The financial position of Aes Corporation A Global Sourcing Initiative Financial Analysis can be assessed by having a look at its ratio analysis.
We can see in appendix 1 how the revenue has been decreasing throughout the years after 2005. The fact that the gross earnings margin has decreased as well suggests that the cost of sales have actually not gone down at the same rate. The decreasing net success, revealing an unfavorable trend from 2006 to 2007 recommends that costs have increased far more than the company has the ability to handle offered its existing resources. With a long term financial obligation contributing to the interest cost, Aes Corporation A Global Sourcing Initiative Financial Analysis remains in alarming requirement of an alternative earnings stream.
We can see a major decreasing pattern in the existing ratio too showing a fall in liquidity which is another point of issue for Aes Corporation A Global Sourcing Initiative Financial Analysis specifically as it has a long term financial obligation to settle also. With the existing assets not in a position to pay off the present liabilities, we can see how the business would be in a major monetary trouble unless the capital enhances with extra sources of finance.
We could explore the monetary condition of Aes Corporation A Global Sourcing Initiative Financial Analysis even more by taking a look at the business's overall debt to total properties ratio in appendix 2. We can see how the overall possessions of the business have been declining from 2005 onwards. However, the long term debt has actually remained at $160 million while the short term debt has increased side by side. Such a circumstance has actually brought Aes Corporation A Global Sourcing Initiative Financial Analysis to a point where its total financial obligation to total properties ratio has increased too. A rising total debt to total properties ratio recommends that the risk has actually increased in terms of the company's properties not sufficing to cover its overall liabilities. This may not be revealing the total liquidity position but offers clarity in terms of the overall monetary position of the company.