Analysis of revenues and profits is of extreme importance for stakeholders, as it helps to understand the financial health of the company and trends in the company’s ability to generate value for shareholders. Table 1 below demonstrates horizontal analysis of AMC Entertainment Holdings’ revenues and profits.
Table 1. Horizontal analysis of AMC Entertainment Holdings’ revenues and profits
AMC’s performance in terms of revenues in 2021 improved significantly in comparison with 2020. In particular, the revenues grew from $1,242.4 million in 2020 to $2,527.9, which signified a 103.47% growth (AMC Entertainment Holdings, 2022). However, the revenues did not reach the pre-pandemic levels of $5,471 million in 2019 (AMC Entertainment Holdings, 2022). The company states that the major decline in revenues in 2020 was due to a significant drop in box office admissions due to COVID-related government regulations around the globe (AMC Entertainment Holdings, 2022). Even though the admissions increased in 2021, the theaters could run with only limited capacity, which did not allow to rebound to revenue rates of 2019 (AMC Entertainment Holdings, 2022). Thus, in light of the provided in formation, I believe that the company’s reporting of revenues was fair.
AMC demonstrated reported a loss of $1,269.8 million in 2021, which was demonstrated a $3,320 growth in net profit in comparison with 2020 (AMC Entertainment Holdings, 2022). However, the levels of 2019 were also not reached due to insufficient growth of revenues associated with the consequences of the pandemic (AMC Entertainment Holdings, 2022). I believe, however, that the results of net profit were overly optimistic. The growth in profits was disproportionate with the growth of revenues, which implies that the company had to reduce its costs significantly. However, no indication of the sources of how the costs were reduced is present in the annual report. At the same time, AMC may have used the pandemic as the ‘big bath’ and demonstrated overly pessimistic profits in 2020.
Reference
AMC Entertainment Holdings. (2022). Annual report 2021. Web.