The paper "AGL Energy Company - Business Valuation and Financial Analysis" is a perfect example of a business case study. In determining the forecast of AGL Energy Company, it is very important to study the trend of the financial performance of the previous five years. This will outline the outlook of the future performance of the company. Just focusing on the stability of the company, after demerging of AGL and Alinta in 2006, AGL Company remained to own 33% interest of AlintaAGL Company. The company recorded a value of $601.8 million net cash provided by operating activities at the beginning of the year 2013 compared to $569.3 and $466.
5 in 2011 and 2012 respectively (Appendix 3). The outlook of this seems to define the company at its mature state in the market. However, the profit margins on the other hand perhaps may not be expected to be much since acquisitions are to be made as a tax burden on the debtors. Growth assumptions implicated by financial analysis of AGL between 2009 and 2013; Profitability assumptions Basing on ratio analysis, returns on equity basically determines the growth rate of AGL Limited Company.
For example, in 2011 the company’ s return on equity dropped from 8.81% to 1.61% in 2012. This directly affected the profit of AGL Limited Company from $559.00 million in 2011 to $115.00 in 2012 (Appendix 2). It is important to understand that the performance of investment at this period was poor that called for the company to reinvest dividends back to the capital. The reinvestment done in 2012 shifted the growth by 2.68% (refer to Appendix 2) and more importantly to note is that it brought the company to stability.
This was the normal level of the growth rate and due to the competitive edge the company has created then the forecasted growth by the end of the financial year 2014 would be 4.2%. There is a decreasing rate of investment by the company which means that in coming years the revenue from investment (other income) would be driving towards 0. Apparently, the high investment rate on the capital rather than on equity perhaps forecasts the stability of the company. However, the challenge will still be on how to manage return on equity in order to stabilize the operations.
AGL Financial Report (2012). Expanding opportunities. Australia.
AGL Financial Report (2013). Energy in Action. Australia, www.agl.com.au
AGL Resources Management Discusses Q4 2012 Results - Earnings Call Transcript. (n.d.). AGL Resources Inc. (GAS):. Retrieved October 29, 2013, from http://seekingalpha.com/article/1160771-agl-resources-management-discusses-q4-2012-results-earnings-call-transcript
Financial Statements for agl energy ltd (AGK). (n.d.). Businessweek.com. Retrieved October 29, 2013, from http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=AGK:AU
Granger, C. W. (1980). Forecasting in business and economics. New York: Academic Press.
Trugman, G. R. (2007). Understanding business valuation. Lewisville, Tex.: American Institute of Certified Public Accountants.