Expedia s Valuation

Subject: Consumer Behavior

Paper Model: APA

Paper Type: Assignment

Total Words: 1215

Document Outline

Analysis and forecasts of Expedia’s financial performance based on past financial data and 
Valuation of the company
Introduction
Analysis of the company’s past trends and forecasted figures and its impact on its valuation

 


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Analysis and forecasts of Expedia’s financial performance based on past financial data and Valuation of the company

Introduction

     Expedia Inc with its subsidiaries operates in the online travel company in United States and international markets. It operates in two segments, leisure and Egencia. Besides, it also provides services and travel products to leisure and corporate travelers. It also provides services through a portfolio of brands including hotels.com, expedia.com, classic vacations, and Expedia local experts. This paper analysis the historical financial performance of the company and forecasts the financial performance in the next 5 years. Besides, it also shed light on the valuation of the company and uses different ratios and market prices to reflect the valuation of the company.

Analysis of the company’s past trends and forecasted figures and its impact on its valuation

                        According to the data analyzed, income statement of the company reveals that revenue of the company has been growing steadily and based on the historical surge in the value, it is predicted that revenue is expected to increase by 14% in each of the next coming 5 years. Besides, gross profit is also forecasted to increase by same margins. But due to forecasted reduction in operational income by 2%, it is expected that operational income will increase but will also show the reduction in the margins by 2% every year. The net income of the company has been showing a positive trend throughout all the years analyzed and it is expected that in the coming 5 years, this net income attributable to Expedia will rise by 6% every year. Though interest expense of the company has been showing fluctuations, it is expected that overall interest will decrease by staggering -205% and will continue this trend in next 5 years.

 

                     The balance sheet figures reveal that current assets are expected to increase by 19% based on the trend in last 5 years, which has been largely positive and this increase is primarily based on positive trends in short term investments and cash and cash equivalent which have increased by 51% and 20% respectively based on their past figures.  There have also been increase in witnessed in total assets, which have increased by 9% and there increase has been based on continuous increasing trend in total assets, which have surged based on capitalized software development, property and equipment and long term investments  and other assets which have increased by 24%, 21%v and staggering 43% respectively. This shows that company has been investing money in its infrastructure and has improved its facilities as well as increased its expansion in more territories to capture the market share. Therefore, it can be argued that company has undertaken expansion and is looking to increase its valuation in the coming year.

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