Due to the planned expansion of the company’s activity in the market, the essential task is to find optimal methods to address the emerging needs resulting from the growing turnover. In this case, the purchase of other businesses seems to be beneficial for further development, and the suggestion is to consider an opportunity to buy Alliance Data Systems Corporation. The selection of this enterprise is conditional upon their latest indicators and efficient policies.
The financial statement analysis of the company revealed its advantageous position in the market, which is especially critical at the time of the COVID-19 economic recession. Thus, they managed to reorientate their efforts in order to remain profitable, as can be seen from the net income growth of +9.62% in 2020 (“Alliance Data Systems Corp,” n.d.). According to the latest change in their policies, Alliance Data Systems Corporation started to focus on Card Services, thereby increasing their indicators (“Alliance Data provides card services performance update for November 2020,” 2020).
They introduced specific modifications in payment deferrals and late fee waivers under the forbearance programs for this purpose (“Alliance Data provides card services performance update for November 2020,” 2020). In this way, the company confirmed its willingness and capability to adjust to emerging circumstances.
The analysts also claim the recent improvements of a row of indicators in the income statement. Thus, despite the previous decrease in sales growth after the beginning of the pandemic, their pace is increasing now as this number changed from -26.59% to -1.51% (“Alliance Data Systems Corp,” n.d.). Moreover, their gross income seems to be stable while remaining at the level above $2,000 million over the past five years, which allows concluding on the capability of the company to stay afloat (“Alliance Data Systems Corp,” n.d.).
This factor is added to the current market conditions, which imply the rapid development of data-driven marketing after the reduction in demand because of the pandemic despite the existing uncertainty (“Alliance Data provides card services performance update for November 2020,” 2020). In this way, the situation in their business activity remains stable, and this fact adds to the benefits of its possible purchase.
As can be seen from the balance sheet, there is growth in investment and other essential assets. The overall cash flow significantly increased since 2015, and cash and short-term investments accounted for $4,520 million in contrast to the past indicator of $1,625 million (“Alliance Data Systems Corp,” n.d.). What is more important, it remains stable, which contributes to the precision of further predictions in this regard. Over this period, the total accounts receivable changed from $13,764 million to $18,743 million, and total current assets increased from $16,250 million to $24,113 million (“Alliance Data Systems Corp,” n.d.). Therefore, it can be concluded that the financial statement and other documents signify the optimistic forecasts for the business in the future.
In conclusion, the purchase of Alliance Data Systems Corporation seems to be a beneficial solution from the perspective of the expansion of the company’s activity and the subsequent increase in profits. It is clear that the current economic crisis presents a threat to the business. However, the indicators presented above reflect the positive outlook on the future of the field and, therefore, the corresponding advantages of such a decision.
References
Alliance Data provides card services performance update for November 2020. (2020). Web.
Alliance Data Systems Corp. (n.d.). The Wall Street Journal | Markets. Web.