September 6, 2011 (Alan Cho) Comparing some of the data gathered about other companies, Youku.com Inc. (NYSE:YOKU) is performing relatively poorly. Although most of these companies are not true comparables to Youku.com Inc. (NYSE:YOKU), each company is currently, or is planning to running an online video section on their respective websites.
|
Selected Financial Ratios (as of 2nd quarter 2011) [thousands of RMB] |
||||||
|
|
Youku |
SINA |
SOHU |
NTES |
BIDU |
Tencent |
|
Current Ratio |
15.34 |
5.54 |
2.73 |
6.23 |
3.67 |
1.56 |
|
Gross Margin |
26.74% |
57.45% |
73.24% |
64.84% |
54.42% |
65.40% |
|
Net Profit Margin |
-14.20% |
20.99% |
31.00% |
42.62% |
47.81% |
34.86% |
Youku’s relatively large current ratio shows that the company may be holding on to too many assets, rather than using them to invest. This will be further discussed in the next section. Poor gross margin and net profit margin reinforce the fact that the company’s net revenues may not be growing fast enough to value the company as an appealing investment.
As seen by the above chart, Youku.com Inc. (NYSE:YOKU) has accumulated a large amount of current assets. This is a direct result of the large amount of cash the company received from investors when it released its IPO. The company’s cash and cash equivalents account now make up the majority of the company’s current assets.
Having cash on hand is not necessarily a bad thing, however, in Youku’s case, there is simply too much. The company does not need this much cash on hand for its operations. Instead, it must take actions to invest in new content or new technological to benefit its users, which will in turn generate more traffic for the company’s website.
To read more about how Youku.com Inc. (NYSE:YOKU) generates and uses cash, read YOKU - What's Beyond Cash?
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