Part VI: Analysis In 350-750 words, summarize the importance of each of the parts above in this assignment (Parts I-V). Explain how each of the steps contributes to the firm’s success going forward.

Part II Raelene –

Balance sheets and income statements are both financial statements that provide information about the company’s finances, but they are not the same. They use different variables (Luenendonk, 2021). The projected income statement and projected balance sheet below, for Netflix, are showing an overall positive trend for the next couple of years (2022 & 2023).

On the projected income statement for Netflix’s, we see revenue, with the subtraction of various costs, we obtain the gross profit, operating expenses, tax, and net income. Over the three years that are showing we see a doubled net income amounts, by year three.

On the projected balance sheet for Netflix’ we see that it is broken up into three sections: assets, liabilities and equity. In a balance sheet we need to have a company’s assets equal to liabilities plus equity. The equity portion of this statement is what the company’s value is to the shareholders, this is the net equity.

In the assets section we see how the total assets continues to climb in a positive manner year by year. There are a couple areas in the in the cash and equivalents, total current assets that are taking larger steps in the growth prospective.

In the liabilities section, as we see in the total assets area, it does grow. The steps up each year are not as aggressive as the assets, which is a good thing. This is showing that the management and leadership team is in control.

In the equity section we see a big jump in the retain earnings which is shown in the total equity. This could be good too. Total equity can increase on the balance sheet whenever a company issues new shares of stock. If the company receives donations of capital from owners or other parties, this also increases total equity. One other common increase in total equity results from an increase in the company's retained earnings (Gaffney, 2017).

To conclude the balance sheet and income statement may evaluate different financial information but together they provide insights into a company’s current and financial health. Investors, creditors, and even the company’s internal management team use these financial statements to make important business decisions (Luenendonk, 2021), and we will do just that as we evaluate. Netflix is showing that it is growing every year and is the number one company is a competitive service.

References:

Gaffney, C. (2017). What Increases and Decreases Total Equity? bizfluent.com. Retrieved from: https://bizfluent.com/info-12199268-increases-decreases-total-equity.html

Luenendonk, M. (2021). Balance Sheet vs Income Statement: What's The Difference? founderjar.com. Retrieved from: https://www.founderjar.com/balance-sheet-vs-income-statement/#:~:text=Balance%20Sheet%20vs%20Income%20Statement%3A%20The%20Key%20Differences,...%205%20Creditworthiness.%20...%206%20Different%20Calculations.%20