Financial health and the cost of capital of travel agencies before and after the crisis

Abstract

This Article deals with the evaluation of the economic crisis in the area of travel agencies. The evaluation was based on the Altman Z-score of financial health and the weighted average cost of capital (WACC). Data presented in 2007-2010 financial reports compiled by selected companies were also employed. Using the signed-rank test the hypothesis the impact of the financial crisis on the financial health of selected companies was examined. The same test was applied to the weighted average cost of capital. Furthermore, dependencies between financial health and the weighted average cost of capital during individual years in concern were investigated. This dependency was tested by means of Spearman coefficient, determination index a correlation coefficient. According to the tests of statistical hypotheses the companies were not affected by a lower Altman Z-score during the crisis; i.e. Their performance was not worse than before the crisis. The impact of the crisis on the weighted average cost of capital was not proven either. Dependency between both indicators (the Altman Z-score and the weighted average cost of capital) was not established. The aim of this Article was to evaluate the impact of the financial crisis and to find possible dependency between stability (represented by the Altman Z-score) and the weighted average cost of capital. It was ascertained that the financial crisis did not have any significant influence on the financial performance of the selected companies. Dependency between the two indicators discussed above was not proven either.