1. What risks does Netflix face as it changes its business model to rely more on streaming content? Where are these risks presented in its financial statements?

2. What criteria should drive the rate of content amortization? Do you agree with the concerns expressed by analysts about declining rate of content amortization by Netflix?

Moving forward now to 2022, see the Netflix 2022 annual report.

3. Read the paragraph "Cost of Revenues" on page 22 (PDF page 24), Critical Accounting Estimates on p. 29-30 of PDF (p. 27-28 of report). Read the Auditor's Report on p. 36-37 (PDF p. 38-39). Now look at the Consolidated Statement of Operations on p. 38 (PDF page 40). Thinking about the huge "cost of revenues" expense and it being the subject of the Critical Accounting Estimates, what risks does this pose for investors? How could this affect the quality of Netflix earnings?

4. See Note 6 Debt on p. 52 (pg. 54 of PDF). See issuance dates and amounts. In conjunction with our understanding of their current business model (buying content at a fixed cost with most of the payment due upfront and spending large upfront costs for creating original content), why did Netflix have to keep borrowing large sums from 2013 to 2019? Also, why might they have chosen to use debt instead of equity financing? You may want to review and quote from the article from Fortune Magazine titled "Why Netflix is Binging on Junk Bonds" posted in Canvas.