Financial Analysis

Financial Analysis

Does it look like this company is financially healthy? What guides you to this conclusion? Would you consider investing in this company or want to work for it? Provide supporting evidence for your claims.

From the outlook of the financial statements, it can be said that the company looks financial healthy and there are various reasons for it. One of them could be the size of the company; the other reasons include the overall performance of the company at large. The Company is driven by the revolution in customer friendly technology, consumers' needs and desires are evolving at a faster pace than ever. There's no longer such a thing as the "status quo" for companies delivering goods and services. There is, however, a never ending demand for businesses to transform intelligently. The foundation for the transformation at Hertz is a successful 5-years-and-counting continuous improvement program, based on work streams redesigned to enhance our customers' rental experiences. These reengineered processes resulted in upgraded service levels and quantifiable efficiency savings, $2.1 billion between 2007 and 2011, which are in large part being reinvested in the Hertz brand in the form of technology-driven innovations to deliver the best service in the industry. Essentially we have created, through technology, a perpetual, real-time "voice of the customer," ultimately providing what he or she wants all of the time.

Discuss substantiate your reasons for your conclusions.

Apart from normal financial operations and technical expertise in the field of renting cars, mergers and acquisitions have also led Hertz to a better financial position. In addition to the points mentioned in the first questions, Hertz has persuaded a reluctant Dollar Thrifty Automotive Group (DTG) to succumb to its advances. Indeed, in a deal valued at $2.3 billion, DTG in August 2012 announced that it has agreed to be acquired by Hertz, after rejecting a lower bid from the company in 2010 and a rival bid from Avis Budget Group. Hertz agreed to pay $87.50 a share for DTG, in a two-step process that includes a tender offer for all of DTG's outstanding shares followed by a cash merger in which Hertz will buy any remaining shares of DTG common stock. As part of the deal, Hertz will sell its Advantage Rent a Car discount business Adreca Holdings Corp., a subsidiary of Macquarie Capital. The deal was cleared by the US FTC in November 2012.

Review the annual report for potential disclosures relating to contingent liabilities and contingent assets. What do these disclosures suggest about the company's potential risk? Support your response with facts from the company's financial statements and annual report.

When we talk about the contingent liabilities and contingent assets, it can be seen that there is a norm in industries that depreciation expense for purchased vehicles is about 30 percent of annual revenue for the large car rental chains. Vehicle purchases are often financed with debt. Revenue can be highly seasonal, especially for operations that cater to vacation/leisure travelers. With continuous vehicle turnover, fleet size for larger rental companies can change substantially throughout the ...