NORFOLK SOUTHERN CORPORATION

Norfolk Southern Corporation

Norfolk Southern Corporation

Summary

Norfolk Southern company (Norfolk south) is a US founded freight trains company. The business, which functions through Norfolk Southern trains, is principally committed in the transportation of raw components, intermediate goods and finished items via rail. Commodities it predominantly transports include coal, coke and iron ore from various regions of the US including West Virginia, Virginia, Pennsylvania and Kentucky. In supplement, from diverse Atlantic and Gulf Coast docks, the business conveys overseas freight. Moreover, Norfolk Southern presents the intermodal mesh in the eastern US.

In 2009, 105 million tons of freight, or roughly 65% of total general merchandise tonnage conveyed by NSC came from online orders. As more and more customers are adept to effortlessly transport as well as pathway their instructions online, this could prove to become an significant area of growth for NSC.

In 2009, NSC had total revenues of $7.97 billion, earning a snare income of $1.03 billion. Compared to 2008, incomes declined 25%, or $2.7 billion due to manufacturers reducing their output to rendezvous smaller buyer demand as a outcome of the tough financial climate. Part of the decline in incomes was furthermore due to the smaller cost of fuel; with smaller fuel charges, NSC was adept to ascribe less for fuel surascribes.

Its snare income was furthermore down considerably, from $1.7 billion in 2008. Since 29% of NSC's profits arrive from boats coal, its profits rely very strongly on the volume of coal being shipped. As a outcome, it is susceptible to the worldwide demand for coal. This reliance can be glimpsed in its total incomes, as incomes from coal turned down by $847 million in 2009, as there was smaller demand amidst manufacturers as well as utility companies. However, former to this year, its coal earnings had grown significantly, emphasised by a 25% increase in the year 2007. if the demand of coal continues high in the future may have large implications for the future profits of NSC.

Financial & Ratio Analysis

Liquidity Ratios

Liquidity ratios attempt to assess a company's proficiency to pay off its short-term liability obligations. This is finished by matching a company's most fluid assets (or, those that can be effortlessly altered to cash), its short-term liabilities.

In general, the greater the coverage of liquid assets to short-term liabilities the better as it is a clear signal that a business can pay its liabilities that are coming due in the beside future and still fund its ongoing operations(Kieso, 2007). On the other hand, a business with a low coverage rate should lift a red flag for investors as it may be a signal that the company will have difficulty gathering running its operations, as well as gathering its obligations.

Liquidity Ratio

2009

2008

2007

Current ratio

126%

95%

86%

Quick ratio

111%

78%

69%

Cash ratio

61%

29%

11%

Inventory Turnover

4859%

5495%

5359%

Revenues declined $2.7 billion in 2009, but bigger $1.2 billion in 2008. As reflected in the table on the following page, the decline in 2009 was due to declined traffic volumes and smaller mean revenue per unit, as a result of smaller fuel surcharges that more ...