FINANCIAL ANALYSIS

Financial Analysis



Financial Analysis

Company profile

Kier Group (Kier or 'the group') is a construction, development and services group engaged in activities such as building, civil engineering, surface mining, facilities management, residential and commercial property investment and private finance initiative (PFI) project investment. The group operates in Europe, Caribbean, the Middle East, and Asia. It is headquartered in Bedfordshire, the UK, and employs around 10,685 people. The group recorded revenues of £2,123 million ($3,377.6 million) during the financial year ended June 2011 (FY2011), an increase of 3.3% over FY2010. The operating profit of the group was £73 million ($116.1 million) in FY2011, an increase of 24.4% over FY2010. The net profit was £61.8 million ($98.3 million) in FY2011, an increase of 55.7% over FY2010 (Gordon, 2002, pp. 32).

Liquidity Ratio

Current Ratio

2009

2010

2011

1.01:1

1.15:1

1.19:1

The current ratio measures the ability of the company to pay of its short term debts, obligations and short term liabilities. Higher the quick ratio, there are more chances that the company is efficient in paying its short term debts. According to the table above, the quick ratio of kier group is reported to be 1.01 which increased to 1.15 in the year 2010 and in the year 2011, the company showed the highest quick ratio as compared to other years.

Quick Ratio

2009

2010

2011

0.55:1

0.65:1

0.65:1

Quick ratio or acid test ratio is a prefix to the financial condition and specifically the Liquidity of a company to measure. It indicates the extent to which the providers of short term debt from current assets can be paid. Here, only the stocks, in contrast to the current ratio, are not taken into account. These can often be sold in its entirety, since it is the continuity of the company at risk. Moreover, loss of value in a forced sale of stocks not be ruled out. The quick ratio of the company shows an increasing trend. In the year 2009, the quick ratio is calculated to be 0.55 which then increased to 0.65 in 2010 and in the year 2011 it remained the same.

Profitability Ratio

Gross profit Margin

2009

2010

2011

7.2%

10.2%

8.4%

Profitability ratios are used to assess the overall effectiveness of investing in predrpiyatie. They are widely used to assess the financial - economic activities of enterprises of all industries. This is one of the most important indicators in assessing the activity of the enterprise that reflect the profitability of the enterprise. Profitability relates to a firm's ability to produce a reasonable profit so that the shareholders and investors will keep providing capital to it for its operations. A firm's profitability is connected to its liquidity, for the reason that earnings eventually produce cash flow. Profitability is the main purpose of assets and financial assets and also some assets on the balance sheet and a few items in the profit and loss account. For these rationales, profitability ratios are imperative to both potential investors and shareholders. The profitability of the company has shown significant improvements till 2010. In the year 2009, the gross profit margin of the company was ...