How Does Expedia’s Financial State Currently Look?

• From the above analysis we can conclude that Expedia’s current financial health is not too robust.
• Expedia’s cash asset ratio is almost 0.3, suggesting that the company doesn’t have enough cash to pay off most of its near term obligations.
• The value of its assets that can be quickly converted to cash is half of its short-term liabilities. The company doesn’t have enough liquid assets to pay off its short term liabilities. Its current ratio is close to the acid test ratio suggesting that Expedia doesn’t possess a significant amount of inventories.
• The solvency analysis shows Expedia is reliant on Debt to a great extent at 68% of Equity. Around 20% of its assets has been created using debt.
• Expedia has been facing operating losses primarily on account of its acquisition spree and the related costs associated with it. In Q1 2016 its operating losses increased by 101% year-on-year. The losses were due to expenses in technology and content and amortization of intangible assets. The Q1 2016 operating losses also include losses for eLong of $40 million. The interest coverage rate suggests that Expedia is not in a position to pay back the current interests on its debts .In conclusion, going by its Q1 2016 financial figures, we can state that Expedia is currently in a weak financial state. However, most of this is because of the numerous acquisitions and investments the company has undertaken over the last couple of years. In 2015, Expedia acquired big players including Travelocity, Orbitz, and HomeAway on its platform. The consolidation of the important OTA players will provide the advantage of offering a wider portfolio of products and services from the same platform. Expedia also entered into a partnership with China’s OTA leader, Ctrip, and sold its stake in the loss making Chinese OTA, eLong. In short, Expedia has its eyes set on long term growth and though its current financial position looks a bit shaky, we believe it’s a matter of time before the world’s second largest OTA (in terms of revenues) improves its financial health. 

Have more questions on Expedia? See the links below.

• Top 3 U.S. OTAs: A Comparison Of Operating Margins
• What Drove Expedia’s Revenue And EBITDA Growth Over The Last Five Years?
• What Is Expedia’s Fundamental Value On The Basis Of Its Forecasted 2015 Results?
• Top 3 U.S. OTAs: A Comparison Of Operating Margins
• Expedia Year 2015 Review
• How Have Expedia’s Different Segments Performed Over The Last Five Years?
• Expedia Q1 2016 Earnings Results

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