Essays on Fosters Construction Ltd - Financial Review and Analysis Case Study

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The paper "Foster’ s Construction Ltd - Financial Review and Analysis" is a perfect example of a finance and accounting case study. The Capital Investment project is to be unveiled in about a year’ s time. This research is a reflection of the financial and fundamentals that the project is going to involve. This will also highlight the viability of the project. The analysis is based on the financial performance of the company. This will allow the company to forge ahead with the project. The project is a capital investment of a new crane and is meant to be bought to ease operations in the organization.

The debate here is whether to buy or repair the existing machinery in order to continue operations. Fosters Construction Ltd. ’ s operations rely on how resources are used. There are various resources at Fosters Construction Ltd. ’ s disposal. The resources interact to give profitable results from the organization’ s activities. An asset such as employees facilitate activities and utilize other assets such as cash to improve the company’ s value (Bodie and Merton, 2000). Financial Review and Analysis The company publishes annual financial reports and in this section, the analysis is based on figures given in the financial reports for 2013 and 2014.

The analysis is important because it helps tell how the company is performing in recent times. There was a percentage increase of 5.88% in total current assets this indicates growth in the firm's net assets and also an increase in the liquidity of the firm. This is in consideration of the existing Net Present Value of the organization’ s assets. There was a a14.26 percentage increase in total non-current assets which comprised of Property plant and equipment.

This shows that there was the acquisition of non-current assets, and there was an increase in the total assets and net worth of the company. This further supports the need to acquire new assets to offset the current capital assets and improve performance. The final liquidity ratio is the interest coverage ratio which is a ratio that indicates the company’ s ability to meet obligations when it comes to interest owed with regards to debts undertaken by the organization. The ratio assists in determining both profitability and risk of an organization.

References

Bodie, Z., and Merton, R. (2000). Finance. Upper Saddle River, NJ: Prentice Hall.
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