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Trx Case Study

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Case Questions for TRX Inc., IPO

! What attributes make a company a good candidate for an IPO?
Good business history:
Investors will expect the long-term sustainability through historical financial data.
Therefore, the good business history can reach investors’ expectation.
Profitability:
A profitable company can indicate investors that the company can get a positive ROI.
The positive ROI can not only suggest potential growth but also lead to dividends for investors. Visibility and recognition:
Visibility enables investors’ better understanding of the business model and increases the recognition.
Growth potential:
In the growing industry, the company has the higher potential to grow in the future.
Solid and experienced management:
The good management can act the best interests of shareholders, maximizing the profitability. Furthermore, the decent management can ensure the growth and performance of the company as well as create positive public image.
! How does TRX compare on these dimensions?
Good business history:
A six-year data shows that the number of travel transactions grew from 9.3 million to
73.5 million in 6 years. In terms of revenues, TRX generated 113.4 million in revenue in 2004, compared with the number of revenue, 63.2 million in 2000. Therefore, the business history indicated the company was growing.
Profitability:
According to the income statement in Exhibit 2, TRX experienced net loss from 2000 to 2005, which may be unfavorable to TRX.
Visibility and recognition:
TRX has low visibility and recognition because of the behind the scenes service.
Educating investors can help increase visibility and recognition.
Growth potential:
In 2004, traveling is one of the largest global industries, totaling $400 billion.
Furthermore, because of growth in online access and low-cast carriers, the back office business model is expected to

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