Netflix – Financial statement analysis and valuation report This is a Financial Statement Analysis and Business Valuation course (ACC-345). >Overview: For this milestone you will review balance sheets, statements of cash flows, and income statements. You will also analyze different valuation standards and focus on the difference in standards used for recording revenue, expenses, and fair values of assets and liabilities. >Prompt: Produce a financial statement analysis and valuation report that summarizes the financial health, projected future performance, and estimated value of Netflix, Inc. As an independent financial accounting analyst working for a major trade journal, your report is intended to inform a general audience about the overall financial well-being of the company and how it compares to a major competitor. Your report should cover information of interest to both internal and external stakeholders—summarizing major findings, suggesting ways to improve operational performance, and assessing investment potential. Keep in mind that brief, clear communications are essential in effectively reaching business and media audiences. Specifically, the following critical elements must be addressed: >Financial Analysis Overview: Provide a general overview of the balance sheet, the major items present, the company’s capital structure, and any changes over time in these items. A common-size analysis (which is built into your workbook) will help with this. I. Balance Sheet Analysis. In this section, use financial statements and accompanying notes to: A.Analyze what the company’s current and prior year liquidity and debt-to-equity ratios say about the company’s financial health, justifying response. Consider the appropriate level of debt and how this year’s performance compares to the previous year. B.Consider normalization adjustments when adjusting the balance sheet to be comparable to competitors, when creating the prospective balance sheet, and when calculating the final company valuation as either a premium or discount. (Include your analysis spreadsheet in Excel as an appendix.) C.Analyze the company’s balance sheet for the current and previous year using a horizontal analysis. (Include your horizontal analysis spreadsheet (green tab) in Excel as an appendix.) Explain your findings. D.Analyze the competitor’s balance sheet indicators for opportunities for the selected company to improve its own performance. Justify your response using the financial statements of both the company and its competitor. II. Income Statement and Cash Flow Analysis. Similar to the balance sheet write-up, discuss major line items and drivers of those line items. In this section, use financial statements and accompanying notes to: A.Analyze the profitability of your selected company using appropriate profitability ratio(s) and a vertical analysis of the company’s current and prior year income statement. (Include your vertical analysis spreadsheet (orange tab) in Excel as an appendix.) Be sure to explain your findings. B.Analyze historical income statements to determine whether there were any non-recurring or extraordinary items that should be removed from the income statement. An example would be aggressive expense recognition or conservative revenue recognition, which could either depress or inflate earnings. Adjusting these items will make the target company more comparable to others. C.Analyze what your selected company’s free cash flow figures for the current and prior year say about the company’s financial health. Consider other sources or uses of available discretionary cash. D.Determine if the company is on track to pay out dividends this year and whether the dividend payout ratio increase or decrease. 1.Balance Sheet Analysis: Liquidity and Debt-to-Equity Ratios. Analyzes what current and prior year liquidity and debt-to-equity ratios say about the company’s financial health, justifying response. 2.Balance Sheet: Normalization Adjustments: Analyzes historical balance sheet and determines any non-recurring or extraordinary items that should have been removed. 3.Balance Sheet Analysis: Horizontal Analysis. Analyzes the company’s balance sheet using horizontal analysis and includes analysis spreadsheet in appendix, explaining findings. 4.Balance Sheet Analysis: Comparison. Analyzes the competitors’ balance sheets to see how it compares to the selected company and determine if any adjustments should be made based on any differences between the selected company and its competitors’. 5.Income Statement and Cash Flow Analysis: Profitability. Analyzes profitability of company using appropriate profitability ratio(s) and vertical analysis of company’s current and prior year income statements and includes vertical analysis spreadsheet in appendix, explaining findings. 6.Income Statement and Cash Flow Analysis: Normalization Adjustments. Analyzes historical income statements and determines any non-recurring or extraordinary items that should have been removed from the income statement. 7.Income Statement and Cash Flow Analysis: Free Cash Flow. Analyzes the selected company’s free cash flow figures for the current and prior year and determines how they impact the company’s financial health. 8.Income Statement and Cash flow Analysis: Dividend Paying Capacity. Determines if the company is on track to pay out dividends this year and whether the dividend payout ratio will increase or decrease. 9.Articulation of response: Submission has no major errors related to citations, grammar, spelling, syntax, or organization