The Financial Transactions of the Aggreko Company - Case Study Example

Introduction The financial advisor in a firm plays a great role in reporting to the investors on the financial progress of an organization. The essay gives the financial report that is to be submitted to the potential investors in the company. The company of interest is the Aggreko Company that deals with provision solution to industries on cooling, heating, and power generation. The Aggreko Company produces power by operating and installing mobile and modular power plants, rents and offers solutions and electrical equipment to the parties interested in their products. Besides, the firm provides power generators fueled by gas or diesel, distribution boards as well as cables and other hiring products. The report covers the financial transactions of the company for the last five years, which is from 2012-2016. It includes the economic dividends, profitability, earnings, stability, as well as financial liquidity. The asset value and the corporate governance have been reviewed as well proving the Aggreko Company to be an investment opportunity. Section A: Profit Profit is the extra money that one gets in a business activity after all the expenditures are deducted from the total money received. Therefore, fluctuation of profitability in Aggreko Company has been recorded over the last five years (2012-2016). From the total gross profit recorded by the company, there has been an increase in profit made by the firm in several years. Therefore it is easy to predict the profitability trend of the Aggreko Company from the current record through the identification of the depreciating series. Besides, the patterns of the profit are directly proportional to the total revenue recorded over the years. From the table below, all the profit records have been given from the year 2012-2016. Table 1.1 2016 2015 2014 2013 2012 Gross profit 821000 884000 903000 930000 973000 Operating profit 199000 248000 300000 357000 390000 Pretax profit 171000 225000 288000 332000 366000 Retained profit 55000 92000 146000 179000 216000 From Table 1.1, the profitability of the company in 2012 was very high. It has been depreciating all through up to date. This predicts future depreciation of the enterprise's profitability if several measures are not taken to the company as a way of improving on the amount of gross profit obtained by the firm. The act will highly increase the dividends allocation to the stakeholders as well as the company’s shareholders (Maphetres, 2013, pp. 48). Earnings The Aggreko Company has been undergoing a depreciation in the earnings obtained by the firm for the last five year. The earnings have also been termed as the company's turnover. In the Aggreko Company, we have had the records of earning of the company having a depreciation graph since 2012 (Giovannitti, 2016). The earnings records show that the firm collected a583, 100 million GBP in the year 2012, a value that after a year dropped to 1573000 million GBP thus postulating a decrease in the earnings. In the years that followed, the earnings still kept depreciating. This brought a risk of the company undergoing a significant loss due to the consistent depreciation of the total amounts collected. The gains from 2014-2016 are 1577000, 1561000 and 1515000 respectively (Andrews, 2016). Dividends The dividends are a form of income to the firm since their payment may be from the immediate net profit or the current earnings that have been retained by the organization. These real benefits are a source of finance which is internally obtained. Therefore, if a firm offers high dividends to their investors, the level of capital and investments will depreciate thus the market value of the bonds and shares reducing at a greater percentage (Yang, 2013, pp. 67). The dividends given by the Aggreko Company has been increasing from 2012-2016 as the records show that the profits given to shareholders and stakeholders are 58100, 65000, 70000, 69000, 6900 million GPB for 2012, 2013, 2014, 2015 as well as 2016 respectively. From 2015, the allocation of dividends has been constant, which is an encouraging record. This postulates the firm to be having more actual earnings or wanting to use less of the saved earnings to use in the dividends allocation. It is a challenge to predict the future trend of the profits in the firm despite the appreciation of dividends having the highest probability. Also, the funds used as stakeholders' fund's records show an appreciation record (Lepree, 2015, pp. 28). Ratio analysis The ratio analysis of profit, earnings, and the dividends since 2012 has been fluctuating with an unpredictable trend. The profit rate has several segments which include the return on the total assets, EBITDA, the margin of the pre-tax profit as well as the performance of the capital. The trends of the return on total asset have been decreasing over the years from 2012 to 2016, and the likely current results are that the records will still depreciate (Doyle, 2015 pp. 2016). On the return of the capital and the pre-tax profit margin has still been depreciating all through. On the contrast to the profit’s ratio trends, the EBITDA value has been increasing over the years. The ratio analysis of earnings have had fluctuating trend too with several years the ratio increasing and on others decreasing. The results to the maintenance of a stable ratio trend on the profitability, dividends, as well as the earnings are being sought for the success of the firm as well as the improvement of the company to be a better investing business (Darshansingh, 2016. Pp. 95). Financial stability. From the records of earnings on the Aggreko Company, there has been an instability on the finance segment of the organization. This has been brought by the changes in the expenditure values, income values which lead to a modification of the tax value. As years go by, we have had amendments in the taxation rates to organizations thus bringing a change in the financial stability too. The financial stability in the year 2012 was high since the records were firm; the expenditures were much less as compared to the income or the revenue collected by the organization. Besides, the rates of shares selling were also high (Hairston, 2012, pp 35). This resulted in the stability of the firm thus leading to the years’ financial records having high values. In the year that followed, we had an increase in the dividends allocation as well as the tax rates which increased the firm's financial stability of the enterprise. The financial stability has been depreciating further, and the speculations for the current financial stability of the company is that the balance will keep on depreciating thus there is a need for the management to be improved as a way of getting the solution to the problem. The effect of the stability if persists with an increase in the series may result in the breakdown of the organization (Isola, 2016, pp. 86). Financial liquidity The financial liquidity deals with how a firm can buy as well as sell assets and ensuring that the drastic changes are not evident in the goods price. The financial records on the liquidity of the firm are that there has been a decrease in the financial liquidity of the company. The cash is obtained after the company sell sits shares to investors as well as buying them from other investors who are selling shares in the market. The buying price of the shares required to be minimal for the firm aiming for the profitability of the enterprise (Kelly, 2014). In the Aggreko business, the financial liquidity has been undergoing a considerable fluctuation due to the uncertain market. Therefore, this predicts future depreciation of the company’ financial liquidity if several measures are not taken to the company as a way of improving on the amount of gross profit obtained by the firm. The act will highly increase the dividends allocation to the stakeholders as well as the company's shareholders (Prarene, 2017, pp. 95). The ratio analysis of the financial stability and financial liquidity. The rate of financial liquidity of Aggreko’s since 2012 to 2016 has been increasing at a certain percentage. In 2012, the quick ratio was at 0.18 followed by 1.20 in 2013, a value that remained constant till the next year. In 2014, a great increase in the ration was recorded which was 1.54, and in 2016 the ratio was at 1.72. In the current rate, the trend is still similar despite the values being higher than those of the quick ratio. Therefore, this predicts future depreciation of the company’ financial liquidity ratio basing on the quick ratio as well as the current ratio if several measures are not taken to the company as a way of improving on the amount of gross profit obtained by the firm. The act will highly increase the dividends allocation to the stakeholders as well as the company's shareholders. Also, the normal ratio for the market is that the earnings' ratio is expected to move to 18.55. The EBITDA to get to 17.32, profit to 14. 97 as well as the Total assets to go to 0.03 million GBP (Piper, 2012, pp. 87). Corporate governance of the Aggreko Company. The administration of the Aggreko Company has been made a success by some members who hold different posts in the management. The employees play different roles which when summed up result to the well-being of the financial status of the company thus increasing chances of profitability as well as opening grounds for investors to be part of the business management. The governance members are located at various boards which include the executive, non-executive board, the senior management, as well as the operational management with each board having several practitioners (Silverberg, 2012, pp. 46). The director's board of the Aggreko Company includes the firm's director, the chairperson, chief financial officer as well as the board’s director. In the senior management’s board, the departments thereby include the managements Human Resource Director, the legal director-power solution, director in charge of technology and manufacturing, and the program director. Besides, in the same department, we have the legal manager of the group and his secretary, the president’s residential solution along sides the regional director of the Aggreko Company (North Asia) firm (Gale, 2015, pp. 10). Carole Cran has been the acting chief financial officer of the executive board since 2014. Due to her experience in the field where she served as the director of finance as well as the financial controller of the firm since 2004 to 2014 when she joined the Aggreko’s Company, her governance in the organization us of significant impact on the current financial status of the enterprise. This is due to her deep understanding of the economic progress of the firm, the challenges faced by the executives' board in trying to improve the financial development of the company (Leach, 2014, pp. 56). In 2015, Chris Weston took over as the Director in the Chief Executive Officer's docket up to date. Most of the service he gave was linked to the experience attained at the Centrica Plc where he worked as the Managing Director. Between 2012 and 2014, Ken Hanna acted as the chair of the Executive Board's department with his governance efforts towards the profitability of the firm resulting in the high records of profitability with minimal dividends being allocated for the stakeholders and the shareholders. Along sides working at the Aggreko's, he has also worked as the chief financial officer of the Cadbury plc as well as holding some senior level positions in the Dalgety plc, Compass Partner, the United Distillers, and the Avis Europe plc as well (Lubale, 2016, pp. 47). Identification of asset value per share The current stocks in the market are more than 300 billion. In the market of the Aggreko Company, the value of the ordinary voting share is 12 million while the deferred non- voting value is going for a cost of 29 million. There is no value share of the partial non-voting shares while the ordinary voting shares are going for a value of 0.5 GBP. These stock value concerning the number of shares available in the market has a great chance of increasing the number of investments to be allocated to the investors. Therefore after the identification of the asset value, the value turned to be higher than expected with records showing a great increase in the asset value (Odeto, 2013, pp. 05). This may result in future predictions appreciation of the company’s asset value if several measures are not taken on the company as a way of improving on the amount of gross profit obtained by the firm. The act will highly increase the dividends allocation to the stakeholders as well as the company's shareholders. Besides, this may fuel to the drastic increase in the number of investors thus increasing the investment assets in the market. Following should be a vast improvement of the financial status of the form along sides the presence of fruitful governance board Goss, 2014, pp13. On the evaluation of the Aggreko’s ability to represent an investment opportunity, the records prove that the firm is an excellent investment opportunity organization. The efficiency has been brought about by the technical services which are of much concern to bigger groups and individuals as well. These goods and services that have led to the creation of more opportunities for investment are the power installation, development and the renting of the electric solution and equipment. The shares sell and buying rates have been of great favor to the investors thus motivating the enrollment of more individuals to the investment business (Alexander, 2014, pp. 13). References Alexander, A., Touboulic, A. and Walker, H., 2014. Making sense of SSCM: How companies express sustainable supply chain management issues in their public reports. 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