Suppose You are an investment analyst working in the corporate business developm
ID: 2401695 • Letter: S
Question
Suppose You are an investment analyst working in the corporate business development department of a private equity company. You have been tasked with identifying acquisition opportunities in the US market. You are required to pick a company listed in the New York Stock exchange and analyze its income statement for the past 2 years (use the techniques mentioned in chapter 14, I have attached some slides to help you focus at the end). After which write a report to give your opinion on whither to invest in it or not. Paper Structure 1. Cover page stating clearly the company name, group member nameslisted in alphabetical order, course title and code, academic semester, name of instructor and date. 2. Table of contents 3. Introduction 4. Horizontal analysis of the company's income statement. 5 statement (minimum 3 ratios) 7. Your recommendation. 8. References (use APA style Format The paper should be written in Times New Roman, size 11, double spaced. The references, and the appendices. Use graphs and tables to illustrate and enhance your Vertical analysis of the company's income statement. 6. Profitability analysis of the income citations). 9. Appendices (Financial statements and any other relevant materials) Paper number of pages should be between 5-7pages excluding the cover page, table of content, Horizontal AnalysisExplanation / Answer
ALCOA CORPORATION
DETAILS OF MEMBERS:
TABLE OF CONENTS
PROFIT & LOSS
BALANCE SHEET
INTRODUCTION
ALCOA CORPORATION IS AN AMERICAN INDUSTRIAL CORPORATION. IT IS THE WORLDS’ 6TH LARGEST PRODUCER OF ALUMINIUM.
ALCOA IS MAJOR PRODUCER OF PRIMARY ALUMINIUM, FABRICATED ALUMINIUM AND ALUMINA COMBINED, THROUGH ITS ACTIVE AND GROWING PARTICIPATION IN ALL MAJOR ASPECTS OF THE INDUSTRY :
IT CONDUCTS OPERATION IN 10 COUNTRIES.
THE POLITICAL ECONOMY RESEARCH INSTITUTE RANKS ALCOA 15TH AMONG CORPORATIONS EMITTING AIRBORNE POLLUTANTS IN THE US.
IN APRIL 2003, ALCOA INC. AGREED TO SPEND $330 MILLION TO INSTALL A NEW COAL-FIRED POWER PLANT WITH STATE OF THE ART POLLUTION CONTROLS TO ELIMINATE HARMFUL EMISSIONS FROM THE POWER PLANT.
ALCOA ALSO MAINTAINS SEVERAL R&D CENTRES IN THE US. THE LARGEST ONE, ALCOA TECHNICAL CENTER, IS LOCATED EAST OF ITS PITTSBURGH HEADQUARTERS AT ALCOA CENTER, PENNSYLVANIA.
ALCOA BECAME ONE OF THE SAFEST COMPANIES IN THE WORLD, DESPITE THE ALUMINUIM INDUSTRY’S INERENT RISKS.
FY
2017
2016
2015
TOTAL REVENUE
11652
9318
11199
COST OF REVENUE
9072
7898
9039
GROSS PROFIT
2580
1420
2160
OPERATING EXPENSES
R&D
32
33
69
SALES, GENERAL ADMIN
284
359
353
NON-RECURRING ITEMS
309
318
983
OTHER OP. ITEMS
750
718
780
OPEARTING INCOME
1205
(8)
(25)
ADD’L INCOME EXP. ITEMS
58
89
(42)
EBIT
1263
81
(67)
INTEREST EXPENSE
104
243
270
EBT
1159
(162)
(337)
INCOME TAX
600
184
402
MINORITY INTEREST
(342)
(54)
(124)
NET INCOME
217
(400)
(863)
ANNUAL INCOME STATEMENT (VALUES IN ‘000,000) (FIGURES IN $)
PROFITABILITY ANALYSIS OF INCOME STATEMENT
RATIOS
2017
2016
2015
GROSS PROFIT MARGIN=GROSS PROFIT/REVENUE
0.22
0.15
0.19
OP. PROFIT MARGIN=OP. PROFIT/REVENUE
0.10
-0.0008
-0.002
NET PROFIT MARGIN= NET PROFIT/REVENUE
0.019
-0.043
-0.077
RECOMMENDATION –
THE COMPANY SEEMS TO BE GROWING. WHEN LOOKED UPON AT RATIOS, PAST YEARS HAVE BEEN A TOUGHER TIME FOR ALCOA CORP. THE EXPENSES WERE DIFFICULT TO BEAR AND SHAREHOLDERS HAD NO PROFIT IN HANDS.
MOVING TO NEXT YR, 2016THE IT HAS REDUCED LOSS BY MORE THAN 50% AND SURVIVED WELL. AND LAST YEAR, FINALLY THE CO. WAS ABLE TO RETAIN PROFITS FOR ITS SHAREHOLDERS AFTER PAYING THE EXPENSES AND ARREARS.
THE COMPANY IS EXPECTED TO ARISE IN NEAR FUTURE AND PROVIDE A GOOD RETURN.
REFERNCES:
APPENDICES:
PROFIT AND LOSS
PERIOD
2017
2016
2015
SALES
4469
3507
4119
COGS
3781
2844
3209
INCOME (LOSS) BEFORE TAXES
132
85
125
NET (LOSS)/INCOME
82
21
43
EQUITY IN NET (LOSS) INCOME
52
25
60
OTHER
10
3
(7)
CO.’S EQUITY IN NET (LOSS)INCOME
62
28
53
BALANCE SHEET
PERIOD
2017
2016
CURRENT ASSETS
1862
1396
NON CURRENT ASSETS
11015
11454
CURRENT LIABILITIES
1699
1767
NON CURRENT LIABILITIES
6751
6777
(1) The amounts included in this column represent the combined financial information related to Ma’aden Aluminum Company, Ma’aden Bauxite and Alumina Company, and Ma’aden Rolling Company.
(2) AofA sold its interest in the DBNGP Trust in April 2016.
FY
2017
2016
2015
TOTAL REVENUE
11652
9318
11199
COST OF REVENUE
9072
7898
9039
GROSS PROFIT
2580
1420
2160
OPERATING EXPENSES
R&D
32
33
69
SALES, GENERAL ADMIN
284
359
353
NON-RECURRING ITEMS
309
318
983
OTHER OP. ITEMS
750
718
780
OPEARTING INCOME
1205
(8)
(25)
ADD’L INCOME EXP. ITEMS
58
89
(42)
EBIT
1263
81
(67)
INTEREST EXPENSE
104
243
270
EBT
1159
(162)
(337)
INCOME TAX
600
184
402
MINORITY INTEREST
(342)
(54)
(124)
NET INCOME
217
(400)
(863)
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