Question
Read the paragraph below about a company. Use your critical thinking to give your analysis about firms projected economic future and also share your thoughts
Read the paragraph below about a company. Use your critical thinking to give your analysis about firms projected economic future and also share your thoughts about particular risk factors mentioned below that could potentially cause the future economic performance of the firm to deviate from these expectations.
One of the first things one can identify from analyzing their financial reports is their profitability pattern. While the organization has not been profitable over the last three years, they certainly have been increasing profitability little by little. This is largely due to the great hit this travel corporation took during the pandemic in effect of COVID-19. Due to the lockdown rules and the aftermath of the virus, people were simply not going on vacation, much less overseas. Now that the pandemic is over, company is slowly getting back on its feet. To predict companys economic future I would say they should become profitable within the next couple of years. Since the organization has heavily relied on loans in the past it will take them time to recover from the debt to equity ratio they have been forced into. Due to the end of the pandemic the corporation will see a spike in demand for people wanting to go on vacation as a result of the long period of restriction. One of the biggest risk factors standing in the way of companys success is their bad debt paying ability. This can prove to be detrimental for the corporation if they continue to leave their loans unpaid. As a result of this, the corporation has adopted a low debt to equity ratio proving that company relies too much on debt for their funding.
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