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Netflix earnings quality score
How much of the reported profit is backed by cash, and how many markers of managed earnings the filings show
Score59 / 100 · grade C · rank 711 of 1027
Netflix (NFLX) scores 59 of 100 for earnings quality, grade C: rank 711 of 1027 companies and 21 of 30 in communication. It loses the most points on accruals of +1.5% of assets, higher than 91% of companies, Montier C-score 1 of 4 checks failed, discretionary accruals of -1.9% of assets (modified Jones), smaller than most. It earns full or near-full marks for profit steadier than cash flow (smoothness 0.63), adjusted earnings 2% below GAAP.
What earned and lost points
| Component | What the filings show | Points | Of |
|---|---|---|---|
| Accruals | accruals of +1.5% of assets, higher than 91% of companies | 2 | 29 |
| Montier C-score | Montier C-score 1 of 4 checks failed | 16 | 21 |
| Discretionary accruals | discretionary accruals of -1.9% of assets (modified Jones), smaller than most | 10 | 14 |
| Piotroski F-score | Piotroski F-score 7 of 9 | 11 | 14 |
| Non-GAAP gap | adjusted earnings 2% below GAAP | 14 | 14 |
| Earnings smoothness | profit steadier than cash flow (smoothness 0.63) | 6 | 7 |
How the score is built
Eight published measures, each scored against the whole universe or on its own scale and weighted: accruals 20, discretionary accruals 10, Beneish M 15, Dechow F 15, Montier C 15, Piotroski F 10, the non-GAAP gap 10, smoothness 5. A measure that cannot be computed (Beneish for a bank, say) drops out and the rest is rescaled, so every company is scored on what applies to it.
Every company ranked → The full quality workbench, live → Netflix: cash flow →
Computed from the companies’ own XBRL filings (latest fiscal year) by published formulas; a statistical screen, not an audit or an accusation. A low score means the reported profit shows more of the markers of managed or low-quality earnings than its peers. Not investment advice.