Netflix Inc. (NASDAQ:NFLX)

The investment activity ratios demonstrate varying trends over the observed period. Generally, the ratios indicate a consistent level of asset utilization, with some evidence of improvement in recent quarters. A closer examination of each ratio reveals specific patterns and potential areas of interest.

Net Fixed Asset Turnover

The net fixed asset turnover ratio exhibited relative stability between March 31, 2022, and December 31, 2022, fluctuating between 21.97 and 22.93. A slight decline was observed through June 30, 2023, reaching a low of 21.83. However, the ratio subsequently increased, peaking at 24.47 by December 31, 2024, before experiencing a moderate decrease to 22.54 by December 31, 2025. This suggests an initial period of consistent performance, followed by improved efficiency in utilizing fixed assets, and a recent slight pullback.

Total Asset Turnover

The total asset turnover ratio generally trended upward throughout the period. Starting at 0.67 in March 31, 2022, it experienced a gradual decline to 0.63 by June 30, 2023. A consistent increase followed, reaching 0.81 by December 31, 2025. This indicates a growing ability to generate sales from its total asset base, suggesting improved asset management efficiency over time. The increase is particularly noticeable in the later quarters.

Equity Turnover

The equity turnover ratio showed a declining trend from 1.73 in March 31, 2022, to a low of 1.41 by June 30, 2023. The ratio then began to recover, reaching 1.67 by March 31, 2025, and further increasing to 1.70 by December 31, 2025. This pattern suggests a period of reduced sales generation relative to equity, followed by a recovery and stabilization in recent quarters. The recent increase indicates improved efficiency in utilizing shareholder equity to generate revenue.

Overall, the observed trends suggest a company that has maintained a consistent ability to generate revenue from its fixed assets, while demonstrating improving efficiency in utilizing both total assets and shareholder equity. The recent fluctuations warrant continued monitoring to determine if they represent temporary variations or the beginning of new trends.

The net fixed asset turnover ratio exhibits a generally stable pattern with a slight upward trend over the observed period. Initially, the ratio fluctuates between approximately 21.97 and 22.78 during the first four quarters of 2022. A minor decline is then observed in the first half of 2023, followed by a recovery and subsequent increase through the end of 2024. The final two quarters of the observed period show a slight decrease, though the ratio remains within the range seen earlier in the period.

Overall Trend

The ratio demonstrates a modest increasing trend from 2022 to 2024, indicating improving efficiency in utilizing fixed assets to generate revenue. However, the most recent quarters suggest a potential stabilization or slight reversal of this trend.

Short-Term Fluctuations (2022-2023)

From March 2022 to June 2023, the ratio experiences minor variations, remaining consistently above 21.80. The dip in the first half of 2023 is relatively small and is quickly offset by gains in subsequent quarters.

Growth Period (Late 2023 - 2024)

A noticeable increase in the net fixed asset turnover ratio is evident from September 2023 through December 2024, rising from 21.85 to 24.47. This suggests a period of enhanced operational efficiency or increased revenue generation relative to fixed asset investment.

Recent Performance (2025)

The ratio experiences a slight decline in the first half of 2025, followed by a further decrease in the subsequent quarters, ending at 22.54 in December 2025. While still a healthy ratio, this recent downward movement warrants monitoring to determine if it represents a temporary fluctuation or the beginning of a more significant trend.

Revenues consistently increased throughout the period, while property and equipment, net, also generally increased, though at a slower pace. The observed fluctuations in the net fixed asset turnover ratio are likely a result of the interplay between these two factors, with revenue growth outpacing fixed asset growth during periods of ratio increase and vice versa.

The total asset turnover ratio exhibits a generally increasing trend over the observed period, though with some quarterly fluctuations. Initially, the ratio remained relatively stable at 0.67 during the first two quarters of 2022, before experiencing a slight decline to 0.65 by the end of the year. This downward movement continued into the first half of 2023, reaching a low of 0.63. However, the ratio began to recover in the latter half of 2023 and throughout 2024, culminating in a peak of 0.81 in the final quarter of 2025.

Overall Trend

The overarching pattern indicates improving efficiency in asset utilization. The ratio’s increase suggests that the company is generating more revenue per dollar of assets invested over time. This could be due to a variety of factors, including improved operational efficiency, better asset management, or a shift in business strategy.

Short-Term Fluctuations

While the long-term trend is positive, quarterly variations are present. The dip in the ratio during late 2022 and early 2023 may be attributable to increased asset investment that had not yet translated into proportional revenue gains, or potentially a temporary slowdown in sales. The subsequent recovery suggests these factors were transient.

Acceleration in Recent Periods

The most significant gains in the total asset turnover ratio occurred between the third quarter of 2023 and the fourth quarter of 2025. The increase from 0.66 to 0.81 represents a substantial improvement in asset efficiency during this period. This acceleration warrants further investigation to identify the specific drivers of this positive change.

Comparison to Prior Years

The ratio in the initial periods (2022-2023) was consistently below 0.70. The progression to a ratio exceeding 0.80 in the most recent quarter signifies a notable enhancement in the company’s ability to generate sales from its asset base.

In conclusion, the total asset turnover ratio demonstrates a positive trajectory, indicating improved asset utilization efficiency. While short-term fluctuations exist, the overall trend suggests effective management of assets and a growing capacity to generate revenue from investments.

The equity turnover ratio for the analyzed period demonstrates a generally stable pattern with some fluctuation. Initially, the ratio experienced a decline from 1.73 to 1.52 between March 31, 2022, and December 31, 2022. A subsequent increase to 1.64 was observed by December 31, 2023, followed by a slight decrease to 1.58 by December 31, 2024. The most recent quarters show a renewed upward trend, reaching 1.70 by December 31, 2025.

Overall Trend

The equity turnover ratio has remained within a relatively narrow range of 1.41 to 1.73 throughout the observed period. While fluctuations occur, there is no indication of a sustained, significant increase or decrease. The ratio appears to be trending slightly upward in the most recent periods.

Short-Term Fluctuations

A noticeable dip in the ratio occurred during the latter half of 2022 and the first half of 2023. This coincided with a period where revenue growth slowed and stockholders’ equity experienced some volatility. The subsequent recovery in the ratio aligns with the resumption of revenue growth and stabilization of equity.

Recent Performance (2024-2025)

The ratio exhibited relative stability between 1.58 and 1.67 for the first three quarters of 2024. The final quarter of 2024 and the first three quarters of 2025 show a consistent increase, culminating in a ratio of 1.70. This suggests improved efficiency in utilizing equity to generate revenue in the most recent period.

Relationship to Revenues and Equity

The equity turnover ratio is calculated by dividing revenues by stockholders’ equity. The observed fluctuations in the ratio are influenced by changes in both revenues and equity. The period of decline in the ratio (late 2022/early 2023) was characterized by slower revenue growth and fluctuations in equity. The subsequent increase reflects stronger revenue performance and a more stable equity base.