Netflix Inc. (NASDAQ:NFLX)

An examination of short-term operating activity ratios reveals fluctuating performance over the observed period. Payables turnover demonstrates variability, while working capital turnover exhibits more pronounced shifts. The average payables payment period remains relatively stable, with some increases towards the end of the period.

Payables Turnover

Payables turnover generally ranged between 26 and 37 over the analyzed timeframe. A peak was observed in June 2022 at 36.53, followed by a decline to 28.54 by December 2022. The ratio recovered in the first three quarters of 2023, reaching 37.07 in September 2023, before decreasing again to 25.84 by December 2025. This suggests inconsistent efficiency in managing and paying suppliers. The fluctuations could be attributed to changes in purchasing patterns, supplier credit terms, or overall business volume.

Working Capital Turnover

Working capital turnover experienced significant volatility. The ratio began at a high of 84.84 in March 2022, then dramatically decreased to 23.67 by December 2022. A partial recovery occurred in the first half of 2023, but remained subdued. A notable increase to 31.89 was seen in December 2023, followed by another decline to 16.63 in December 2024. The ratio showed some improvement in 2025, reaching 22.16 by December 2025. This substantial variation indicates considerable changes in the relationship between working capital and revenue, potentially reflecting shifts in sales volume, inventory management, or accounts receivable collection practices. The missing value for June 2024 prevents a complete assessment of the trend during that period.

Average Payables Payment Period

The average payables payment period remained relatively consistent, generally fluctuating between 10 and 13 days for most of the period. A slight increase to 14 days was observed in December 2022 and again in December 2025. These increases, while modest, could indicate a lengthening of payment terms with suppliers or a slower rate of invoice processing. Overall, the company appears to maintain a consistent approach to paying its suppliers.

In summary, the observed ratios suggest a dynamic operating environment. While the average payables payment period demonstrates stability, the fluctuations in payables and working capital turnover warrant further investigation to understand the underlying drivers and potential implications for liquidity and operational efficiency.

The accounts payable turnover ratio exhibits fluctuations over the observed period, spanning from March 31, 2022, to December 31, 2025. Generally, the ratio demonstrates a pattern of variability without a consistently strong upward or downward trajectory, though a potential decline is noted towards the end of the period.

Initial Period (Mar 31, 2022 – Jun 30, 2022)

The ratio increased from 28.76 to 36.53, indicating a more efficient use of payables during this timeframe. This suggests the company was paying its suppliers more quickly, potentially taking advantage of early payment discounts or improving its cash management practices.

Subsequent Fluctuations (Jul 31, 2022 – Dec 31, 2023)

Following the initial increase, the ratio experienced volatility, ranging from a low of 26.38 to a high of 37.07. This suggests inconsistent payment patterns or changes in the volume of purchases made on credit. The ratio generally remained above 30 during this period, indicating relatively efficient payable management.

Recent Trend (Mar 31, 2024 – Dec 31, 2025)

A downward trend is observed in the most recent quarters. The ratio decreased from 34.70 to 25.84. This could indicate a slowing in the rate at which the company is paying its suppliers, potentially due to cash flow constraints, a deliberate strategy to extend payment terms, or an increase in accounts payable relative to cost of revenues. The decline from 34.06 in June 2024 to 25.84 in December 2025 is particularly noticeable.

The cost of revenues generally increased over the period, while accounts payable also showed an overall increasing trend, though with significant quarterly variations. The interplay between these two items influences the payables turnover ratio, and the recent decline in the ratio, despite rising cost of revenues, warrants further investigation to determine the underlying causes and potential implications for the company’s financial health.

Relationship to Cost of Revenues

While cost of revenues increased from US$4,284,705 thousand to US$6,522,621 thousand over the period, the accounts payable did not increase proportionally. This disparity contributes to the observed decline in the payables turnover ratio in the later quarters.

In conclusion, the payables turnover ratio demonstrates a period of initial improvement followed by fluctuations and a recent downward trend. Monitoring this ratio closely will be important to assess the company’s ability to manage its short-term obligations and maintain healthy relationships with its suppliers.

The working capital turnover ratio exhibits considerable fluctuation throughout the observed period, spanning from March 31, 2022, to December 31, 2025. Initial values indicate a relatively high turnover, followed by a substantial decline and subsequent volatility.

Initial Period (Mar 31, 2022 – Jun 30, 2022)

The working capital turnover ratio began at 84.84 and increased to 91.06. This suggests efficient utilization of working capital to generate revenue during this timeframe. A higher ratio indicates that the company is generating more sales from each dollar invested in working capital.

Significant Decline (Sep 30, 2022 – Mar 31, 2023)

A marked decrease in the ratio is observed, falling from 29.95 to 14.73. This decline coincides with a significant increase in working capital, while revenue growth was more moderate. This suggests a potential inefficiency in working capital management, where increased investment in current assets did not translate into proportional revenue gains.

Volatility and Recovery (Jun 30, 2023 – Dec 31, 2024)

The ratio continued to fluctuate, reaching a low point with a missing value for June 30, 2024, and then showing some recovery. Values ranged from 11.35 to 31.89, indicating inconsistent performance. The increase to 55.26 by March 31, 2025, suggests a potential improvement in working capital efficiency, though this is followed by a decrease to 22.16 by December 31, 2025.

Working Capital Fluctuations

The substantial changes in the working capital turnover ratio appear closely linked to significant shifts in working capital levels. The largest increases in working capital are seen between March 31, 2022, and December 31, 2022, and again between March 31, 2024, and June 30, 2025. These increases do not consistently correlate with proportional increases in revenue, contributing to the observed ratio fluctuations.

Overall, the working capital turnover ratio demonstrates a pattern of instability. While initial periods show strong efficiency, subsequent quarters reveal a decline and ongoing volatility. Further investigation into the drivers of working capital changes and their impact on revenue generation is warranted to understand the underlying causes of these fluctuations.

The average payables payment period exhibited relative stability over the observed period, with fluctuations primarily occurring between 10 and 14 days. An initial period of consistency at 13 days in March 2022 was followed by a decline to 10 days in June 2022, remaining at 10-11 days through the remainder of 2022 and the first half of 2023.

Overall Trend

A slight lengthening of the average payables payment period is discernible in the latter half of 2023 and into 2024. The period increased to 14 days by December 2023, before fluctuating between 11 and 16 days through December 2024. This trend suggests a potential shift in payment practices or negotiating power with suppliers. The period then stabilized around 11-13 days through September 2025, with a final increase to 14 days by December 2025.

The period remained largely within a narrow range for the majority of the analyzed timeframe, indicating consistent management of short-term liabilities. However, the increases observed in late 2023 and late 2025 warrant further investigation to determine the underlying causes. These increases could be attributable to changes in supplier terms, strategic decisions to manage cash flow, or industry-specific factors.

Notable Fluctuations

The most significant increase in the average payables payment period occurred in December 2023, rising to 14 days from a recent low of 10 days in September 2023. A similar increase was observed in December 2025, reaching 14 days again. These peaks suggest potential seasonal or event-driven impacts on payment timing.

The consistency in the period for much of the observed timeframe suggests effective management of supplier relationships and a predictable cash conversion cycle related to payables. The recent fluctuations, however, indicate a potential need for ongoing monitoring to ensure optimal working capital management.