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Financial Statement Analysis

Autor:   •  August 10, 2016  •  Research Paper  •  3,961 Words (16 Pages)  •  515 Views

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Executive summary

This report aims to compare the performance and financial position of five companies in the electric utility industry sector. Firstly, it will briefly introduce the background and characteristics of this industry and companies’ profiles. Then the report will compare and analyze these companies in terms of liquidity, profitability, solvency and cash performance by using relevant ratios and indicators.

*Unless otherwise stated, all the data and ratios we used are retrieved from annual reports of the corresponding companies, including: Duke Energy (2014), NextEra Energy (2014), American Electric (2014), PPL (2014) and Ameren (2014).

Table of Contents

Executive summary 2

1. Industry Analysis 4

1.1 Introduction 4

1.2 Main effectors 4

1.3 Company profiles 5

2.Beneish Earnings Manipulation Score 6

3. Liquidity Analysis 6

3.1 Current Ratio& Quick Ratio 6

3.2 Turnover 7

4. Solvency Analysis 10

5. Profitability analysis 11

6. Cash Flow Analysis 14

6.1 Cash flow from operating (CFO) 15

6.2 Performance ratios 15

6.3 Coverage ratios 17

7. Conclusion 18

Appendix 1 19

Appendix 2 19

References 20

1. Industry Analysis

1.1 Introduction

The electric utility industry can be specified into four sectors: Generation, Transmission, Distribution and Retailing. This industry is so essential to economy that government laid strict regulation on it. At the beginning, only few enterprises (usually government-owned and operated) was participating in this industry and monopolizing the business from generating to retailing.

Since the 1990s, the market generally opened up. With the increasing entering of competitive private firms, the market became vibrant, which resulted to changes in regulatory frameworks and ownership structures of enterprises. In 2014, though the number of U.S. municipalities is still high, the large proportion of customers is served by investor-owned utilities.

1.2 Main effectors

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