Forecast Analysis

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Saia LTL Freight is forecast to show a healthy revenue and profit for fiscal year 2021. However, looking at the historical information on Saia’s working capital by year and the forecast over the next five years shows an alarming inconsistency. The forecast chart below shows the five-year predictions with a 95% confidence interval and 4-point seasonality for each reported financial quarter. 

 

 

Working capital measures a company’s liquidity, operational efficiency, and short-term financial health (Fernando, 2021). Saia’s varied working capital may indicate they are in financial distress with their cash flow, or potentially not collecting cash quickly enough from customers. Looking further into Saia’s working capital concerns by running a five-year forecast analysis on the company’s free cash flow, in the visual shown below, reinforces the idea of a cash instability within the company.

 


 

If Saia Freight does not address this cash flow situation, it will make investing in expanding company operations difficult. If Saia is unable to grow and compete with its competitors, the company could potentially face losing their market share in the logistics and trucking industry.

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