Running Head: COMPANY FINANCIAL COMPARISON

Company Financial Comparison

AMC Cinema vs Regan Cinema

Name.

Institutional Affiliation.

Date.
AMC CINEMA VS REGAN CINEMA 2

This essay will major in two major industries that are Regal Cinema and AMC Cinema.

These two companies are from the same industry and major on one thing that is entertainment.

Starting with the Regan Cinema this is a cinema company which is the world's second-largest

cinema located in the British, whose Chief Executive Officer is Moshe J. Greidinger. The

company currently collects an average of 4.37 billion annually. The current stock price runs at a

buy-sell, 48.49p-48.44p, according to the given sources. AMC Entertainment Holdings, Inc., on

the other hand, is the largest cinema exhibition in the U.S and the largest movie exhibition across

the world.

AMC has driven innovation in the exhibition industry through the deployment of

signature recliner seats, enhanced food and beverage solutions; increasing guest engagement by

its loyalty and subscription programs, websites, and mobile apps; providing premium widescreen

experiences and a wide range of content, including the latest releases and independent prize

releases in Hollywood. The company is currently trading at a buy-sell, 5.67p-5.72p, according to

the sources given. As I evaluate these two companies, I will use four major cash flow indicator

ratios, which will support the conclusion of this essay. My major concern will be information

obtained from each company's financial reports, as of 31st December 2019. This information will

be used during my analysis. Investors, creditors, and analysts prefer a higher ratio – more than

1.0, which means that a company can cover its existing short term obligations and retain

incomes. Companies with a high or rising cash flow are generally considered to be financially

good.

Cash flow coverage ratio

AMC CINEMA VS REGAN CINEMA 3

This ratio is an indicator of a company's capability to emolument interest and principal amount at

its due date. This ratio shows how many times its earnings cover a company's financial debts. A

ratio equating to one or more than one suggests that the industry is well financially good and can

fulfill its monetary debts using the cash produced by its operations. If the company does not

strengthen its financial condition, it is less than one, suggests the bankruptcy of the industry

within two years.

Operating Cash Flows

Cash Flow Coverage Ratio=
Total Debt

Regal Cinema:

$ 724.70 M
¿
$ 9,512.80

¿ 0.076181566

AMC Cinema:

$ 358.5 M
¿
$ 99.9 M

¿ 3.588588589

The AMC Cinema was in this particular year performing better than the Regal Cinema as the

ratio was greater than one.

Cash Flow Return on Investment (CFROI)

This ratio is a metric that assists a business in assessing the outlay or product output. The

measure can be considered in the stock market to fix cash flow rates. It can also be referred to as
AMC CINEMA VS REGAN CINEMA 4

the output ratio that can affect managers' decisions about financial obligations other than

depreciation and investment structures. It is the rate of cash flow return over the market value of

the capital used. The estimation of cash flow returns on the investment guides a manager to

target further profits by keeping costs down. It is calculated as follows:

Cash Flow
CFROI =
Market Value of Capital Employed

Where capital employed is calculated as:

Capital employed =Total Assets – Current Liabilities=Equity+ Non−current Liabilities

Regan Cinema:

Capital Employed=12,450.5−1,490.4

¿ 10 , 960.1

$ 724.70 M
¿
$ 10,960.1 M

¿ 0.066121659

AMC Cinema:

Capital Employed=1,214.2+195.9

¿ 1 , 410.1

$ 358.5 M
¿
$ 1,410.1 M

¿ 0.254237288
AMC CINEMA VS REGAN CINEMA 5

Despite both companies having a ratio of less than one, AMC Cinema seemed to be performing

better than the Regan Cinema in this particular aspect of ratio.

Operating Cash flow/Sales Ratio

This ratio compares a company's operating cash to its revenues. The higher the ratio, the better

the company will be. More operating cash flow is always desirable. While no standard guidelines

exist for this ratio, a consistent or growing trend in that ratio shows good debtor management.

Enterprises with this trend are good opportunities for investment.

The formula is:

Operating Cash Flows

Operating cash flow /Sales Ratio= x 100 %
Sales Revenue

Regan Cinema:

$ 180.3 M
¿ ∗100
$ 4,369.70 M

¿ 4.126141383 %

AMC Cinema:

$ 579.0 M
¿ ∗100
$ 5,471.0 M

¿ 10.58307439 %

AMC Cinema has a higher percentage than Regan Cinema. This indicates that the company is

good for investments.

AMC CINEMA VS REGAN CINEMA 6

Price / Cash flow ratio

The ratio is the investor value metric for assessing the desirability of investing in shares in a

company. This ratio only takes into account cash flows and depreciates non-cash items. The ratio

is determined by dividing a company's market value into the cash flow generated by the

company per share.

Stock Price per Share

Price/Cash Flow Ratio=
Operating Cash Flow per Share

For better and realistic assessment, most financial experts advise the use of the P / CF ratio. This

reflects the P / E ratio and leads to an inappropriate decision about investment (Ready Ratios).

On the other hand, the P / Cash Flow Ratio removes the impacts of non-cash products without

deliberate or intentional manipulation and gives realistic and reliable results. This helps investors

evaluate a company's actual status. The standard P/CF ratio between 10 and 1.

Regan Cinema:

18.44
¿
13.10

¿ 1.418461538

AMC Cinema:

5.71
¿
1.44

¿ 3.965277778

AMC seems to have a higher P/CF ratio than Regan Cinema.

AMC CINEMA VS REGAN CINEMA 7

Conclusion

From the above analysis, using the four different cash flow indicators and investment valuation

ratios, AMC Cinema is considered best for investment opportunities. Various investors can come

along and invest in shares of this particular company. The company is expected to satisfy various

stockholders all over the world in regard to the analysis above.

AMC CINEMA VS REGAN CINEMA 8

References.

Amc Entertainment Holdings, Inc. (AMC) SEC Filing 10-K Annual report for the fiscal year

ending Tuesday, December 31, 2019: Retrieved From: https://last10k.com/sec-filings/amc

CINEWORLD GROUP PLC (CINE) ORDINARY 1P: Rtrieved From:

https://www.hl.co.uk/shares/shares-search-results/c/cineworld-group-plc-ordinary-1p/financial-

statements-and-reports

Ready Ratios, Cash Flow Indicator Ratios: Retrieved From:

https://www.readyratios.com/reference/cashflow/