![]() ![]() We will have a look today how to understand this data and how they finance these payments Here are the free (hugely negative, -$7 billion) cash flows of the recent years which show outside funds being injected into the business to invest in technology and content: Netflix’s free cash flows going deeper into red mainly to pay for content creation. If you look at Netflix, you will see that pattern supercharged. We believe free cash flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to repay debt obligations, make investments and for certain other activities or the amount of cash used in operations, including investments in global streaming content. ( Netflix, annual report 2018, pg 26)įree cash flow is an important metric in any innovator’s finances as we are often using cash (typically from outside sources) to create assets and operate our business until it generates sufficient profits to hold itself. We have used Netflix to refresh and improve our financial skills ( economies of scale, diseconomies of scale, contribution margin, customer acquisition cost/lifetime value).Ĭash flows are important events in your business and free cash flow is a great metric that Netflix and other innovators pay great attention to: ![]()
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