Tolerance Of Coral Larvae To Thermal Stress-Myassignmenthelp.Com

Question Discuss About The Tolerance Of Coral Larvae To Thermal Stress? Answer: Introduction In this report, study has been prepared on the financial performance of company and how company has managed its capital structure to reduce its overall cost of capital. It is considered that AMC Outdoor Company has increased its business efficiency throughout the time. Ratio analysis, capital structure analysis and share price analysis have been used in this report to analysis the companys performance. Comparing Firms Capital Structure AMC Outdoor Company has capital structure of 32% debt and 68% equity capital. It has shown that company has to establish proper level of capital structure after considering financial risk, associated cost of capital and other internal and external factors of business (Finance. Yahoo, 2017). After collecting details from the annual report of company, WACC has been computed as below (Brigham Ehrhardt, 2013). Interest after tax 2956100 Debt 103000000 Cost of debt 2.87% Weights Debts (Loan) 103000000 Equity 222334000 Total 325334000 Weighted Average Cost of Capital (WACC) Debt Equity Cost of Capital (WACC) After computing the details of company, it could be considered that Cost of capital under WACC of company is 6.64%. Company has capital structure of 32% debt and 68% equity capital. It is observed that other company in the same industry QMS Media Company has maintained debt to capital ratio 22: 78%. This has shown that company has low financial risk and high cost of capital. This will reduce the overall profit and increased tax burden on the company. Therefore, it could be inferred that AMC Outdoor Company should maintain debt to equity ratio 30:70 with a view to reduce the overall cost of capital (Finance. Yahoo, 2017). Analysis of Financial Ratios of AMC Outdoor Company It is considered that ratio analysis of company reflects the relation between two factors. The APN Outdoor Company has reduced its current ratio by .65 points in 2017 with a view to reduce the overall cost of capital. Quick ratio has gone down by .55 in 2017 since last three years. Gross profit margin has also shown positive outcome and resulted to 20% profit in 2016 as compared to loss of 7% in 2015. Return on equity of company has increased to 26% profit in 2016 as compared to loss of 8% in 2015. Net profit has shown 20% profit in 2016. Interest coverage ratio of company has gown down to zero due to no interest payment liabilities. Efficiency ratio of company has also managed to reduce the cost of capital and amount of blockage. There is no inventory turnover due to zero level of inventory. Creditors turnover ratio has increased to 40% in 2016 to reduce the overall cost of capital (Brigham Gerhardt, 2013). Significant Changes in the Capital Structure in Past Three Years Capital structure of company has been divided into two specific parts. Equity capital of company is $58.15, $63.74, and $59.64 million in all three years 2014, 2015 and 2016 respectively. Debt portion of company has also increased by 5% since last three years. In 2014 company had AUD$ 125 million which went down to AUD $ 97 million in 2015. After that, it increased to AUD $ 133 in 2016 (Finance. 2017). Company has increased its debt portion with a view to reduce the tax burden and cost of capital at large. Wealth Maximization in Past Three Years It is evaluated that stock price of company has increased by 200% since last three years. It is evaluated that total turnover and overall earning of company has shown significant growth in its business functioning. It is observed that if shareholders have high level of value creation on its investment then it will increase the wealth maximization in determined approach (Brigham Ehrhardt, 2013). Importance of Minimization of the Cost of Capital There are several benefits which could be enjoyed by AMC Outdoor Company after minimization of cost of capital. It will reduce the overall cost of production, creation of synergy and establishment of effective business functioning in market. Nonetheless, AMC Outdoor Company needs to establish proper level of harmonization between debt and equity capital with a view to reduce the financial risk and cost of capital (Finance. Yahoo. 2017) Recommendations for Lowering the Cost of Capital Lowering cost of capital is very critical task. However, APN Outdoor Company should invest more capital in its business with a view to increase the overall operating earnings. The existing market is showing high amount of growth and increased business efficiency. Therefore, APN Outdoor Company should deploy more funds to increase the productivity and efficiency of business in determined approach (Kaur Gupta, 2015) Conclusion Significant Changes in the Capital Structure in Past Three YearsThis report has depicted that APN Outdoor Company has strong financial stability in Australian market. However, due to high level of debt portion in its capital, company has high financial leverage and risk in its business functioning. It is considered that company should inject more capital in its business and decrease its operating expenses to increase the overall profit and earning in determined approach. References Brigham, E. F., Ehrhardt, M. C. (2013).Financial management: Theory practice. Cengage Learning. Finance. Yahoo. (2017). APN Outdoor Group Limited (APO.AX). Retrieved September 16, 2017 from, https://finance.yahoo.com/quote/APO.AX/financials?p=APO.AX Finance. Yahoo. (2017). QMS Media Limited (QMS.AX). Retrieved September 16, 2017 from, https://finance.yahoo.com/quote/QMS.AX/balance-sheet?p=QMS.AX Kaur, K., Gupta, A. P. N., 2015, Performance evaluation of dbla, hsv-clahe rgb-clahe based image enhancement. Negri, A. P., Hoogenboom, M. O. (2011). Water contamination reduces the tolerance of coral larvae to thermal stress.PLoS One,6(5), e19703.