Ratio Analysis: Regal VS Cinemark
In our analysis of Regal Entertainment Group and Cinemark Holdings, Inc., we found interesting information in their ratios. Being theaters, they do not carry much inventory other than concession items and rentals costs. However this industry has heavy property plant and equipment.
Liquidity Ratios
We first looked at Liquidity Ratios to see if the firm is able to satisfy short- term obligations as they come due. These will also tell us if there are any possible cash flow problems. Current Ratios: As we look at their current Ratios we see that on the 5 year span both improved, except for a little dip in 2008. Regal appeared to have acquired more PPE in 2008, which severely dropped their levels of cash for the year. However they also dropped current liabilities that year which kept the dip from being as severe as it could have been. On the other hand Cinemark’s 2008 dip really appeared to be a result of the economy. There were no large dips or raises in any certain item to suggest otherwise. Quick Ratios: As we look at the Quick Ratios, we see that subtracting the inventory did little to change the ratio for either company. In this industry this ratio is not really a means to measure success. There is very little inventory and it is not liquid.
Asset Management Ratios
We next looked at Asset Management Ratios to see the how quickly the firms can convert various accounts into cash. Inventory Turnover Ratio: Again, when we look at this (or any ratio dealing with inventory) for this industry, it does not give and accurate means to measure success. Fixed Asset Ratio: In looking at this ratio we see that Regal Entertainment is much better as it has a much high ratio. Their net PPE is consistently above 66% of their total assets while Cinemark’s net PPE never even hits 40% Total Asset Turnover Ratio: This is showing very close to the result we saw in the Fixed Asset Ratio for both companies. Basically this is telling us that Regal Entertainment generates
Liquidity Ratios
We first looked at Liquidity Ratios to see if the firm is able to satisfy short- term obligations as they come due. These will also tell us if there are any possible cash flow problems. Current Ratios: As we look at their current Ratios we see that on the 5 year span both improved, except for a little dip in 2008. Regal appeared to have acquired more PPE in 2008, which severely dropped their levels of cash for the year. However they also dropped current liabilities that year which kept the dip from being as severe as it could have been. On the other hand Cinemark’s 2008 dip really appeared to be a result of the economy. There were no large dips or raises in any certain item to suggest otherwise. Quick Ratios: As we look at the Quick Ratios, we see that subtracting the inventory did little to change the ratio for either company. In this industry this ratio is not really a means to measure success. There is very little inventory and it is not liquid.
Asset Management Ratios
We next looked at Asset Management Ratios to see the how quickly the firms can convert various accounts into cash. Inventory Turnover Ratio: Again, when we look at this (or any ratio dealing with inventory) for this industry, it does not give and accurate means to measure success. Fixed Asset Ratio: In looking at this ratio we see that Regal Entertainment is much better as it has a much high ratio. Their net PPE is consistently above 66% of their total assets while Cinemark’s net PPE never even hits 40% Total Asset Turnover Ratio: This is showing very close to the result we saw in the Fixed Asset Ratio for both companies. Basically this is telling us that Regal Entertainment generates