Growth rates and hypothetically, Finance Basics

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Growth Rates

Most Recent Fiscal Year

Fiscal Year

(-1)

Fiscal Year

(-2)

Fiscal Year

(-3)

Annual Revenue Growth

48.18%

29.48

22.39

13.22

Annual Net Income Growth

40.58

38.83

39.55

24.65

Annual Free Cash Flow Growth

42.40

34.89

2.56

106.37

1. What trends, if any, are apparent in these ratios?

2. Netflix's revenue has consistently increased since 2008, and its net income has been positive for the last four years.

3. Hypothetically, is it possible for sales to increase while net income declines? Why or why not?

4. Yes, it is possible. If costs such as higher labor cost or increased advertising or promotional expenses exist, it is possible for net income declines while sales to increases.

5. Hypothetically, is it possible for net income to decline while free cash flow increases? Why or why not? 


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