PA2.

LO 9.3Use Netflixs 2017 annual report to answer the following questions.

1. Using the revenue and contribution profit information, calculate the contribution profit (loss) percentage for each of the divisions. Comment on how your analysis has changed compared to your analysis of the dollar amounts for each division.
2. Since companies typically do not publicly provide more than macro levels of asset values, lets assume the following level of assets (investment): Calculate the return on investment (ROI) for each division. Comment on the results.
3. Assume that Netflix uses a cost of capital of 7%. Calculate the residual income (RI) for each of the divisions. Comment on the results.

Assets (fictitious) Domestic streaming International streaming Domestic DVD 2017 $15,000,000 6,000,000 1,500,000 2016 $14,000,000 4,000,000 2,000,000 2015 $10,000,000 2,000,000 3,000,000