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Six Flags Entertainment Corporation Operations and Financial Performance Evaluation

Introduction

Amusement parks in the United States represent a place were the youth and families can go to have fun in a safe and controlled environment. The industry leader in amusement parks is Disney whose brand is recognized worldwide. High capital is a barrier of entry into this industry since upwards of $500 million dollars is needed to build a theme park with single rides costing over $40 million each (Referenceforbusiness). To succeed in this industry it takes innovation, technology, and great marketing to attract customers to your facilities. The industrial revolution accelerated the popularity of amusement parks due to the creation of mechanized rides such as the ferris wheel. A company that successfully penetrated the marketplace 50 years ago is Six Flags Entertainment Corporation. The purpose of this paper is to evaluate the operations and financial performance of Six Flags.

Company Background

Six Flags Entertainment Corporation was founded in 1961 by Angus Wynne (Sixflags). The first Six Flags theme park was opened in Texas. The company operates in the amusement park industry under SIC code 7996 (Marigoldtech). Today Six Flags is the world’s largest regional theme park with 18 facilities of which 16 are located in the United States, one in Mexico, and one in Canada. The company is a public firm whose stocks are traded in the New York Stock Exchange (NYSE) under the symbol SIX. The price of Six Flags common stocks as of February 5, 2014 was $33.99 (Yahoo). The market capitalization of Six Flags is $3.23 billion. The Chairman, President and Chief Executive Officer (CEO) of the company is Jim Reid-Anderson. The organization a few years back filed for Chapter 11 bankruptcy protection. “Six Flags and certain of its domestic subsidiaries filed Chapter 11 bankruptcy on June 13, 2009 and emerged from Chapter 11 on April 30, 2010” (Sixflags). The firm’s accounting books are prepared using the U.S. generally accepted accounting principles (GAAP). Six Flags receives over 26 million visitors each year. The company faces a variety of business risks. The general state of the economy is a business risk because entertainment is a luxury item in the personal budgets of people. A second major business risk the firm faces is competition. Bad weather is another risk that affects attendance to the parks. A fourth risk is changes in consumer taste and preferences.

Six Flags Entertainment Corporation Operations and Financial Performance Evaluation

Common Size Financial Statements

The common size financial statements of Six Flags Entertainment Corporation for the last five years are illustrated below. A trend analysis of the year to year changes within the accounts of the income statement and balance sheet is also included.

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