Discuss About The International Journal Of Finance Accounting?
The overall report is mainly conducted to depict the relevant capital structure of APN Outdoor group, which could help in identifying the current financial condition. Furthermore, the report also elaborates on the WACC and financial ratios of the organization, which could help in identifying relevant futuristic developments in the organization.
Evaluation of the APN’s capital structure:
The overall capital structure of the company can be identified from the evaluation of WACC, which could directly help in identifying the minimum returns that needs to be conducted by the organisation. Currently, the WACC of APO is identified as 6.67%, where the organisation aims in adding an additional amount of equity in 2016 which could directly change the current capital structure of the organisation (Investors.apnoutdoorcorporate.com, 2017). However, the organisation currently used in reducing its overall cost of capital for achieving optimal capital structure that could help in improving its overall profitability. Nevertheless, from the evaluation of the current structure of the organisation it could be identified that relevant deduction of cost of capital can only be achieved by increasing the portion of debt value. Furthermore, the analysis also states that overall depth accumulation of the organisation has a relatively declined in 2016, which was depicted in the financial report. Furthermore, the company in the previous year mainly reduces the interest bearing capital while increasing the equity capital and its annual report.
Evaluation of the financial ratios:
From the evaluation it can be seen that financial ratios of the company can we help and effective its financial condition. The profitability ratio such as net profit margin is mainly at 14.66% in 2016, which is relatively higher than 13.67% obtained in 2015. Moreover, the current ratio is mainly at 1.90 and has been constant since 2 years. However, the quick ratio of the organisation has a relatively increased from 2015 to 2016 at the levels of 1.78 (Investors.apnoutdoorcorporate.com, 2017).
Moreover, interest coverage ratio of the organisation is mainly recorded at 25.96 while its long term debt to total assets has been calculated at 0.23. Only indicates that the overall financial stability of the organisation as a relatively improved over the years. Furthermore, the evaluation of interest coverage ratio indicates that the organisation can obtain more debt and adjust the overall cost of capital according to its needs.
Evaluation of competitor’s performance:
There are different types of competitors for APN Group Among which is the Ooh Media and can be identified as one of the active competitors. However, Ooh media directly uses show mixture of both equity and debt for financing its overall activities, which could help in reducing its insolvency condition. For the home, the comparison of capital structure of the competitor Ooh Media and APN group would mainly help in identifying the relevant inclination that is used by APN Group. From the evaluation it does not seem that the competitor’s capital structure is being followed by APN Group, as the organisation mainly focuses on equity rather than debt (Investors.apnoutdoorcorporate.com, 2017). The evaluation of the financial report indicates that the loan obligations of the organisation have declined from 2015 to 2016 indicating, dependency on equity capital. Nevertheless, the aim of APN Group is mainly generate relevant investment funds and increase the overall returns for their shareholders.
Depicting the Capital structure of APN:
Currently the overall capital structure of APN Group is mainly identified to be a mixture of debt and equity, which has directly allowed the organisation to finance its overall activities. The WACC of the organisation is directly impacted with the overall financing decision that is conducted by the management. Furthermore, any kind of changes any management decisions directly reflect on WACC of the organisation. In addition, it is also seen that any kind of increment in the overall weighted cost of capital and market value of the organisation. Relevant increment in the market value directly increases share price and generate relevant capital to support its future actives (Investors.apnoutdoorcorporate.com, 2017).
However, the reduction in cost of capital can only be conducted with the help of less costly funds that is used by organisation to conduct their activities. The overall low cost of capital could help in reducing relevant funding of new projects, which could help in reducing financing cost of the project (Bodie, 2013). Moreover, the relevant reduction in cost of capital could only be obtained by acquiring low interest debt and reducing the exposure of equity capital. The new low interest debt that can be accumulated from bonds, bank loan, and other credit financing that could help in increasing debt of the organisation.
The report many states that the overall capital structure of APN is a relatively adequate, as both equity and debentures are been used for financing the company's operation. The evaluation of the overall revenue and earnings of the organisation mainly depicted its financial health, which is relatively adequate to support its future operation. Furthermore, the company has been providing satisfactory returns, which could help its shareholder to get the relevant dividend.
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