Avis: Financial Case Study

Great Essays
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

Related Documents

  • Improved Essays

    Here in case of NIIT, the gross profit margin in year 2010 was 38.26 and it kept declining and became 16.55 in 2013. On the other hand in case of 3i Infotech the gross profit margin in the year of 2010 was 33.59 and the ratio of this company was also declining and came to 27.96 last year. From this it can be concluded that the financial position of 3i Infotech is better than the NIIT in term of gross profit because NIIT has more variation in Gross Profit as compared to 3i Infotech. • In table 6, the net profit margin has been calculated. In NIIT the ratio in 2010 was 14.75 and after it kept declining and last year it reached to 0.16.…

    • 1545 Words
    • 7 Pages
    Improved Essays
  • Improved Essays

    The total revenue formula is profit margin equal Net Income over sales, profit Margin for the 2012 10.75%, 2013 11.18%, 2014 9.75% (Yahoo finance, 2016). 2013 General Electric have the greatest profit margin The Reason for 2013 Margin was in 2012 the company earnings before interest and taxes was less than 2012 and 2014 therefore income tax expense were less “on January 2, 2013 due to the fact American Taxpayer relief Act of 2012 was enacted and the law extended many provisions, including a two- years extension of the U.S. tax provision deferring tax on active financial services income and certain U.S. business credits retroactive to January 1, 2012 therefore it has taken into consideration in determining the income tax for that ratified period so tax 2013 showed backdated allowance of the earlier expired provisions” (electric, 2013). Year 2013 was more profitable to General Electric Companies because of 11.18% in the Net profit margin even though total revenue and Net income were less than the other two years. (Yahoo finance,…

    • 710 Words
    • 3 Pages
    Improved Essays
  • Decent Essays

    The highest cash conversion cycle of 55 days was generated in 2103. Consequently, Starbucks needs to concentrate on reducing their cash conversion cycle to attain higher efficiency. In 2013, Starbucks had 13 days in sales outstanding, 67 days in inventory, and a 25-day average payment period resulting in a cash conversion cycle of 55 days. In 2014, Starbucks had 13 days in sales outstanding, 59 days in inventory, and a 27-day average payment period resulting in a cash conversion cycle of 45 days. Starbucks’s cash conversion cycle was 10 days faster in 2014 than it was in 2013 meaning the company had to finance 10 fewer days of net working capital in 2014.…

    • 839 Words
    • 4 Pages
    Decent Essays
  • Improved Essays

    On month-on-month basis, industrial output grew 0.41 percent. Industrial Production in China averaged 12.72 percent from 1990 until 2015, reaching an all-time high of 29.40 percent in August of 1994 and a record low of -21.10 percent in January of 1990. Industrial Production in China is reported by the National Bureau of Statistics of…

    • 935 Words
    • 4 Pages
    Improved Essays
  • Superior Essays

    Net income is the concluding balance on the income statement. The net income is a company’s total profit or earnings for that fiscal year. In 2013, Apple Inc. had a net income of $37,037,000 which increased to $39,510,000 in 2014 (“AAPL Income,” 2016). This is a small increase compared to the increase between 2014 and 2015. With a $13,884,000 difference between 2014 and 2015, Apple Inc. had a net income of $53,394,000 in 2015 (“AAPL Income,” 2016).…

    • 754 Words
    • 4 Pages
    Superior Essays
  • Decent Essays

    Rroton Ratio Analysis

    • 1293 Words
    • 6 Pages

    In 2013, the positive trends in some ratios are reversed. The growth in EPS is interesting given the profit margin is decreasing from 2012 to 2013.The EPS has gone from 60.77 cents in 2011, 60.99 cents in 2012 to 67.15 cents in 2013. It must be remembered the revenue is increasing during the three years. Consequently, any ratio that involves the number of revenue in the dominator will increase all else being equal. the gross cash flow per share is higher than the EPS, but the gross cash flow per share may not be restricted to operating cash flow only.…

    • 1293 Words
    • 6 Pages
    Decent Essays
  • Great Essays

    Morrisons Case Study

    • 1759 Words
    • 8 Pages

    Moreover it is more than a measure of a company's past performance that takes into account market expectations for company's growth. To calculate this ratio we used market closing share price taken on the previous day of financial report being published divided by earnings per share figure. Morrisons P/E ratio of 12.70 for 2010 suggests that investors are willing to pay 12.70 GBP for every 1 GBP of earnings that the company generates, or that the capital value of the share is 12.70 times higher than the current level of earnings attributable to it. While comparing Morrisons to Tesco, its P/E ratio is lower by less than 2 points. At the same time Tesco is dominant in the market, whereas Morrison is fourth in market growth and its P/E ratio is only about 12 percent lower than one of Tesco’s, which tells the shareholders that the investment attractiveness of Morrisons is not much lower than the one of industry’s leader.…

    • 1759 Words
    • 8 Pages
    Great Essays
  • Improved Essays

    Viacom Growth Strategy

    • 761 Words
    • 4 Pages

    Another decrease the balance sheet displays, is liabilities and shareholders equity. It reached a meager 22.22 billion in 2015, the first time it had dipped below 23 billion in the past years. The common equity of Viacom dropped more than five billion dollars, accumulating just 3.54 billion. Likewise, their total equity dropped to 3.82 billion, more than 4 billion less than it had been in 2011. Their retained earnings increases substantially, however.…

    • 761 Words
    • 4 Pages
    Improved Essays
  • Great Essays

    You can see in the summary that the assets and liabilities and equity are about equal to each other at 757.4, which is good and very important because you always want your assets and liabilities to balance. These reports tell us two main things about the assets: the first is that loans are the main focus of the assets, and the second is that the assets seem to be mainly increasing. We can tell that loans are the main focus due to the fact that almost 90% of the total assets are loans, leaving only 10% to other assets. That being said, the increase in assets can potentially be unfavorable because with the increase in loans comes an increase in what you need to pay off. When looking at the liabilities and equity, we can see that the main items include checking and savings, and time accounts.…

    • 2169 Words
    • 9 Pages
    Great Essays
  • Decent Essays

    Higher the EPS, better for the company. POSCO has maintained an acceptable EPS from 2004 to 2011 which can be seen from the graph above. The EPS of 2012 showed a decline when compared to the previous year due to a decrease of net income by USD 887 million in 2012 when compared to 2011’s net income. Similarly, EPS reduced further in 2013 due to a decrease of nearly USD 986 million when compared to 2012’s net income. Decomposition of ROE – DuPont Analysis DuPont analysis decomposes ROE into the following three…

    • 995 Words
    • 4 Pages
    Decent Essays