Zip Car Performance Analysis
PACCOUNTING AND FINANCIAL ANALYSIS
Zipcar is expanding rapidly since it was established in 2000. According to its latest 8-k form, for the 2012 first quarter, revenue increased 20% to $59.1 million compared to $49.1 million in the prior year period. Revenue growth resulted primarily from a 23% year-over-year increase in membership to more than 709,000 members at quarter end. But does it really have a sustainable growth to support its expanding and operation? We implement a rough accounting and financial analysis to evaluate its performance and forecast its future.
Due to the high fleet cost and Selling, General and Administrative cost, Zipcar never achieved a net profit in its history. It had a net margin as (7.5%) in 2010 and (2.9%) in 2011, the trend is positive, showing the management’s effort to increase the revenue and decrease expenses.
For the effectiveness of utilizing the assets, Zipcar achieved its asset turnover rate as 7.0% in 2011, compared to 7.5% in 2010. This down trend can also showed as Zipcar’s revenue per member went from $429 in 2009 to $392 in 2011. This may results from the average 20% growth rate of members, and most of the new members did not use the hourly service as much as the old members.
For the leverage, it was 4.15 in 2010 and 1.17 in2011, the result is positive, and showing that Zipcar’s strategy on decreasing financing cost on acquiring and maintaining the large scale of vehicles (Cut down on loan and acquire vehicles through Assets Backed Securities (ABS) Facility) has been working.
For the Return of Equity, even though it is still negative as (2.4%) at the end of 2011, its loss on equity decreased almost 90% from 23.3% in 2010. The investors may see it as a positive signal that Zipcar did its best to increase its profitability, and It implies a possibility that Zipcar may achieve other analyst’ estimated 2 million net incomes at the end of FY 2012.
ESTIMATED GROWTH AND FORECAST
Since Zipcar’s core business is providing
Zipcar is expanding rapidly since it was established in 2000. According to its latest 8-k form, for the 2012 first quarter, revenue increased 20% to $59.1 million compared to $49.1 million in the prior year period. Revenue growth resulted primarily from a 23% year-over-year increase in membership to more than 709,000 members at quarter end. But does it really have a sustainable growth to support its expanding and operation? We implement a rough accounting and financial analysis to evaluate its performance and forecast its future.
Due to the high fleet cost and Selling, General and Administrative cost, Zipcar never achieved a net profit in its history. It had a net margin as (7.5%) in 2010 and (2.9%) in 2011, the trend is positive, showing the management’s effort to increase the revenue and decrease expenses.
For the effectiveness of utilizing the assets, Zipcar achieved its asset turnover rate as 7.0% in 2011, compared to 7.5% in 2010. This down trend can also showed as Zipcar’s revenue per member went from $429 in 2009 to $392 in 2011. This may results from the average 20% growth rate of members, and most of the new members did not use the hourly service as much as the old members.
For the leverage, it was 4.15 in 2010 and 1.17 in2011, the result is positive, and showing that Zipcar’s strategy on decreasing financing cost on acquiring and maintaining the large scale of vehicles (Cut down on loan and acquire vehicles through Assets Backed Securities (ABS) Facility) has been working.
For the Return of Equity, even though it is still negative as (2.4%) at the end of 2011, its loss on equity decreased almost 90% from 23.3% in 2010. The investors may see it as a positive signal that Zipcar did its best to increase its profitability, and It implies a possibility that Zipcar may achieve other analyst’ estimated 2 million net incomes at the end of FY 2012.
ESTIMATED GROWTH AND FORECAST
Since Zipcar’s core business is providing