what is the appropriate discount rate for Netflix, Inc., and Amazon.com, Inc.’s
ID: 2598557 • Letter: W
Question
what is the appropriate discount rate for Netflix, Inc., and Amazon.com, Inc.’s forecasted cash flows.
Netflix Balance Sheet
Amazon Balance Sheet
Netflix Inc. 2012 2013 2014 Assets Current assets: Cash and cash equivalents $ 290,291 $ 604,965 $ 1,113,608 Short-term investments 457,787 595,440 494,888 Current content library, net 1,368,162 1,706,421 2,125,702 Other current assets 124,551 151,937 206,271 Total current assets 2,240,791 3,058,763 3,940,469 Non-current content library, net 1,506,008 2,091,071 2,773,326 Property and equipment, net 131,681 133,605 149,875 Other non-current assets 89,410 129,124 192,981 Total assets $ 3,967,890 $ 5,412,563 $ 7,056,651 Liabilities and Stockholders' Equity Current liabilities: Current content liabilities $ 1,366,847 $ 1,775,983 $ 2,117,241 Accounts payable 86,468 108,435 201,581 Accrued expenses 53,139 54,018 69,746 Deferred revenue 169,472 215,767 274,586 Total current liabilities 1,675,926 2,154,203 2,663,154 Non-current content liabilities 1,076,622 1,345,590 1,575,832 Long-term debt 200,000 500,000 900,000 Long-term debt due to related party 200,000 - - Other non-current liabilities 70,669 79,209 59,957 Total liabilities 3,223,217 4,079,002 5,198,943 Stockholders' equity: 56 60 60 301,616 777,441 1,042,810 2,919 3,575 (4,446) 440,082 552,485 819,284 Total stockholders' equity 744,673 1,333,561 1,857,708 Total liabilities and stockholders' equity $ 3,967,890 $ 5,412,563 $ 7,056,651Explanation / Answer
Dear Friend,
Determination of the estimated fair market value of 100% of Netflix, Inc., and Amazon.com, Inc.’s equity is as follows:
For computation of Fair Market Value from the Balance sheet, we need two elements. First calculate the capital Employed and then divide the capital Employed with Number of Equity Stock.
Netflix Inc., (Amount in $. )
Now after computation of the capital Employed, divide the capital Employed with Number of Equity. As the given information is not clear, we are not able to calculate the same.
Amazon.com (Amount in $. Billions)
Now after computation of the capital Employed, divide the capital Employed with Number of Equity. As the given information is not clear, we are not able to calculate the same.
Particulars 2012 2013 2014 Current Assets 2,240,791 3,058,763 3,940,469 Other Non Current Assets 1,727,099 2,353,800 3,116,182 Total Assets (A) 3,967,890 5,412,563 7,056,651 Current Liabilities 1,675,926 2,154,203 2,663,154 Long Term Debt 200,000 500,000 900,000 Other Non Current Liabilities 1,347,291 1,424,799 1,635,789 Total Liabilites (B) 3,223,217 4,079,002 5,198,943 Capital Employed (A-B) 744,673 1,333,561 1,857,708Related Questions
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