Which method did each company use when calculating the net cash provided by operating activities

Netflix began when Reed Hastings had to pay a late fee of $40 for an overdue rented video. He knew he could come up with a more profitable business that would be more enjoyable for the consumer (Funding Universe, n.d.). Before Jeff Bezos founded Amazon, he was a vice president at D. E. Shaw, a global investment management firm in New York City. But he left it all in 1995 to move to Seattle, rent an apartment for $890 a month, and build his electronic commerce company when the Internet was just starting to take hold (Brandt, 2011). Looking at such humble beginnings, it is hard to believe that Hastings and Bezos grew such influential and recognized businesses. You can even go to the websites of their respective companies and find their financial statements to get a better appreciation for the truly impressive growth of each company.

Locate the financial statements of both Netflix, Inc., and Amazon.com, Inc., in the Netflix and Amazon Data Spreadsheet document, Isolate their current statements of cash flows. Analyze these statements and consider how they reflect the current financial health and sustainability of these companies.

Answer the following questions in a 4-page paper:

  • Which method did each company use when calculating the net cash provided by operating activities? Explain.
  • What was the most significant (i.e., monetarily largest) item reported by each company in its investing section and in its financing section?
  • What were these two companies’ trends in terms of net cash provided by operating activities during this period of time? What do you think it means for these companies’ sustainability?
 
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