Accounting Decision Making Genesis Energy Limited

Question: Discuss about the Accounting Decision Making for Genesis Energy Limited. Answer: Introduction AGL Energy Limited is a publicly-listed company on the Australian Security Exchange. It is engaged in generating the power and electricity from the power stations which uses "thermal power, natural gas, wind power, hydroelectricity and coal steam gas sources. The company was established in 1873, in the name the "Australian Gas light Company." It has it headquarters in North Sydney, New South Wales Australia. It provides services like Electricity Generation, Distribution, Retailing and natural gas distribution. It also has huge investments in the supply of the electricity and gas. It is one of the largest "private owners" and also operating and developing renewable energy assets (Agl.com.au 2016). Genesis Energy Limited is currently known as Genesis Power Limited is public listed company listed company on the Australian Security Exchange. It engaged in the electric generation, natural gas, LPG retailing, and providing electricity. It was formulated as part in 1989-99 in the new Zealand electricity sector. It has been taking the retail client from the boards in lower North Island. Genesis is the biggest electricity and retailer of the natural gas, in New Zealand. It is ranked as the third largest electricity generation regarding Mega Watt in all over the New Zealand (Genesis Energy NZ.2016). Analysis of the Financial Statements As per the financial statement of the AGL Energy Limited and Genesis Energy Limited the company shows huge variation in each and every portion of the Financial Statement (Brigham Ehrhardt 2013). The Statement includes the cash flow statement, Income Statement, and Balance Sheet. AGL comparatively has the most non-current asset as compared to Genesis which is 74%. The current assets also show 90% variation in the i.e. AGL has some current Assets (DeFusco et al., 2015). Total current liabilities also show a similar variation with 86%; this shows that the Genesis has comparatively low liability or debt to pay its debtors. The research also shows that Net income or the profit of the company is comparatively high that is profit earned by the AGL is more than the Genesis; it is 50% more than the Genesis. So let's also compare the sales and cash element sale is 80% more, and cash is 90% more than Genesis. Further moving on with the research the total assets, liabilities and Equity is also comparatively high with 77%, 75%, and 79% respectively. All the criteria as compared to the AGL is good and sound as compared to Genesis but in respect of the outstanding share Genesis has less no. of an Outstanding share which shows a good sound (Henry Robinson 2015). Measurement and analysis of the Ratio This section includes analysis and measurement of the ratio which is Profitability, Liquidity, Capital Structure and Market performance are as follows: Profitability ratio Under this category there are many ratios but for our study, we need only to calculate only Net Profit Margin Ratio and Return on Asset and the formula of which is given below As per the calculation AGL has Net Profit Margin Ratio in 0.02 and Genesis has 0.05. Return on asset of AGL is 0.01 and Genesis are 0.03. It represents that the capacity to generate profit in its operational profit and return on its assets of Genesis is better (Innocent et al., 2013). Liquidity Ratios Under this category, there are many ratios but for our study, we need only to calculate only Current Ratio and Quick Ratio and the formula of which is given below- As per the calculation, a Current Ratio of AGL and Genesis are 1.46 and 1.12 and Quick Ratio of AGL and Genesis is 0.91 and 0.67 respectively, which implies that the capacity of the AGL to pay the current long-term liability is more than that of the Genesis (Patel 2016). Capital structure Under this category there are many ratios but for our study, we need only to calculate only Debt to Equity Ratio and Equity Ratio and the formula of which is given below As per the calculation Debt to Equity Ratio of AGL and Genesis is 0.80 and 0.93 and Equity Ratio is 0.56 and 0.52 respectively (Jankowski et al., 2015). This show Genesis has comparatively more Debt as compared to Equity and AGL has more share of Equity as regarding the Asset of the Company. Market performance- Under this category, there are many ratios but for our study, we need only to calculate only Earning per share and Dividend per and the formula of which is given below Earnings per share = ( Net Income/ No. of outstanding Share) Dividend Per Share = Payout Ratio * Earning per share As per the scenario AGL 0.33 has comparatively EPS more than Genesis 0.10 and Dividend Per Share is also more AGL 0.59 and Genesis 0.08. AGL is having comparatively good paying dividend and return capacity more (Lartey et al., 2013). Recommendation As per the quantitative analysis, AGL is giving the high return as well the good dividend so the investment should be done on it. Genesis is not the company for doing investment and getting invested (liquidity ratio2014). The competitors of the AGL and Genesis are not so much competitive to be invested. But as it is looked into the scenario AGL is company for getting invested as compared to Genesis as well to its competitors (Malek et al., 2012). Conclusion Finally to conclude it is said that the financial position of the AGL is very sound as compared to the Genesis. In each and every aspect the AGL is found to be the gainer as well as in the better position. Regarding the getting return as well as of debt paying capacity AGL is the gainer in each and every area. Instead of being the largest producer of electricity in the New Zealand which is 14%, as compared to its competitor it still does not have a good position in the global market for getting the investment opportunity. Reference List (2016).Agl.com.au. Retrieved 22 August 2016, from https://www.agl.com.au/about-agl Brigham, E. F., Ehrhardt, M. C. (2013).Financial management: Theory practice. Cengage Learning. DeFusco, R. A., McLeavey, D. W., Pinto, J. E., Anson, M. J., Runkle, D. E. (2015).Quantitative investment analysis. John Wiley Sons. Henry, E., Robinson, T. R. (2015). Chapter 1. Financial Statement Analysis: An Introduction.CFA Institute Investment Books,2015(2), 1-35. Innocent, E. C., Mary, O. I., Matthew, O. M. (2013). Financial ratio analysis as a determinant of profitability in Nigerian pharmaceutical industry.International journal of business and management,8(8), 107. Jankowski, K. J., BudzyÅ„ski, W. S., Kijewski, Ã…Â . (2015). An analysis of energy efficiency in the production of oilseed crops of the family Brassicaceae in Poland.Energy,81, 674-681. Lartey, V. C., Antwi, S., Boadi, E. K. (2013). The relationship between liquidity and profitability of listed banks in Ghana.International Journal of Business and Social Science,4(3). liquidity ratio(2014). (5th ed.) Oxford University Press. Malek, A., Mohammadi, M., Nasiri, F. (2012). Comparison of Malaysia manufacturing companies by financial statement analysis tools. InProceedings of: International Conference of Educational Performance and Development(Vol. 1). Patel, A. D. (2016). To Measure Short Term Financial Strength of Selected Steel Companies in India Based on Liquidity Ratio.International Journal of Scientific Research,4(5). Power Company - Electricity Companies - Genesis Energy NZ. (2016).Genesis Energy. Retrieved 22 August 2016, from https://www.genesisenergy.co.nz/home profitability ratios(2016). (6th ed.) Oxford University Press.