Excursion Cycles is the company, which operates on the bicycle market, providing the bicycles for adventures, leisure, and races. What follows is the financial analysis of the company’s activity.
The analyzed period of Excursion Cycles activity is 2015-2025. During the period, the shareholder value of the company has increased from $9.33 to $33.38, primarily, due to the significant growth of the stock price from less than $10 in 2015 to $31.10 in 2025. Such situation is favorable for Excursion Cycles, as the shareholder value is a very important indicator, which shows the value owners can get owing to the capability of the company’s management to increase the revenues, the dividends and the stock price. As Excursion Cycles has been profitable from 2016 onward and the stock price has been increasing steadily, the cumulative change in the shareholder value is 148% that is the great indicator of the company’s healthy financial position. Furthermore, Excursion Cycles is ranked the second in the industry, as the company was able to close the gap with the market leader rather quickly. Nevertheless, it is very significant to analyze the other financial strengths and weaknesses of Excursion Cycles.
The financial strengths of the company can be summarized as following:
- The positive cash flow. Excursion Cycles net cash flow has been positive for the most of the period with the average net cash change of $10 million in the last 5 years. Such situation was ensured by the successful reduction of the operating costs. Therefore, the company is able to cover its first month’s cash flows. Moreover, the positive cash flow indicates the profitability of Excursion Cycles.
- The great liquidity indicators. The working capital is one of the most important indicators of the company’s liquidity. It is generally calculated as the difference between the current assets and the current liabilities. Excursion Cycles has always maintained the positive net working capital with the highest one in 2025 (more than $73 million), which indicates the company’s ability to expand its activities. Furthermore, the current liquidity ratio and the quick liquidity ratio are about 15 (theoretically, the value of these indicators above 0.6 is considered sufficient). Such indicators show, that Excursion Cycles haven’t got any liquidity problems.
- Impressive solvency and creditworthiness. The company has low leverage indicators. For example, total debt to equity ratio and long term debt to equity ratio tend to zero (the value of these indicators below 0.3 is considered to be very good). This is the evidence of Excursion Cycles financial stability, financial independence, so the risk to suffer from the creditors’ actions (for example, from the increase of interest rates) is minimal.
- Good profitability indicators. Excursion Cycles was able to improve its gross profit significantly from $4.8 million in 2015 to $49 million in 2025. The company’s return on assets indicator is about 14.5% in 2025. This indicator is calculated as the ratio of the net incomes to the total assets and shows the company’s ability to generate profits and the quality of asset management. Return on assets depends on the industry and should be compared with the competitors. Excursion Cycles is ranked third among the competitors after American Cycles and Cycology. The result is not bad, but could be substantially improved.
Return on equity is the second important indicator of the profitability and for Excursion Cycles its value is also about 15%. Its level is even higher than considered sufficient (10-12%), and it indicates the good profitability for the company’s owners. Earnings per share are another significant indicator for the owners and potential investors. Excursion Cycles has improved the indicator significantly from the negative value to more than $6.00 per share and now is the first among competitors. Moreover, price-earnings ratio is about 5 and shows the future growth potential. Generally, Excursion Cycles profitability indicators give a good signs of the company’s financial health and attractiveness for investors.
However, there are also some financial threats for Excursion Cycles. First of all, the permanent positive cash flow, high volumes of net working capital and very high liquidity ratios could be the indication of inefficient asset management. Free funds should be invested into the new research and development projects, the expansion of the activity and the company’s development.
Secondly, high liquidity ratios and low leverage indicators show that Excursion Cycles should consider the greater use of the loan capital, which is much cheaper, than equity capital.
And finally, low inventory and asset turnover rates are the significant problem for the company. For example, inventory turnover rate tends to zero while total asset turnover has decreased from about 3 in 2015 to just above 1 in 2025. These are the signs of inventory inefficiency and (or) inventory excess. In order to improve the asset turnover, it is necessary to sell or write off some part of the inefficient equipment, to decrease the volume of non-manufacturing assets, raw materials, and unfinished stock. Such actions will allow to improve the assets and inventory effectiveness and to generate additional sales revenue.
In conclusion, it is important to mention, that Excursion Cycles has a stable and healthy financial situation with a high level of liquidity and profitability. Nevertheless, there are still the opportunities for the further growth and development by means of more active use of loan funds, investment of excessive cash flow into new projects and expansion of activity, improvement of the asset turnover in order to increase sales and market share.