Uber Technologies, Inc transportation company

1.   Introduction

Uber Technologies, Inc. is a transportation and technology company that is a leader in technology-driven transportation, food delivery, and freight services in the world market. Launched in 2009. Its activities take place in more than 70 countries, and the company suggests a variety of solutions that include ridesharing, meal and grocery delivery, and on-demand. The purpose of this report is to analysis the discuss the development that organization faced, the dividend and capital management along with financial ratio to measure financial performance(Punt et al., 2021).

2.   Section-A

Development One

Description: Expansion of Uber’s Delivery Services

In the last couple of years, Uber Technologies has considerably scaled its delivery operations, especially via Uber Eats. The growth was also meant to take advantage of the increasing customer needs for meal and grocery delivery services, particularly prompted by the COVID-19 pandemic. Uber aimed to expand its customer base by offering diverse services, thereby increasing exposure to its platform (Athey et al., 2024).

Financial Impact:

The Delivery segment experienced a 17 percent expansion in revenues throughout the year 2023 as compared to the 2022-2023 year, and the gross bookings emerged to be around 12.5 billion dollars. The growth of Uber Technologies Eats has not only achieved revenue growth but has widened Uber’s consumer base, leading to an increase in the average customer spend. This expansion led to a 5 percent rise in the company’s share price, as investors expressed confidence in the company’s diversification process.

Strategy to Mitigate/Exploit Impacts:

Uber Technologies introduced several strategies to maximize the benefits of its delivery segment. Among them was the fact that it focused on reducing the cost of participating in the delivery business by critiquing better algorithmic route optimization. Uber was also equipped with membership benefits, such as Uber One, which encouraged increased engagement and consumer loyalty to consume and use other services on its platform. Moreover, Uber employed targeted marketing strategies to acquire new customers and merchant partners, thereby increasing the Number of orders on the platform. (Oppegaard, 2020)

Development Two

Description: Regulatory Challenges in the Mobility Sector

The company has faced prosecution and work regulations, including the passing of Assembly Bill 5 (AB5), which was an attempt to reclassify gig workers to employees. Such regulatory forces have led Uber to spend more on compliance and legal defence, not to mention the increase in the cost of doing business in those areas. (Eyert et al., 2020)

Financial Impact:

During the 2023 financial year, Uber Technologies experienced significant growth in operational costs, primarily due to increased compliance with legal and regulatory requirements, amounting to an additional $500 million. Consequently, this had a relatively significant impact on Uber’s profitability, with the net Profit reducing by 3 percent compared to the previous year. There was also a temporary decline in the company’s share price, which dropped by about 4 percent after stricter labor laws were announced in the major markets where the company operates.

Strategy to Mitigate/Exploit Impacts:

Uber Technologies has also been advocating for laws that will help it sustain its independent contractor model, especially by lobbying to pass Proposition 22 in California, to reduce such adverse effects. This law will enable Uber to continue operating its contractor-based business model in the state, thus restricting the impact of AB5. Also, the firm has been concentrating on technology advancements and cost reductions in other parts of the business to counter the increase in regulatory expenses. (Seidl, 2020)

3.   Section-B

Dividend Theory Applicable to Uber Technologies, Inc.

According to the Dividend Irrelevance Theory, investors are indifferent to whether a company pays a dividend or not, or the amount it pays, as long as the company’s overall financial performance and its potential for future growth are strong. This Theory suggests that the collective effect of Uber retaining its earnings to reinvest rather than paying out a majority through dividends does not have a significant impact on shareholder value in the long run. (Mao et al., 2025). Uber Technologies, Inc. (Uber) does not provide dividends to its stockholders at the moment, and this approach fits into the Dividend Irrelevance Theory, especially the view of this Theory presented by Modigliani and Miller.

Dividend History:

• 2019-2023: Uber has not declared any dividends during this period.

Dividend Policy

Uber’s dividend policy is Irregular and Progressive, meaning the company does not pay regular dividends and focuses on growth. The reason for this policy can be attributed to Uber’s focus on expanding its market share, particularly in highly competitive industries like ridesharing and delivery. Uber has made substantial investments in research and development, which typically requires retaining earnings rather than distributing them to shareholders. (Cornelissen & Cholakova, 2019)

Reasons for Not Paying Dividends

Uber Technologies decision not to pay dividends aligns with the Dividend Irrelevance Theory. Uber prioritizes growth over dividend payments, which is typical for companies in the technology and startup sectors. By not paying dividends, Uber can reinvest its profits into scaling its business, launching new services, and maintaining a competitive advantage in the markets it serves. This is particularly important as Uber continues to develop its delivery (Uber Eats) and freight (Uber Freight) services alongside its core mobility business (Ngoc & Dung, 2024)

Influences on Uber’s Dividend Decision and Capacity to Pay Dividends

One of the factors influencing Uber’s dividend policy is its growth strategy, which focuses on market expansion and is capital-intensive. Uber has invested heavily in developing some technologies, acquiring companies (Postmates), and expanding in the market in the past three years. Also, Uber has been expanding its freight operation, which also requires significant resources in logistics, technology infrastructure, and fleet management. (Noghondari et al., 2021)

Company’s Source of Finance: Equity and Non-Current Liabilities

Uber Technologies, Inc. has been financing its operations mainly by using a mix of equity and non-current liabilities. Since Uber is a technology-based business, it has been using equity financing extensively because it aims at growth and expansion. This involves distributing common shares to the outside world through its IPO and reinvesting earnings within the business. (Kanapickiene et al., 2021) This firm has generated substantial capital through equity financing, particularly its initial public offering (IPO) and subsequent stock offerings. As an example, in 2021, Uber added $2.5 billion to its total equity, primarily through the issuance of new stocks, driven by its continued growth in overseas markets and diversification of services, including Uber Eats and Uber Freight. Uber has raised another kind of non-current liability in the form of bonds and long-term debt to fund its expansion plans as well. T

Gearing Ratio Calculation and Examination

Gearing ratio is a significant measure of a company’s capital structure, indicating the amount of debt used to finance the business relative to equity. It can be accounted for by the formula.

Gearing Ratio ( Long Term Liabilities / Capital Employed ) X 100

1. 2022:
   • Non-current Liabilities =  14,752 Million
   • Equity =   $ 8,074 Million
   • Gearing Ratio = (14752 /8074 ) × 100 = 182.70%
2. 2023:
   • Non-current Liabilities = $ 16,563 Million
   • Equity = $ 12,028 Million
   • Gearing Ratio = ( 16563/12028 ) × 100 = 137.70%

Capital Structure of Uber and the Gearing Ratio

The relative gearing level of approximately 24 percent strikes a balance between debt and equity, with a somewhat higher proportion of equity financing. This indicates that the company is attempting to minimize its financial risk exposure by maintaining a conservative capital structure and allocating a smaller portion to debt. The capital structure of Uber follows the Traditional View (Net Income Approach) of capital structure theory in consideration of the gearing ratio. Under this Theory, the rising cost of debt is directly linked to the company’s increasing debt, which in turn contributes to the increasing overall cost of capital and financial risk. (Garud et al., 2020)

Cash Management and Financial Risks Concerned with Capital Structure

Due to its emphasis on equity financing, Uber Technologies avoids over-borrowing to an extent where it risks meeting and fulfilling debt payments, especially during market volatility. Nevertheless, despite a low gearing ratio, the Number of financial risks associated with cash management remains. Since Uber uses equity financing, it may be under pressure to preserve or generate its market value to meet investor expectations, not to mention that it does not distribute any dividends.. (Kim & Suh, 2021)

Influences on Uber’s Capital Structure

With its company mission focused on fast growth, especially in international markets and new business areas like Uber Technologies Freight, Uber has chosen to increase its capital by offering equity instead of heavy debt. The other influencing factor is the competitive market of Uber. Since it will be trying to match other ridesharing and delivery services, Uber may decide not to pay dividends but retain earnings to guarantee that it has sufficient financial versatility to pursue new technologies, alliances, and markets.. (Ahmed et al., 2024)

4.   Section-C

1-   Profitability Ratios

1.1Gross Profit

Gross Profit is the amount by which revenue exceeds the cost of revenue, providing an indication of a company’s ability to generate Profit from its basic operations. The gross profit formula is computed by deducting the cost of revenue to the revenue. (Evmenchik et al., 2021)

Formula for Gross Profit = (Gross Profit / Total Sales ) X 100

The amount of Uber’s gross Profit was $14,824 million in 2023, i.e., 39.76%, the year before it was $ 12,218 million (38.33%). This gross profit growth indicates that Uber’s revenue is increasing mainly due to the development of Uber Eats and Uber Freight, driven by service demand, and more effective management of the cost of revenue, which enables Uber to retain a larger share of the growth in its revenues.

1.2Net Profit Margin

Net profit margin reveals the amount of Profit the company will keep per every dollar earned in revenue after deductions are made on all the expenses. (Widiasmara et al., 2022)

Formula for Net Profit = (Gross Profit / Total Sales ) X 100

The net profit margin of Uber increased to 5.06% in 2023 compared to the negative 28.7% in 2022. This radical development is representative of an excellent turnaround in the profitability of Uber.

2-   Efficiency Ratios

2.1 Receivable Days

The level of days required by the company in receivable days is a measurement of the time used by the company in getting repayments to its customers. (Fitriyani & Hendrawan, 2025)

Formula Receivable Days = (Total Sales / Account Receivables) X 365 days

Uber is experiencing a delay in payments, with its receivable days increasing from 31.82 days in 2022 to 33.3 days in 2023. This increase in the Number of receivable days may be attributed to Uber’s broadening scope of operations, particularly in new global markets, where payment cycles can take longer to close.

2.2 Payable Days

Payable days evaluate the Number of days a company takes to settle its suppliers. The estimate is calculated by dividing accounts payable by the cost of revenue and then multiplying by 365 days. (Widiasmara et al., 2022).

Formula Receivable Days = (Total Cost of Revenue / Account Payables) X 365 days

The payable days at Uber have also reduced slightly, from 13.52 days in 2022 to 12.8 days in 2023. This decrease indicates that Uber has become more efficient in managing its responsibilities to suppliers and contractors, paying them off earlier in 2023.

3-   Liquidity Ratios

3.1 Current Ratio

The current ratio is an indicator that determines a company’s ability to pay its short-term debts using its short-term assets. (Shabrina & Hadian, 2021)

Formula = Current Ratios = Current Assets / Current Liabilities

 It is computed as a result of dividing the total current assets by the total liabilities. The current ratio of Uber rose in 2023 to 1.19 as compared to 1.04 in 2022, pointing to better liquidity. The increase is attributed to the rise in Uber’s current assets, primarily cash and accounts receivable, which have grown in line with the company’s revenue in 2023.

4-   Investment Ratios

4.1 Earnings Per Share

Earnings per share refer to Net Income divided by the Number of shares. It is worth noting that the organization’s earnings are based on the Number of shares issued. (Babiak & Krzemińska, 2021)

Earnings Per share (EPS) = Net Income / Outstanding Shares

During the year, the EPS stands at -4.635 per share, whereas during the year 2023, it has appreciated by $0.92 per share. The reasons for the change included lower losses from operations, reduced expenditures, and fewer negative expenditures. Whereas during the year 2023, both have been converted into Profit.

4.2 Return on Capital Employed (ROCE)

Return on Capital Employed (ROCE) measures how a particular company can yield a profit given the amount of money invested in that business. It is determined by dividing the net operations by the difference between the total assets and the current liabilities. (Babiak & Krzemińska, 2021).

ROCA = Total Income /(Total Assets – Total Current Liabilities)

The ROCE of Uber Technologies has plummeted to 3.8 percent in 2023, from 7.88 percent in 2020, indicating a significant decline in the company’s efficiency in generating profits from its capital. One of the reasons behind this decrease may be the decreased operating Profit compared to total assets in 2023, implying that Uber has not necessarily used its capital as well as it could have in the previous year.

5.   Summary of Ratio Analysis

Although Uber does not pay dividends, it takes a strategic approach toward reinvestment in growth, along with capital structure and financing strategy that demonstrates its orientation towards sustainability in the long-term perspective. The analysis of its essential key indicators and ratios, such as the gearing ratio and ROCE, reveals both strengths and weaknesses, particularly in terms of debt utilization and resource management effectiveness.

6.   Conclusion

In recent years, Uber Technologies, Inc. has faced significant growth challenges. As it continues to expand its delivery services, the company has experienced growth in revenues. However, regulatory complications in the mobility industry have increased operational costs and impacted profitability.

7.   References

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