Financial Analysis of Barratt Development - Essay Example

The company has its operation in all parts of Britain, where it has established 27 divisions by delivering around 14,838 new homes per year. Hence, it focuses on delivering value to the shareholders (Barratt Developments Plc., 2015c). The deals that have completed during 2012 and 2013 are depicted in the figure above. The investment in equity shares decreased in 2013 as compared to 2012. This reflects that the company has failed to invest more in the equity of other companies. The reason behind this failure is an accumulation of cash reserves.

The Help buys scheme through which the company sells homes was 4% during 2013 (Barratt Developments Plc, 2015a). This is a new scheme, which helped first-time buyers to get homes in London at reasonable rates. The Part-exchange has also increased in 2013 as compared to 2012, which indicates the fact that the company is earning profit through this scheme. The number of investors has increased over the period as the company is preferred by the public, who have the interest to invest in the shares (Barratt Developments Plc, 2015a).

The housing market in the UK: There has been steady growth in the UK housing market due to the demand for new homes and buildings by customers. With the increase in population, there is an increase in demand for new homes (White, 2014). Impact on Barratt Development: The growth in the housing market has helped Barratt Development to earn more profit as the sale of houses increased to a great extent. The rise in sales of the company reflected strong market conditions, which in turn contributed to the development of the economy.

Customers have always preferred the company for purchasing houses as the designs of the interiors prepared by Barratt are unique. Planning regulation and Tax: The supply of private housing is ascertained with the help of house prices along with underlying determinants. In this regard, price and supply of private housing are positively related; higher prices do encourage the supply of houses. Hence, planning regulations are necessary for the housing market (Economics Online Ltd, 2015).