MBA 707-Company Analysis Assignment Help
The graduate study of business administration involves advanced understanding of the operations and performance of for-profit firms in the economy. Before beginning the study of individual sub-disciplines of business administration, such as marketing, human resources, and corporate finance, we start with some fundamentals for that study. In these two company analysis assignments you are asked first to undertake a preliminary financial analysis of a U.S. public firm based on its reported financial statements and then examine the public firm’s own public discussion of its recent results.
1. For your assigned firm’s most recent fiscal year, locate and review the firm’s annual report, earnings announcement, and/or recorded earnings call that discusses the financial results of the most recent fiscal year.
2. Write a two-page business brief on the firm’s public discussion of its most recent fiscal year results.
a. Characterize the tone of the discussion and the message it conveys to the investment community.
b. Discuss the extent to which your assessment of the firm’s performance in part 1 of the company analysis is consistent with the firm’s own public description of its results.
c. In your business brief identify any line items from the financial statements and any financial ratios that are particularly emphasized by the company in its report, announcement, and/or call. Also, to prepare for the requirements of the Team Report, discuss the firm’s performance in the context of its industry. Identify what you believe are the company’s advantages in the marketplace and its strategy to exploit them.
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Introduction
The paper consists of a study of various aspects of the financial position of the Xylem Inc. There is an inclusion of various financial aspect of the company which is stated in the annual report of the company. The announcement regarding various projects and figures is stated in the paper to analyze the position of the company. There is a brief discussion about the results achieved by Xylem Inc. and the same is stated for the investment community. It also includes the analysis of the company view over the results achieved as well as a description of the results. The ratios are being discussed in the paper along with their interpretation. The announcement and figures are being analyzed along with the ratios discussed in the annual report. The advantages that the company has are being stated to understand the position of the company.
1. For your assigned firm’s most recent fiscal year, locate and review the firm’s annual report, earnings announcement, and/or recorded earnings call that discusses the financial results of the most recent fiscal year.
Xylem Inc. is engaged in water technology and earned revenue of approximately $4.7billion. The company is engaged in various sectors such as Water infrastructure, Applied Water and Measurement and control solutions. There was the acquisition of subsidiaries of Sensus Worldwide limited except Sensus Industries in the Year 2016 for the consideration of approx. $1710 Million Net. The revenue from Water infrastructure applied water and Measurement & Control Solutions was $2004, $1421 and $1282 Million respectively (Xylem, 2018). The Market size in which the company operates is worth $17 Billion approx. in case of water infrastructure, $19 Billion approx. in the case of Applied Water and approx. $18 Billion in case of Measurement and Control Solutions. Xylem Inc. revenue is operated in various countries such as United States, Europe, Asia Pacific etc. The revenue earned from these countries is 46% of total revenue from the US, 28% from Europe, 13% from the Asia Pacific and 13% from other countries in the Year 2017. The company has focused on increasing the investment in the research and development sector from 2.9% in the year 2016 to 3.8% in the Year 2017 of the revenue (Xylem, 2018). The earning per share of the company is $1.83 in the year 2017 which is much higher than earned in the year 2016. The company net income was of $330 Million in the year 2017 and the operating margin is 11.8%.
2. Write a two-page business brief on the firm’s public discussion of its most recent fiscal year results.
a. Characterize the tone of the discussion and the message it conveys to the investment community.
Xylem Inc. is a highly established company working in Europe, USA, etc. Profit is the main component for any stakeholder. It is important for long term growth and sustainability that the company is able to earn higher profits. As per the investment point of view, it is important that the shareholder value is increased and able to provide a return to them. Financial statements of the company are very important for any investor and stakeholder of the company. The financial statement of the company looks positive and is able to provide a good return to the shareholder of the company (Xylem, 2018). The financial position of the company is strong and effective. There is an improvement in the profitability of the company as well as overall return. It is important to have strong liquidity as well as well as the profitability position of the company in order to provide a good return as well as build confidence of the shareholders. Xylem Inc. has managed the resources available in an effective way and even though there is high debt in the company but is able to balance the cash flows accordingly.
b. Discuss the extent to which your assessment of the firm’s performance in part 1 of the company analysis is consistent with the firm’s own public description of its results.
Xylem Inc. description of the result is consistent with the analysis that is being carried out. The company is positive towards the liquidity position of the company even though the company debt is high. The company is able to increase its profitability in comparison to the previous year which has resulted in an increase in diluted earnings per share. The company is focussed on converting the long pending work in assets from next year. There is a regular increase in the Cumulative total return of the company in comparison to various Index such as XYL, S&P 500, S&P 500 Industrial Index. It could be interpreted that the return on equity of the company is higher than earlier. Xylem Inc. has grown exponentially and established in many countries with increasing revenue. Company profit is high from new markets and other countries which have helped the company grow. The company is trying to improve the technology regularly in order to increase the efficiency of the product and meet the demands of the consumers. Xylem is able to provide a high capital return to the stakeholder of the company.
c. In your business brief identify any line items from the financial statements and any financial ratios that are particularly emphasized by the company in its report, announcement, and/or call.
Ratios are an effective way to determine the company performance, liquidity and another aspect important for the investors as well as stakeholders of the company. Xylem Inc. has emphasized on the profitability ratio of the company. The profitability ratio helps to determine the performance of the company in terms of revenue and profit earned during the year. The gross profit margin ratio of the company has increased over the years from 38.7% to 39.3%. The higher is the gross profit ratio higher is the return to the stakeholders of the Xylem Inc. There is also emphasize on the expense to revenue ratio which has positively decreased in comparison to the previous year of the company from 28% to 27.5%. The operating margin ratio has increased along with an increase in the revenue from 10.8% to 11.8% (Xylem, 2018). The net income of the company has increased from $260 million to $330 million. There is an increase in revenue by 187.4% in comparison to the previous year.
The performance of the company is very good and it’s improving consistently. Xylem Inc. is able to provide high capital returns along with a high return to the shareholders of the company. There is an increase in the Cumulative total return of the company regularly from $100 to $271 (Xylem, 2018). The company has high hold of the market in which they operate and is established in various countries such as Europe, North America, Latin America, and Asia. The revenue earned by the company consists of 47% from the USA and 54% out of the USA and 21% of revenue from the markets which are currently emerging (Xylem, 2018). The company has captured a lot of market share in the various areas the company operates.
The advantages that the company has are innovative technology as well as various intellectual properties are being owned by them which have resulted in competitive advantages. Xylem Inc. has always tried to improve the technology along with the development of new technology which has helped in increasing the revenue as well as decrease the operating cost of the company. There are various plans laid down and a good share of revenue is spending in the research and development department which helps the company to grow and expand. The profitability of the company has increased along with the increasing return to the stakeholders of the company. One of the advantages that the company have is effective utilization of the resources that are available to increase and maintain the cash flow of the company.
Conclusion
It can be concluded that the position of Xylem Inc. is strong with huge market share. The ratio of the company has improved with the increase in revenue and profits. The decrease in the expense has also affected the profitability in a positive way. It could be stated that since the cumulative total return of the company has increased the company is rapidly growing. There is an appropriate return to the shareholders of Xylem Inc. along with good capital returns. The company is able to increase the revenue from the emerging sector as well as other countries than the USA.
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