ompute 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	$11,071,833
Cost of revenues	6,987,244
Marketing	1,660,998
Technology and development	856,492
General and administrative	630,294
Operating income	936,805
Other income (expense)
Interest expense	(294,766)
Interest and other income	41,725
Income before income taxes	683,764
Provision for income taxes	10,666
Net income	$673,098

NETFLIX INC. Consolidated Balance Sheets
in thousands, except par value	2018	2017
Current assets
Cash and cash equivalents	$2,659,933	$1,978,779
Current content assets, net	3,610,981	3,021,965
Other current assets	524,675	375,908
Total current assets	6,795,589	5,376,652
Noncurrent content assets, net	10,487,629	7,270,110
Property and equipment, net	418,281	319,404
Other noncurrent assets	631,622	457,269
Total assets	$18,333,121	$13,423,435
Current liabilities
Current content liabilities	$3,284,899	$2,925,302
Accounts payable	394,652	252,048
Accrued expenses	334,669	220,881
Deferred revenue	533,390	433,654
Total current liabilities	4,547,610	3,831,885
Noncurrent content liabilities	2,635,077	2,334,187
Long-term debt	7,262,401	4,556,102
Other noncurrent liabilities	129,231	135,246
Total liabilities	14,574,319	10,857,420
Stockholders equity
Preferred stock, $0.001 par value	0	0
Common stock, $0.001 par value	1,709,935	1,366,912
Accumulated other comprehensive loss	(13,727)	(14,410)
Retained earnings	2,062,594	1,213,513
Total shareholders equity	3,758,802	2,566,015
Total liabilities and shareholders equity	$18,333,121	$13,423,435
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