Financial Resources Management in Construction Industry: A Comparative Analysis of Balfour Beatty PLC and Polypipe Group PLC

Financial Resources
Management
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INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
PART A...........................................................................................................................................3
Evaluation of profitability............................................................................................................3
Financial position of the company in terms of short term or long term liquidity........................5
Evaluation of performance in respect of Equity shareholder’s...................................................6
Overall evaluation of performance and position of the business.................................................7
PART B...........................................................................................................................................9
Forecast dividend growth model.................................................................................................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14
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INTRODUCTION
Financial resources management of every organisation is a critical task to achieve
organizational goals and objectives. It is the method of preparing, coordinating, managing and
tracking financial resources (Abdelhak, Grostick and Hanken, 2014). It is an excellent method
for monitoring an organization's financial operations such as acquisition of funds, allocation of
funds, accounting, transactions, risk assessment and any other. This report evaluates the
performance and current position of the company. This assignment classified in two parts where
they select two organization such as Balfour Beatty PLC and Polypipe Group PLC. Both
companies are part of UK construction industry. They implement ratio analysis and vertical or
horizontal analysis for the past five consecutive years.
MAIN BODY
Overview of the organizations:
Balfour Beatty PLC:
Balfour Beatty is the largest global group of transport companies. Business finances,
develops and manages innovative, efficient infrastructure that underpins daily life, enhances
communities and fosters economic development. With almost 110 years of experience in
delivering highly complex infrastructure structures across projects at the heart of national
societies, the organization works with the highest levels of efficiency, health, and technical
competence. Integrating with consumers and domestic supply chains as well as helping local
organizations.
Poly-pipe Group PLC:
Polypipe Plc is UK's largest construction and manufacturing firm. Company engaged in
the manufacture of private, commercial and transportation piping systems for plastics. The
company is interested in the development of piping systems mainly used and implemented in
ventilation, drinking water, plumbing, power control, insulation, cable control, and heating
systems. Business is leading manufacturer of building industry piping systems.
PART A
Evaluation of profitability
Ratio analysis:
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Balfour Beatty PLC:
Year 2018 2017 2016 2015 2014
Gross Profit 371 311 284 157 131
Revenues 6634 6916 6923 6955 7264
Gross Profit Margin 5.59 % 4.50 % 4.10 % 2.26 % 1.80 %
Year 2018 2017 2016 2015 2014
Net Profits 135 162 24 -206 -60
Revenues 6634 6916 6923 6955 7264
Net Profit Margin 2.03 % 2.34 % 0.35 % -2.96 % -0.83 %
Poly-pipe Group PLC:
Years 2018 2017 2016 2015 2014
Gross Profit 181 173.00 180 143 125
Revenues 433 412.00 437 353 327
Gross Profit Margin 41.80 % 41.99 % 41.19 % 40.51 % 38.23 %
Years 2018 2017 2016 2015 2014
Net Profits 49 34 44 34 14
Revenues 433 412 437 353 327
Net Profit Margin 11.32 % 8.25 % 10.07 % 9.63 % 4.28 %
It was estimated from the gross profit and net profit ratio stated above that over the last 5
years both companies have shown positive growth. The net profit margin ratio implies that when
the percentage is small, the company will produce higher profits than the other. It often reflects
the good financial position of the company. This ratio determines an organization's net
productivity condition in a given period of time. Through managing operating costs and other
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