A Company Profile Of Balfour Beatty Finance Essay

October 1, 2017 February 4th, 2019 Management

Balfour Beatty provides universe category services in substructure industry. They operate the lifecycle of substructure and have a strong place substructure markets. They have four trade names in taking market-leading these are

Professional services

Construction services

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

Support services

Infrastructure services

They provide chief services in creative activity and attention of substructure that includes investing, undertaking designing, finance, direction services, technology, and building services. Their chief clients are in United Kingdom, Europe, United States, South East Asia, Australia, and Middle East. They deliver the highest degree of safety, quality and proficient expertness.

Question No. 1

The company ‘s geartrain determination. You should besides measure the pitching determination of the house and comparing it with the theoretical and empirical groundss.

Answer:

Gearing:

Gearing Tells us about the relationship between the company ‘s debt and equity stockholders financess. It expressed as a per centum and calculated by spliting the company ‘s debt by its equity. Highly geared company means higher hazard and means company unable to pay its big debts.

There are several grounds of stockholders involvement in pitching for illustration high geartrain hazard means that there is a hazard on settlement or insolvency, it increases the instability on dividends. If geartrain is high so there is a low opportunity of having dividends is company liquidate. Recognition bureaus analyse really carefully in company ‘s ratio before offering any loan because if company is extremely geared they might non pay the involvement.

Calculation of pitching ratio:

It compares the entire adoption of the company with sum of finance invested into the concern. It shows the ratio of the capital raised through the adoption. Following is the expression to cipher the geartrain ratio:

Capital employed financed means the entire debt financed and portion holder ‘s financess. Using this formula 25 % pitching ratio means 25 % of finance comes from debt finance and 75 % from equity financed. Company is extremely geared if 50 % + of entire capital comes from long term loan.

Gearing Ratio of Balfour Beatty:

Gearing Ratio Calculation

old ages

Non-Current Assetss

Current Assetss

Entire

Current Liabilitiess

Non-Current Liabilitiess

Entire

Equity

Gearing ratio

2007

1673

1686

3359

2165

711

2876

483

147.205

2008

2378

2166

4544

2809

870

3679

788

110.4061

2009

2818

2576

5394

3044

1344

4388

1238

108.5622

Interpretation:

Dividends policy

Question no 2

The company ‘s dividend determination. You should describe on the company ‘s current dividend policy. If the house announced a dividend between 05/10/2010 and 09/02/2011. How did the market react to the dividend proclamation? Compare and contrast yours selected company ‘s policy to the theoretical and empirical groundss.

Answer

What is Dividend policy?

A house have different picks sing dividend policy whether they pay to stockholders as hard currency dividends, how should be it distributed, and much the hard currency should be. In broader sense dividend policy besides means to take the determination whether to administer hard currency to investors via portion repurchase instead than regular dividends.

How dividend policy consequence houses value?

There are different positions on how dividend policy affects company ‘s value:

Dividend addition stockholders wealth ( Gordon 1959 )

Dividends are irrelevant ( Miller and Scholes 1978 )

Dividend lessening stockholders wealth ( litzenberger and ramaswamy 1979 )

Recent research from 1983 to 1987 done by Cornell, Shapiro, prezas, ravid, says that there is a relationship between investing and fiscal determination investor stakeholders ( providers, clients, Bankss, employees, distributors ) influence the fiscal determination.

Dividend policy of Balfour Beatty and reinvestment program:

“ Balfour Beatty aims over clip to turn the dividend loosely in line with the growing in net incomes, taking into history the investing demands of the concern. The Board has recommended a concluding dividend of 7.2p in regard of 2009, giving a full-year dividend of 12.0p ( 2008: 11.1p adjusted ) , up 8 % on last twelvemonth. Underliing dividend screen for 2009 is 2.9, somewhat lower than the screen of 3.1 last twelvemonth but the Board believes that this is sensible given the strength of the Group ‘s hard currency militias and future chances. ”

Balfour Beatty has a dividend reinvested program which allows their ordinary stockholders to reinvest their hard currency dividends in company ‘s portion from through specially arranged portion covering services.

Dividends paid over the old ages

Financial Calendar of Balfour Beatty of 2010

Date

Event

1 January

Preference dividend collectible

4 March

2009 Prelim proclamation

21 April

Ordinary: ex-dividend day of the month

23 April

Ordinary: record day of the month

12 May

AGM and probationary day of the month for trading update

26 May

Preference: ex-dividend day of the month

28 May

Preference: record day of the month

1 June

Ordinary: last day of the month for signifier of election ( DRIP )

1 July

Preference dividend collectible

July

Interim Management Statement

5 July

Ordinary: payment day of the month

11 August

Half-year consequences proclamation

6 October

Interim ordinary: ex-dividend day of the month

8 October

Interim ordinary: record day of the month

3 November

Concluding day of the month for DRIP authorization signifiers in regard of interim ordinary dividend

11 November

Interim Management Statement

24 November

Preference: ex-dividend day of the month

26 November

Preference: record day of the month

3 December

Interim ordinary: dividend payment day of the month

For 2011

Date

Event

1 January

Preference dividend collectible

13 January

Update on trading for twelvemonth ended 31 December 2010

3 March

2010 full-year consequences proclamation

12 May

Annual General Meeting

17 August

2011 half-year consequences proclamation

Question no 3

The company ‘s working capital direction. By utilizing appropriate ratio analysis measure your selected company ‘s direction of working capital. Where are its strengths and failings? Compare and contrast with relevant theoretical and empirical literature.

Answer

Working Capital Management

Working capital is a fiscal tool which helps to understand the operating liquidness available to the organisation including authorities entity. Working capital step ‘s the organisation wellness and efficiency. If on the job capital of the organisation is positive it means that company is able to pay its short term liabilities. But if on the job capital is negative its agencies that company is non able to pay its short term liabilities this could be unsafe for company and besides impact its market value and portion monetary value.

Ratios:

A fiscal ratio is a cardinal to understand the fiscal state of affairs of the company. Most of the ratios are calculated from the information given in the fiscal statements. Financial ratio can be used by the directors to assist in determination devising that will assist stockholders, creditors, and fiscal markets. It helps them to understand the strength and failing of the company. If portions of the company traded in fiscal market the portion monetary value is besides used.

There are different types of fiscal ratios

Profitability ratio

Liquidity ratio

Assetss turnover ratio

Fiscal purchase ratio

Dividend policy ratio

Profitability Ratio:

It used to mensurate the company ‘s used of assets and control over the disbursals and bring forth a good rate of return. It measures the success of the house on net income generating. Profitability ratios calculated as follows:

31/12/2009

GBP

31/12/2008

GBP

31/12/2007

GBP

31/12/2006

GBP

31/12/2005

GBP

Profitability ratios

Tax return on Stockholders Funds ( % )

26.65

31.36

32.51

32.30

48.29

Tax return on Capital Employed ( % )

11.36

15.56

13.15

12.78

16.32

Tax return on Entire Assets ( % )

4.95

5.94

4.67

4.85

6.29

Net income border ( % )

2.98

3.27

2.43

2.79

3.67

Gross border ( % )

8.72

7.66

7.33

8.16

7.69

Berry ratio ( ten )

1.38

1.39

1.20

2.04

1.80

EBIT border ( % )

2.39

2.17

1.21

2.76

3.41

EBITDA border ( % )

3.72

3.28

2.12

4.10

4.59

Liquidity ratio:

It shows the house ‘s ability to run into its short term liabilities and handiness of hard currency to pay its debts. There are two types of liquidness ratio

Ratios

A 2009

2008A

2007A

2006A

2005A

Current ratio ( ten )

0.85

0.77

0.78

0.80

0.90

Liquidity ratio ( ten )

0.81

0.73

0.75

0.75

0.86

Assetss turnover ratio

It shows that how expeditiously a company uses its assets and bring forth gross or gross revenues for the company. Following is the expression to cipher it

Fiscal purchase ratio:

Dividend policy ratio:

Dividend policy ratio tells about the dividend policy of the company and future growing. There are two different ratio method used to cipher this:

Balfour Beatty Trading Update

Consequences for 2010

Balfour Beatty plc will denote their trading consequences for the twelvemonth ended 31st December 2010 on 3rd of March 2011.

Trading:

Their overall public presentation is regular with their programs. They book high quality book order of ?15 billion which shows the strength of their expertness in proficient and incorporate solutions.

Operational public presentation:

In professional services, public presentation is more so there

x

Hi!
I'm Amanda

Would you like to get a custom essay? How about receiving a customized one?

Check it out