Anyone reading AMC's financial statements for about 25 minutes would come to the conclusion that it will fail.
I am financial statement illiterate but aren't they analysis of what happened rather than an estimation of what will happen?
of course AMC's financials look bad
now. We're in a pandemic, people aren't going to the movies. I'm hoping that they'll open up at some point this year and movies will be back
albeit, AMC was on the decline before the pandemic, but I think they have a chance to bounce back
yes, like all the textbooks say, a stock should be valued based on its future cash flows etc. etc. all that stuff you read on the I-net or investing for dummies is true.
that doesn't mean looking at a balance sheet or income statement or statement of cash flow can't help you forecast into the future.
As I mentioned a few pages ago, AMC has more than $5 billion in debt. It's 2019 EBITDA (back when things were normal) was around $750 million. A basic way to measure financial health is to look at cash flow leverage. There are a lot of different numerators and denominators, but basically the S&P as a whole is around 2.5x. AMC at the end of 2019 was 6.2x. The lower the number, the stronger the company. Their balance sheet equity (liabiliites to equity) also show that they have a lot of debt.
So to put it simply, even if you brushed aside the disaster of covid, AMC was facing and uphill battle. In oder to handle that debt load, they needed to either improve their cash flow or reduce the amount of debt on the balance sheet, by, like, a lot.
