Financial Wizards: How is YRCW still in business?

[skyactiv]

YRCW is Yellow Roadway Corporation Worldwide. If you look at their metrics and research past history, I cant understand how they've stayed in business.

http://research.tdameritrade.com/grid/pu...amp;symbol=YRCW

 

[Brybo86]

Tax breaks, exemptions, etc

 

[fdcg27]

Cash flow counts wrt staying in business.
Accounting earnings, which tell the real story only count over time.
As long as an entity has enough cash flow to pay its bills and meet its payroll, it can survive.
Non-cash accounting charges, like depreciation, have no cash cost, although depreciation does matter over time, since it is a measure of the economic value of the assets you're using.

 

[itguy08]

Same reason Amazon is still in business even though it has not turned a profit much in its entire lifetime. People think one day it will.

 

[Pop_Rivit]

Carriers, especially LTL carriers are notorious for operating on razor thin operating ratios. It's not unusual to see operating ratios jump well over 100 in the period after an acquisition (Yellow acquired Roadway and USF). When Yellow acquired USF, most of the USF divisions were operating in the upper 80's and low 90's, now USF Holland is consistently at 100 or more.

Things are getting better, but it's not unusual for a large carrier never to recover from an acquisition and Yellow has swallowed up several carriers over the last few years.

The LTL carriers that seem to do well are those that focus on their core competencies and building their existing lanes rather than trying to increase their size by acquiring other carriers-Old Dominion is an example that has done it right and is operating with decent ratios of 90 or below.

Yellow's future depends upon how long the lenders are willing to keep the company afloat-there's a point when they'll cut their losses and close the doors. It's happened with large carriers before; the LTL landscape is littered with shuttered carriers like CF, PIE, etc.

 

[andyd]

What I don't understand about Yellow Freight is why their trucks are ORANGE !

 

[Pop_Rivit]

Originally Posted By: andyd
What I don't understand about Yellow Freight is why their trucks are ORANGE !

Simple. The company's roots are from a company called Yellow Cab Transit (a taxi company). In the 1920's the company hired Dupont to figure out the most visible color for their equipment (for both safety and market visibility) and Dupont determined that a color called swamp holly orange was the most visible color. Yellow Cab Transit adopted that color as their fleet color, and it carried over when they went into the trucking business.

 

[JHZR2]

Originally Posted By: Pop_Rivit
Originally Posted By: andyd
What I don't understand about Yellow Freight is why their trucks are ORANGE !

Simple. The company's roots are from a company called Yellow Cab Transit (a taxi company). In the 1920's the company hired Dupont to figure out the most visible color for their equipment (for both safety and market visibility) and Dupont determined that a color called swamp holly orange was the most visible color. Yellow Cab Transit adopted that color as their fleet color, and it carried over when they went into the trucking business.


Good fact! Perhaps Ill paint my cars that color for safety

 

[threeputtpar]

Originally Posted By: fdcg27
Cash flow counts wrt staying in business.
Accounting earnings, which tell the real story only count over time.
As long as an entity has enough cash flow to pay its bills and meet its payroll, it can survive.
Non-cash accounting charges, like depreciation, have no cash cost, although depreciation does matter over time, since it is a measure of the economic value of the assets you're using.


Agreed. A company can operate in the red into infinity as long as new capital is injected into it to cover operating expenses. If cash supply is unlimited, then operational profit means nothing.

Kind of like if an entity has a money tree or printing press.

 

[fdcg27]

...and, if you sift out the non-cash costs, the company may actually be profitable.
As long as marginal revenue exceeds marginal cost, operations are profitable and it may simply be a matter of renegotiating fixed costs to bring the company to health, with the threat of liquidation used to gain the cooperation of holders of debt, especially those holding unsecured debt.