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Analyzing the Debt’s Effects on Netflix’s Liquidity and Costs
- 1 Macau University of Science and Technology
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Abstract
Netflix has issued substantial sums of debt in 2018 and 2019 in order to expand its content library and deal with the intense rivalry that exists in the streaming media sector. The objective of this paper was to investigate the ways in which Netflix's liquidity and costs of financing are impacted by the use of long-term debt financing. The annual reports that Netflix produced from 2017 through 2022 were scrutinized in great detail. According to the findings of this research, Netflix did not experience any liquidity issues in 2018 and 2019 as a result of its long-term debt financing. Therefore, organizations that provide streaming media may utilize long-term debt financing in order to make short-term investments if they managed the due dates of their loan in an appropriate manner. Meanwhile, based on the findings of this study, Netflix was able to reduce the costs associated with debt by issuing debt mostly in euros and using fixed interest rates. When interest rates are forecasted to rise, it may be beneficial for businesses to cut their debt costs by taking on debt denominated primarily in euros and offering fixed interest rates.
Keywords
Netflix, long-term debt, liquidity, costs of debt
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Cite this article
Wu,L. (2023). Analyzing the Debt’s Effects on Netflix’s Liquidity and Costs. Advances in Economics, Management and Political Sciences,30,118-124.
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