Peabody Energy Financial Assessment Essay

4574 words - 19 pages

Contents
Introduction 3
Financial Statement Analysis 4
Standard Cost 10
Analyzing Future Projects 12
Recommendations 14
Appendices 15
Works Cited 22

Section I: Introduction
Peabody Energy Corporation is a coal energy company and the world’s largest private-sector coal producer in the world. (Hoovers, 2011) Peabody was founded in 1883 as a coal supplier and later began coal mining in 1926. (Hoovers, 2011) Currently, Peabody operates roughly 28 mines and processing facilities and, additionally, markets, brokers and trades coal. (New York Times) Peabody Energy Corporation’s principal goods and services include coal trading and brokering, coalbed methane production, ...view middle of the document...

Creditors use these techniques in order to assess the credit worthiness for potential customers and maintain control over outstanding loans. (Mowen, Hansen, & Heitger, 2012) Investors use financial analysis to assess the company for potential investments. (Mowen, Hansen, & Heitger, 2012) Managers need to use the assessments to analyze their own level of production and profitability as well as the financial soundness of the entire company. Areas that managers typically concern themselves with are “profitability, liquidity, debt position, and progress towards organizational objectives.” (Mowen, Hansen, & Heitger, 2012) For a multi-billion dollar company like Peabody, in an industry as large as coal mining, processing and exportation, this assessment can be quite complex
Common-Size Analysis
A simple initial comparison is called common-size analysis, comparing two financial statements. Horizontal analysis, for example, can be used to compare income statements for Peabody Energy to compare percent growth in income over time. Appendix C shows the ‘Results of Operations Data’ for 2006 through 2010. Taking 2006 as the base year, the respective percent increase in each financial category from 2006 to 2010 is found in Appendix D. Referencing the total revenue, besides a slight decrease in revenue for 2009, Peabody is generally expanding their total cash intake. Though their revenue is generally expanding, their net income fluctuates from year to year this comes from rising costs and expenses coupled with the fluctuating ‘Income Tax Provision’ and ‘Income from Discontinued Operations.’ The firm may benefit from lobbying from more lenient income tax provisions and better analysis from their discontinued operations. The growth in their revenue and growth in their expenses is mostly linear. It is the fluctuating expenses that are having more of an impact on a steady net income.
Like horizontal analysis, vertical analysis compares income statements to find trends. Vertical analysis, however, helps to find relationships among items within a particular time period. (Mowen, Hansen, & Heitger, 2012) Using the same data as the horizontal analysis, our vertical analysis will compare the percentages of net sales to the final net income. The chart in Appendix E shows this breakdown. For this income statement, Revenue is used as the base for computing the percentages for where the money is spent; showing how much of the initial revenue is delivered as net income. For the years 2006 to 2010, the percent of total revenue documented as net income is 14.9%, 5.8%, 14.6%, 7.7%, and 11.7% respectively. This shows a similar outcome from the horizontal analysis that there is an obvious fluctuation in net income compared to revenue. While the revenue consistently increases, costs and expenses prove net income to be far less consistent.
Ratio Analysis
Ratio analysis is a helpful tool for financial management because it offers a measure based on the...

Other Essays Like Peabody Energy Financial Assessment

Synthesis Accounting Scandals Essay

1796 words - 8 pages company based in India, has just been added to a notorious list of companies involved in fraudulent financial activities, one that includes such names as Enron, WorldCom, Societe General, Parmalat, Ahold, Allied Irish, Bearings and Kidder Peabody. Satyam's CEO, Ramalingam Raju, took responsibility for broad accounting improprieties that overstated the company's revenues and profits and reported a cash holding of approximately $1.04 billion that

Standardize Baseline Essay

1288 words - 6 pages Standardized Baseline Development Support Alexandra Soezer MDG Carbon Regional Training for Asia, Pacific and Eastern Europe, 2 September 2013 1 Outline • Activities globally; • Technical/financial support needs; • Support/funding; • Support challenges; • SBs and NAMAs; 2 Standardized Baseline support activities Supporter IGES Sector Energy use in the rice mill sector Supply side energy efficiency Country/Region Cambodia

Bank of America

1833 words - 8 pages merica Corporation. Assessment of the external environment of the financial services sector; an internal/external assessment of B of A.; a strategy assessment; and recommendations to the Bank of America on how to maintain and strenghen its competitive position. Paper Introduction: strategic Management analysis bank of america Introduction The report presents the findings of a strategic management analysis ofBank of America Corporation a

Esquel Supply Chain Dynamic

3607 words - 15 pages called CLYTEX. Esquel started as a trader, buying fabric and garment capacity from various companies in China. At the early stage, the company started by servicing low end markets, selling * Terylene-Cotton (TC) * Chief value cotton (CVC) * Cotton Shirt * Pyjamas, pants and Jackets The customers at that time were Arrow, a division of Cluett Peabody, Phillips Van Heusen and Kmart. Over the years, their customer base

Corporate Integrity in Duke Energy

2157 words - 9 pages only suffer financial loss due to being made to pay a fine for environmental damage, but also the company’s actions negatively affected its reputation and share price. Therefore, companies should carry out ethical practices and risk assessments to best serve the needs of all stakeholders. BACKGROUND INFORMATION In February, 2014, Duke Energy released a high amount of coal ash into the Dan River, Rockingham County, N.C., which violates the

Management

2306 words - 10 pages assessment tool when selecting possible design alternatives results in the provision of a cost-effective solution within limits of available data. In addition, a standard LCC comprises initial and operation costs, installation and commissioning costs, energy costs as well as disposal costs among others. System Requirements The management of FedEx gives particular emphasis on the initial purchasing and installation cost of new systems. In line

Enron and Microsoft

1964 words - 8 pages not change much if at all due to higher prices. The energy market, unlike other sectors of the economy – is dominated by a few very large companies, oscillating from the state of oligopoly to that of a monopoly. The energy market was loosely regulated and these factors set the stage for the numerous unethical and illegal activities in the operation and financial reporting of this once giant organization. Enron allegedly became successful, trading

Coca-Cola

1474 words - 6 pages Health drink which had a great potential growth in the future. PepsiCo as a benchmark based on year 2007 financial statement. Profit Margins Coca-Cola’s NPM of 21% is much higher than PepsiCo is mainly due to having the largest markets in soft drink. In assessment of the competitor, PepsiCo, Coca-Cola is still the industry leader in all profitability ratios calculation. | |Coca

Johnson Controls Capital Investments

1177 words - 5 pages the initial investment.” (http://www.answers.com/topic/discounted-payback-period) You see the discounted payback period takes into account the time value of money and the discounting of future cash flows which is similar to NPV method before it obtains the value for the payback period. Since Johnson Controls is a growing leader in Energy Savings Performance Contracting, it would be very sensible for management to use the discounted payback

Ba 595 5 Paper Analysis

1045 words - 5 pages of a monopolistic bank: A theoretical approach. Asian Economic and Financial Review, 3(11), 1439–1450. Ergun, U., & Ibrahim, A. (2013). Global energy prices and the behavior of energy stock price fluctuations. Asian Economic and Financial Review, 3(11), 1460-1465. Olson, O. (2013). The role of productivity in economic growth and equilibrium. Asian Economic and Financial Review, 3(11), 1497-1527. Sosvilla-rivero, S., & García, E. (2005). Forecasting the dollar/euro exchange rate: Are international parities useful? Journal of Forecasting, 24(5), 369-377.  

Carrot Chip

846 words - 4 pages Financing Project Year 1995 Amount $150.00 million 2001 $75.00 million 2003 $50.00 million 2003 World Bank Local Governance Finance and Development Project LBP’s LGU Investment Program LBP’s LGU Investment Program – Additional Financing 1999 $100.00 million KfW 2005 $19.20 million 2008 €7 million USAID Anti-money Laundering Capital Market Development Financial Sector Taxation Assessment

Related Papers

Accounting Essay

976 words - 4 pages Introduction of the article From 2013, the global coal price has decreased significantly caused by the declining coal consumption and many researches indicate that the sharp decline in coal price is structural rather than cyclical which means, unlike what the government and the coal fraternity said, demand may not rebound. Under such circumstance, the Australian coal producer, Peabody Energy is under a huge financial distress risk. In four

Survey Of The Green Energy Industry 2010

5075 words - 21 pages & Maintenance Training Initiative: The Association of Energy Engineers is pleased to announce that many of its professional seminars now qualify for partial reimbursement of seminar fees for pre-qualified professionals based on eligibility for the Pepco & Delmarva Power Commercial & Industrial Training Initiative. About the Program: Financial incentives are available for training that will promote, either directly or indirectly, the enhanced energy

Pm 592 Course Project 1 Essay

1408 words - 6 pages Breakdown Structure | 6 | 4.0 Cost Estimates | 8 | 4.1 Cost Estimation Assumptions | 8 | 4.2 Cost & Contingency Estimation | 9 | 5.0 Financial Analysis | 11 | 6.0 Project Schedule | 12 | 7.0 References | 12 | 1.0 Executive Summary This project is a pilot project for the development of a business venture to promote the installation of energy efficiency and conservation features into homes to save home owners

Energy Efficiency And Sustainable Development Essay

3096 words - 13 pages Countries through energy efficiency address the risks of climate change, an increasing number of countries, mainly from the OECD, have embarked on ambitious programmes, with energy efficiency often as the main pillar. Energy efficiency enables countries to alleviate the financial burden of oil imports on their balance of trade and also improves energy supply security [pic][pic] 4. Developing Countries In developing countries the energy