forecasted income statements:
Revenue growth
39.0%
Subscription costs to revenues
55.8%
Fulfillment expenses to revenues
7.8%
Marketing expense to revenues
12.6%
Technology and development to revenues
8.1%
General and administrative to revenues
3.7%
Legal settlement
$0
Interest expense
No change
Interest and other income
No change
Provision for income taxes to Income before income taxes
37.1%
NETFLIX, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
Year ended December 31,
2011
2010
2009
Revenues
$3,204,577
$2,162,625
$1,670,269
Cost of revenues:
Subscription
1,789,596
1,154,109
909,461
Fulfillment expenses
250,305
203,246
169,810
Total cost of revenues
2,039,901
1,357,355
1,079,271
Gross profit
1,164,676
805,270
590,998
Operating expenses:
Marketing
402,638
293,839
237,744
Technology and development
259,033
163,329
114,542
General and administrative
117,937
64,461
46,773
Legal settlement
9,000
-
-
Total operating expenses
788,608
521,629
399,059
Operating income
376,068
283,641
191,939
Other income (expense):
Interest expense
(20,025)
(19,629)
(6,475)
Interest and other income
3,479
3,684
6,728
Income before income taxes
359,522
267,696
192,192
Provision for income taxes
133,396
106,843
76,332
Net income
$ 226,126
$160,853
$115,860
Explanation / Answer
Statement Showing Income Statement for NeFlix Particulars 2011 2012 2013 Working Notes Revenues 3,204,577.00 4,454,362.03 6,191,563.22 Revenue*1.39 Cost of Revenues: Subscription 1,789,596.00 2,485,534.01 3,454,892.28 55.8% * revenue Fulfilment expenses 250,305.00 347,440.24 482,941.93 7.8% * revenue Total Cost of Revenues 2,039,901.00 2,832,974.25 3,937,834.21 Gross Profit 1,164,676.00 1,621,387.78 2,253,729.01 Operating Expenses Marketing 402,638.00 561,249.62 780,136.97 12.6% * revenue Technology and Development 259,033.00 360,803.32 501,516.62 8.1% * revenue General and Admin 117,937.00 164,811.40 229,087.84 3.7% * revenue Legal Settlement 9,000.00 - - Total Operating Expenses 788,608.00 1,086,864.34 1,510,741.43 Operating Income 376,068.00 534,523.44 742,987.59 Other Income(Exp): Interest Expense (20,025.00) (20,025.00) (20,025.00) No Change Interest and Other Income 3,479.00 3,479.00 3,479.00 No Change Income before Income Taxes 359,522.00 517,977.44 726,441.59 Provision for Income Taxes 133,396.00 192,169.63 269,509.83 37.1% *Income before Income Tax Net Income 226,126.00 325,807.81 456,931.76
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.