BUS 500A ��� Accounting Fundamentals Project on: Netflix, Inc.
Project Overview
The objective of the project is for you to improve your understanding of accounting concepts and become familiar with the contents of a company���s annual report, Form
10-K filing with the Securities and Exchange Commission (which is also referred to as an annual report) and a proxy statement for Netflix, Inc. which is a publicly-
held company. This project involves your preparing written answers to the questions below based on the information provided in these documents. This project is a
team project. Team members will be required to submit an evaluation on each team member and the dynamics of the team. The written report will be due to the BUS 500A
Blackboard in parts as scheduled.
The project is worth 25% of your course grade.
Selected Company: Netflix, Inc
You may either go to the website for Netflix, Inc or the Securities and Exchange Commission to obtain a copy of the SEC Form 10-K (2015) and the Proxy Statement.
To access these documents via the company website go Netflix . Select the 10-K for year ending December 31, 2015 and proxy statement (DEF 14A). These documents are
lengthy, so you decide if you want to print out the hardcopy (which may be easier for you) or just view the documents online (not as easy for viewing but does save you
paper and ink).
Report
Your report is expected to have a professional appearance as would be expected in most business settings. Presentation is important. Prepare your report in Word,
using font size 12 and with single line spacing. The first page should be in memo format with three sections: 1) Purpose of this assignment 2) Sources used 3)
Conclusion ��� What is your opinion of the company; Would you invest in this company?. The format of your report is to follow the outline of the questions included in
this handout. In your report, state the question or item immediately followed by your answer. To facilitate the instructor���s review and your class discussion, you
must cross-reference your answers to the sources used including the document name and the page number.
Questions
Include in your report the answers to the questions listed below. Also, remember to include the source of your answer, by indicating the document (SEC Form 10-K, and
Proxy Statement) and page number.
I. Background information
a. Name of Company
b. Fiscal year covered by the annual report:
c. Stock exchange where shares are traded and stock ticker symbol
d. State of incorporation
e. Describe the company���s business(es), e.g., types of products manufactured.
f. What are the Company���s major corporate values?
g. Who are the Company���s major competitor(s)?
II. Audit report
a. Who are the company���s external auditors?
b. What opinion did the auditors issue?
c. Did the auditors examine all the evidence supporting the amounts and disclosures in all of the financial statements? If not, why not. Explain.
d. What is the auditor���s responsibility for the financial statements?
e. What is management���s responsibility?
f. Under the Sarbanes-Oxley Act of 2002, reports on internal control are required. Did the company���s management acknowledge its responsibility for establishing
and maintaining adequate internal control over financial reporting? What is the auditor���s opinion on the effectiveness of the company���s internal controls?
IV. Assets
a. What is the company���s largest current asset?
b. What items are classified as cash equivalents?
c. Does the company distinguish between trade vs. nontrade accounts receivables? If yes, what and how much is their nontrade accounts receivables? If no, how
much is their trade accounts receivable?
d. What were the balances at year end for Allowance for Doubtful Accounts for trade accounts receivables and for nontrade accounts receivables?
e. What categories of inventory does the company report on its balance sheet? What inventory accounting method(s) does the company utilize?
f. What are the company���s depreciable assets? What method(s) of depreciation does the company use?
g. Compute the company���s Inventory turnover and Day���s sales in inventory for 2014 and 2015. Comment on the change if any.
h. What kinds of intangible assets does the company have?
i. How much goodwill is on the balance sheet and how is it defined?
V. Liabilities
a. What are the company���s major liabilities?
b. How much does the company owe within the next fiscal year?
c. How much long-term debt is due and payable? How much of the long-term debt is due within the next fiscal year?
d. Compute the company���s Debt ratio for 2014 and 2015 and comments on the change, if any.
VI. Stockholders��� equity
a. What are the different classes of stock issued by the company?
b. How many shares of common stock were issued? What is the par value of the stock?
c. What were the number of shares and cost of the treasury stock held by the company at year-end?
d. Were cash dividends paid? When? Who makes these decisions?
e. For the current period, what does the Statement of Stockholders��� Equity tell you about Retained Earnings and Treasury Stock?
VII. Earnings per share
a. What is the amount of earnings per share (EPS) being reported?
b. Have EPS increased since the prior year?
c. Compute the company���s Dividend yield for 2014 and 2015 and comment on the change, if any.
VIII. Business segments
a. How many business segments does the company have?
b. What are the revenues for the largest business segment?
c. What are revenues for the smallest segment?
IX. Cash flows
a. How much cash was provided by operating activities?
b. What major investing activities occurred during the period?
c. What major financing activities occurred during the period?
d. What was the net change in cash during the period?
X. Proxy statement
a. Briefly describe the issues that the stockholders voted on at the annual meeting of the shareholders.
b. What are the standing committees of the Board of Directors?
c. How often are Directors elected and what is their term of office?
d. What were the audit fees charged by the outside audit firm? What were the other non-audit fees?
e. What was the total compensation of the highest paid executive? What was included in the compensation?