Compute and Analyze Measures for DuPont Disaggregation Analysis

The 2018 balance sheets and income statement for Netflix Inc. follow. Refer to these financial statements to answer the requirements.

NETFLIX INC. Consolidated Statements of Earnings
For Year Ended December 31, $ thousands	2018
Revenues	$15,794,341
Cost of revenues	9,967,538
Marketing	2,369,469
Technology and development	1,221,814
General and administrative	630,294
Operating income	1,605,226
Other income (expense)
Interest expense	(420,493)
Interest and other income	41,725
Income before income taxes	1,226,458
Provision for income taxes	15,216
Net income	$1,211,242

NETFLIX INC. Consolidated Balance Sheets
in thousands, except par value	2018	2017
Current assets
Cash and cash equivalents	$3,794,483	$2,822,795
Current content assets, net	5,151,186	4,310,934
Other current assets	748,466	536,245
Total current assets	9,694,135	7,669,974
Noncurrent content assets, net	14,960,954	10,371,055
Property and equipment, net	418,281	319,404
Other noncurrent assets	901,030	652,309
Total assets	$25,974,400	$19,012,742
Current liabilities
Current content liabilities	$4,686,019	$4,173,041
Accounts payable	562,985	359,555
Accrued expenses	477,417	315,094
Deferred revenue	760,899	618,622
Total current liabilities	6,487,320	5,466,312
Noncurrent content liabilities	3,759,026	3,329,796
Long-term debt	10,360,058	6,499,432
Other noncurrent liabilities	129,231	135,246
Total liabilities	20,735,635	15,430,786
Stockholders equity
Preferred stock, $0.001 par value	0	0
Common stock, $0.001 par value	2,315,988	1,871,396
Accumulated other comprehensive loss	(19,582)	(20,557)
Retained earnings	2,942,359	1,731,117
Total shareholders equity	5,238,765	3,581,956
Total liabilities and shareholders equity	$25,974,400	$19,012,742
Combined federal and state statutory tax rate	22%

a. Compute ROE and ROA for 2018.

	Numerator	Denominator	ROE
	Answer	Answer

	Numerator	Denominator	ROA
	Answer	Answer

b. Confirm that ROE equals ROE computed using the component measures for profit margin, assets turnover, and financial leverage: ROE = PM AT FL.

	Numerator	Denominator	PM
	Answer	Answer

	Numerator	Denominator	AT
	Answer	Answer

	Numerator	Denominator	FL
	Answer	Answer

	Ratio	Number
	PM	Answer
	AT	Answer
	FL	Answer
	ROE

***ROE may be different due to rounding

c. Compute adjusted ROA (assume a statutory tax rate of 22%).

	Numerator	Denominator	Adjusted ROA
	Answer	Answer