2. Does the company have enough cash and liquidity to survive an economic slowdown? Enhance the answer with a clear conclusion
Ans. The financials of WeWork doesn't seem to be much profitable, we can assume that is because of the pandemic. In the year 2022, the revenue of the first quarter was $765 million which is an increase of 6-7% in a quarter.
Net loss was $504 million. Because of the increase in interest rates, it is hard for WeWork to get more loans to finish off its debt and the investors are not much interested as they can interpret the future outcomes by looking at the current balances of the company. The revenue in the third quarter was $817 million which is an increase of 24% year-over-year. The company has $500 million in undrawn debt commitments from SoftBank and has said it expects to end 2022 with $300 million in cash, less than one-third of what it had at the end of 2021. Its debt contracts allow it to borrow another $500 million. As the cash and liquidity of WeWork cannot be considered a good source to stay profitable because of the debts but WeWork has proposed a new business survival model and claims to be more profitable in 2023 than in previous years.
Given that at the end of 2022, the company has $300 mullion in cash in spite of a loss of $504 million. The company has also an increased revenue of $817 million. The company also has an extended credit line of another $500 million.
The company's cash to obligation ratio =
=0.6
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
