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FINANCIAL ANALYSIS OF
FINANCIAL ANALYSISCONTENTSTopicPage NoIntroduction3Environmental scan an risk analysis4-6Analysis of financial statements using ratios7-9Analysis of cash flow,MVA and EVA10-11Conclusion12-14References15-17Appendix18-22IntroductionIn year 1874 Charles Jeremiah Smith founded corporation named as A.O. Smith Corporation.It is considered as ruling producer ofinhabited and marketable water heaters and boilers.It’sheadquarter is established in Milwaukee, Wisconsin. The product range of A.O. Smith2
FINANCIAL ANALYSISCorporation includesdomestic gas and electronic water heaters and large-scale marketablewater heating systems.Corporation embraces the two sections i.e. North America and rest ofthe world (China, Europe and India).In year 1976 it had proposed its initialy highly-efficientresidential water heater.The top contenders of this company are Paloma Co. Ltd., Bradford-White Corporation and Aero International.Inc.The strategic SWOT analysis of the business and operations of A.O. Smith Corporation willhelp to evaluate visualization of the position of organization.STRENGHTSInflated revenue & profitability.Providence of monetary reinforcementAccessible networks of sales anddistributionMarket entrance barriers.WEAKNESSProductivityPossibility of rise in rate of loanTax StructureBrand portfolioRise in candidacy in market3
FINANCIAL ANALYSISOPPORTUNITIESProfitability & growth rateTHREATSFinancial competenceRapid increase in price of raw materialRising interest ratesRisk caused by external factorsRevolutionize in priceREFERENCE:A.O.SmithCorporation(2015)http://www.aosmith.com/uploadedFiles/Web_Assets/Documents/Annual%20Report.pdfA.O.Smith Corporation (2015) About us Retrieved September11,2016,fromhttp://www.aosmith.com/About/History/a)An environmental scan and risk analysis of the organizationIn today’s scenario the most significant activity among corporations is theenvironmental scanning.A research and understanding of the events which influencesthe organization like trends, economy, technology, society etc is considered asenvironmental scanning.In A.O.Smith Corporation a resourceful use of resources is done so that impact onthe environment could be reduced. A recognizing programme is developed by thecorporation for encouraging its employees for resource conservation and4
FINANCIAL ANALYSISsustainability while performing job. For this purpose an award is given to theemployee at the end of the annual year who had achieved the maximum amount ofreduction in consumption of electricity, water and natural gas.Leadership in Energyand Environmental Design(LEED) silver certification was awarded to thecorporation in year 2011.The basic risks and uncertainties facing by the A.O.Smith are as follows:1.Economic recession reported globally could cause adverse effect on A.OSmith Corporation.2.As it has an important business section in china so any kind of decelerate intransition in Chinese economy is also risky for A.O Smith Corporation.3.Growth in sales of products which are Lochinvar-branded may result inreducing the expected revenue and earnings of A.O Smith Corporation.4.Any kind of letdown in fulfillment of ambitions of 2015 may negatively affectthe investors ofA.O Smith Corporation.5.An adverse effect may cause by the turn down in new marketable edifice ofA.O Smith Corporation.6.Any kind of interruption (i.e. cancellation of order, reduction in the quantityof order) in purchase by the major customers or any kind of material loss maynegatively affect the A.O Smith Corporation.7.Rapid increase in competition may decline the revenue of A.O SmithCorporation.8.Any kind of defects in product may adversely affect the operations of A.O5
FINANCIAL ANALYSISSmith Corporation.9.The future growth of the A.O Smith Corporation may get affected if it will notbe able to fulfill the future acquirement.10.Decline in number of customers may be faced by the A.O Smith Corporationif they will not do any kind of innovation in their product as well as intechnology of the product.11.Product with new technology and more advancement may lead A.O SmithCorporation towards success.12.Failure in implementing innovative and novel resource planning system for anenterprise could interrupt the performance of A.O Smith Corporation.13.Maintenance of key recruits plays a vital role for A.O Smith Corporation.14.Additional risk faced by A.O Smith Corporation as it also deals in places otherthan US.15.International operations cause risk related to foreign currencies.16.Material worth instability and trader attentiveness may adversely affect theoperations ofA.O Smith Corporation.17.New rules and regulations made for the stock or materials used byA.O SmithCorporation in manufacturing of its product may cause negative impact on it.REFERENCEA.O.SmithCorporation(2015)http://www.aosmith.com/uploadedFiles/Web_Assets/Documents/Annual%20Report.pdf6
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