Current Financial Characteristics of CCI

The motor carrier industry is highly regulated, resulting with high level of financial stability. Through government regulations, more specifically from the U.S Interstate Commerce Commission (ICC), Continental Carriers and others have received steady financial resource allocations and maintained steadily increasing profits with minimal fluctuations over the years. In addition, with the government’s tight entry control, the industry is able to create a high market entry barrier to prevent new entrants from gaining market shares. On top of that, rate regulations have helped prevent destructive competitions within the industry. Traditionally, Continental Carriers has maintained a consistent policy of avoiding long-term debts or any type of fixed debts, and it has financed itself through retained earnings along with proceeds of its previous stock offering and short-term bank loans, which do not occur often. More importantly, since most of the common stock is held by the management itself, CCI is able to maintain more control over financial decisions. These as a whole have contributed to its current economic state of steady increase in income and dividends per share (from 1$ to 1.5$ per share). Nevertheless, one of the financial problems that CCI currently encounters is the subpar performance of company’s common stock. Although the operating revenue and income per share have both been steadily increasing, the average market price of common stock nonetheless experienced a decrease in1987 (from 24.94 to 21.75), with another probable drop in year 1988 (to 18.19). In terms of total assets, CCI’s cash receivables and inventory are approximately 50% of the company’s net carrier operating property. This not only shows that motor carrier industry relies heavily on equipments and operations, but it also suggests the possibility that