FIRSTGROUP COMPANY

FirstGroup Company

Writer's Name

Writer's university

FirstGroup Company

Introduction

Source of finance opted by any company depends upon numerous factors. These include the current credibility of the company in the industry, banking and capital markets. If the company has good reputation with its share holder, it can go for equity financing. On the other hand, if the company is already on paid up capital, with high amount in the capital market, then it should go for the money market debt instruments (Forgue &Garman, 2010, p.9). The tenure for which loan is required is also important in deciding the source of finance for the company.

FirstGroup Company

FirstGroup plc is the provider of transport services primarily in the United Kingdom and North America. The UK Bus division of the company's offers bus transportation services. Its UK Rail division provides various over ground rail services. The financial position of the company can be gauged from the trend of financial ratios and performance over the last 5 years.

Financial Ratios

The most important observation in this table is the value the company if it liquidates all its assets. FirstGroup Company has been unable to maintain a liquid position as the current and quick ratio has been declining since 2007 (Mergent Online, 2012). This has made difficult for the company to maintain strategic alliances with its suppliers and obtain inventory on short term basis; which in turn, has affected all other aspects of the financial management.

FirstGroup Plc-Financial Ratios

Profitability Ratios

2011

2010

2009

2008

2007

ROA % (Net)

1.9

2.3

2.67

3.26

3.96

ROE % (Net)

11.29

15.73

19.41

18.65

20.03

ROI % (Operating)

366.26

347.3

359.1

386.87

515.63

EBITDA Margin %

4.85

5.88

6.13

5.9

3.78

Calculated Tax Rate %

13.36

18.1

21.5

12.24

27.18

 

 

 

 

 

 

Liquidity Ratios

2011

2010

2009

2008

2007

Quick Ratio

0.66

0.69

0.53

0.7

1

Current Ratio

0.77

0.79

0.6

0.84

1.09

Net Current Assets % TA

-6.12

-5.07

-12.03

-3.93

2.75

 

 

 

 

 

 

Debt Management

2011

2010

2009

2008

2007

LT Debt to Equity

2.35

2.81

3.16

3.43

1.56

Total Debt to Equity

2.57

2.93

3.52

3.56

1.63

Interest Coverage

68.78

64.61

70.31

82.39

941.99

 

 

 

 

 

 

Asset Management

2011

2010

2009

2008

2007

Total Asset Turnover

1.18

1.1

1.15

1.28

1.6

Receivables Turnover

11.1

10.42

10.28

9.67

9.88

Inventory Turnover

69.84

62.35

63.92

63.36

62.44

Accounts Payable Turnover

21.39

20.95

22.01

21.24

22.88

Property Plant & Equip Turnover

2.94

2.7

2.86

3.15

3.73

Cash & Equivalents Turnover

17.78

19.22

21.91

14.37

12.67

 

 

 

 

 

 

Per Share

2011

2010

2009

2008

2007

Cash Flow per Share

1.16

0.94

1.04

0.84

0.74

Book Value per Share

1.94

1.86

1.63

1.58

1.36

Source of Finance Utilised By FirstGroup Company

The distribution of source of finance used by the company is evident from part of the balance sheet depicted below.

FirstGroup Plc-Financial Ratios

GBP in thousands

2011

2010

2009

2008

2007

 

 

 

 

 

 

Total current liabilities

1,427,000

1,350,000

1,757,400

1,187,100

791,400

Net current assets (liabilities)

-322,400

-283,800

-711,500

-189,100

70,000

Total non-current liabilities

2,888,200

3,331,900

3,354,800

2,924,400

1,144,300

Total liabilities

4,315,200

4,681,900

5,112,200

4,111,500

1,935,700

Share capital

24,100

24,100

24,100

21,900

21,900

Share premium account

676,400

676,400

676,400

447,800

447,800

Hedging reserves

35,400

-114,000

-352,800

49,700

26,700

Other reserves

4,600

4,600

4,600

4,600

4,600

Own shares

-5,000

-6,500

-3,400

-7,600

-17,400

Translation reserves

156,600

318,600

337,400

-70,300

-57,800

Retained earnings

41,500

-8,400

98,500

245,500

170,400

Equity attributable to equity holders of the parent

933,600

894,800

784,800

691,600

596,200

Non-controlling interests

17,300

15,700

19,500

13,200

11,100

Total equity

950,900

910,500

804,300

704,800

607,300

Long Term Debt

As on March 31, 2011, the long term stands at £2,306,900,000 (including current portion of £116,100,000); comprised of:

£554,900,000 syndicated and bilateral unsecured bank loans.

£1,490,400,000 bonds with interest rates ranging from 6.125% to 8.75%, due 2013 to 2024.

£251,900,000 obligations under HP contracts and finance leases with effective interest rate at LIBOR up to average fixed rate of ...