Abstract
This paper presents a case study on the financial standings of Avis which is a large car rental group. The years 2012, 2013, and 2014 will be used to determine its financial stability. In comparison to Avis we will be using one of its competitors, Hertz Company, along with its 2013 financial information. The purpose of this analysis is to determine which company has a better financial standing and it will also influence our decision on which company will be suitable for investing. This analysis will be determined by calculating the company’s liquidity, activity, profitability, and coverage ratios.
Company Background Avis a car rental industry is known for its long history of innovation and one of the world’s top brands for …show more content…
Activity
Accounts receivable turnover
Accounts receivable turnover measures the number of time the company could collect or the accounts receivable turned over during a time period or during a year. The higher the ratio indicates a shorter time between making sale and collecting the cash from its customers. The number of accounts receivable of Avis Company is steady from year 2012 to 2014, there’s only a slight changes between each year. In 2012, Avis company have a 13.88 accounts receivable turnover, in 2013 they had a decreased to 13.54, and had increased in 2014 to 13.93. Avis company have a 13.93 times accounts receivable turn over a year.
Asset Turnover
Asset turnover ratio is an important ratio because its measure s the company ability to generate sales from its assets by comparing net sales with average total assets. The higher the amount in the assets turnover, the efficiency a company uses all of its assets to generate sales. In 2012, Avis Company had an assets turnover of 0.52, had a decreased in 2013 to 0.50, and increased in 2014 to 0.51. The company assets turnover is decreased which means for every $1.00 invested in assets, the company only generates 51 cents in 2014. Avis Company was not very efficient with its use of …show more content…
For the current ratio it means that the Avis have more current assets to pay every $1.00 in their current liabilities. For the company quick ratio, Avis have 0.84 and hertz 0.13. For the quick ratio it means that Avis have a higher quick assets (liquid) to pay every $1.00 in the current liabilities. For the company current cash debt coverage, Avis have 1.47 and Hertz have 0.06. For the current cash debt coverage it means that Avis did not have problems in paying their debt while the Hertz is struggling in paying their current liabilities from operations. As what we can see, we can say that Avis have a better liquidity position rather than Hertz. For liquidity ratio, Avis is more appealing to the investor rather than
This paper presents a case study on the financial standings of Avis which is a large car rental group. The years 2012, 2013, and 2014 will be used to determine its financial stability. In comparison to Avis we will be using one of its competitors, Hertz Company, along with its 2013 financial information. The purpose of this analysis is to determine which company has a better financial standing and it will also influence our decision on which company will be suitable for investing. This analysis will be determined by calculating the company’s liquidity, activity, profitability, and coverage ratios.
Company Background Avis a car rental industry is known for its long history of innovation and one of the world’s top brands for …show more content…
Activity
Accounts receivable turnover
Accounts receivable turnover measures the number of time the company could collect or the accounts receivable turned over during a time period or during a year. The higher the ratio indicates a shorter time between making sale and collecting the cash from its customers. The number of accounts receivable of Avis Company is steady from year 2012 to 2014, there’s only a slight changes between each year. In 2012, Avis company have a 13.88 accounts receivable turnover, in 2013 they had a decreased to 13.54, and had increased in 2014 to 13.93. Avis company have a 13.93 times accounts receivable turn over a year.
Asset Turnover
Asset turnover ratio is an important ratio because its measure s the company ability to generate sales from its assets by comparing net sales with average total assets. The higher the amount in the assets turnover, the efficiency a company uses all of its assets to generate sales. In 2012, Avis Company had an assets turnover of 0.52, had a decreased in 2013 to 0.50, and increased in 2014 to 0.51. The company assets turnover is decreased which means for every $1.00 invested in assets, the company only generates 51 cents in 2014. Avis Company was not very efficient with its use of …show more content…
For the current ratio it means that the Avis have more current assets to pay every $1.00 in their current liabilities. For the company quick ratio, Avis have 0.84 and hertz 0.13. For the quick ratio it means that Avis have a higher quick assets (liquid) to pay every $1.00 in the current liabilities. For the company current cash debt coverage, Avis have 1.47 and Hertz have 0.06. For the current cash debt coverage it means that Avis did not have problems in paying their debt while the Hertz is struggling in paying their current liabilities from operations. As what we can see, we can say that Avis have a better liquidity position rather than Hertz. For liquidity ratio, Avis is more appealing to the investor rather than