Genesis Energy Limited Position in Industry

Question: Discuss about the Genesis Energy Limited for Position in Industry. Answer: Companys Introduction Position In Industry M/s AGL Energy Limited was incorporated in the year 1837 and since then the company has been engaged in developing the technologies through which the safe and reliable energy can be reached to the customers. The company was first to develop the gas street lamp in 1841 in Australia and has cater to the customers in many ways including Gas stoves for housewives, introducing the natural gas and launching the battery storage device in the year 2015. Due to these developments on year on year basis, the company has been regarded as one of Australias leading Integrated Energy Companies. (Cited in Official Website) M/s Genesis Energy Limited was formed in the year 1999 and since then has been the diversified company selling electricity and Natural Gas. Now it has become the largest retailer in gas and electricity of New Zealand catering more than 6,50,000 customers in the New Zealand. The focus of the company is on all the sectors prevailing in the economy residential, commercial and industrial. (Cited in Official Website) As both the companies operates in the same industry and keeping in consideration the pace at which both the companies are growing and has become competitor to each other, the companies have been selected for comparison. Initial Analysis Of Trends In The Financial Statements Agl Energy Limited Profit and Loss Statement Decreasing trend in the Revenue earned by the company. In 2014 there has been increase of 7.51% and in the year 2015 there has been increase on 2.33% approximately. Decreasing Trend in the Net Profit earned by the company. In 2014 there has been increase of 52% whereas in the year 2015 there has been decrease of 61% approximately. There has been increase in Other Operating Income by $ 83 million which shows 33.60% as increasing trend. Increase in Finance Cost by $7 million is there over the past year. Balance Sheet In the year 2015, inventories are $396 million as compared to the year 2014 figure which is $191 million. It exhibits increase in net working capital. Decrease of $197 million in the Cash and Cash Equivalents which shows that the companys cash flows have been decreased. Borrowings have been considerably increased from $45 million in the year 2014 to $ 443 million in the year 2015. Net Working Capital has been decreased from $1245 million in the year 2014 to $ 1086 million in the year 2015. Statement of Cash Flows As compared to year 2014, in the year 2015: Operating Cash Flows has been increased $345 million . Investing Cash Flows has been decreased by $ 1406 million. Financing Cash Flows has been increased by $669 million. Therefore, net decrease in Cash Balance over the year 2014-2015 is $207 million. Statement of Changes in Total Equity It comprises of Issued and Paid up Share Capital, Reserves and Retained Earnings and has been increased to $8815 million. (Anastasia, 2015) Increase is mainly because of issue of share capital. Genesis energy limited: Profit and Loss Statement Revenue has been increased from $2005 million in the year 2014 to $2097 million in the year 2015. Net Profit has been increased from $49.2 million in the year 2014 to $104.80 million in the year 2015. Decrease in Finance Cost by $1.10 million is there over the past year. Balance Sheet In the year 2015, inventories are $80 million as compared to the year 2014 figure which is $93.80 million. It exhibits decrease in net working capital. Decrease of $2.30 million in the Cash and Cash Equivalents which shows that the companys cash flows have been decreased. Borrowings have been considerably increased from $12.3 million in the year 2014 to $ 117.80 million in the year 2015. Net Working Capital has been decreased from $110.70 million in the year 2014 to $ 36.60 million in the year 2015. Statement of Cash Flows As compared to year 2014, in the year 2015: Operating Cash Flows has been increased $14.40 million . Investing Cash Flows has been increased by $ 34.30 million. Financing Cash Flows has been decreased by $51.80 million. Therefore, net decrease in Cash Balance over the year 2014-2015 is $2.3 million. Statement of Changes in Total Equity It comprises of Issued and Paid up Share Capital, Reserves and Retained Earnings and has been increased to $1825.40 million. Change In Financial Ratios And Its Reason Agl Energy Limited In terms of Profitability Ratio Profitability ratios have been decreased as compared to the ratios of earlier year. The decrease is majorly due to decrease in the profit margins or increase in the expenses. (Bajkowski, 1999, p.3) In terms of Liquidity ratios Current and Quick Ratio shows that the companys liquidity position is not much better and the decrease is majorly due to the increase in borrowings. In terms of Capital Structure Ratio Debt Equity ratio and Shareholders equity ratio is better which shows that investor will have gains in making investment in this company. (Lan, 2012) Earnings Per share (EPS) give the amount that each investor will have for his or her share. Decrease in Earnings per share by $0.65 over the past two years. Genesis Energy Limited In terms of Profitability Ratio Profitability ratios have been increased as compared to the ratios of earlier year. The increase is majorly due to increase in the profit margins. In terms of Liquidity ratios Current and Quick Ratio shows that the companys liquidity position is not much better and worst and the decrease is majorly due to the increase in borrowings. In terms of Capital Structure Ratio Debt Equity ratio and Shareholders equity ratio is better which shows that investor will have gains in making investment in this company. Earnings Per share (EPS) give the amount that each investor will have for his or her share. Increase in Earnings per share by $5.56 over the past two years. References 1. AGL Energy Limited official website available on https://www.agl.com.au/about-agl accessed on 25/08/2016. 2. Genesis Energy Limited official website available on https://www.genesisenergy.co.nz/home accessed on 25/08/2016. 3. Anastasia, (2015), Financial Statement Analysis : An Introduction available on https://www.cleverism.com/financial-statement-analysis-introduction/ accessed on 24/08/2016. 4. Bajkowski, (1999), Financial Accounting Ratios: Putting the Numbers to Work, AAII Journal, August 1999 issue, Pages 1-7. Accessed on 26/08/2016 5. Lan J., (2012), 16 Financial Ratios for Analysing a Companys Strengths and Weaknesses, AAII Journal, September 2012 issue available on https://www.aaii.com/journal/article/16-financial-ratios-for-analyzing-a-companys-strengths-and-weaknesses.touch accessed on 26/08/2016. 6. Literature Review Analysis of Financial Statements available on https://library.binus.ac.id/eColls/eThesisdoc/Bab2/Bab%202_10-19.pdf accessed on 26/08/2016.