The case of Granite Construction Industry Plc Study

The of Granite Construction Industry Plc - Case Study Example This paper focuses on Granite Construction Company. The paper is aimed at carrying out financial analyses of Granite Construction Plc with particular focus on the liquidity, profitability and solvency ratio so as to gain a reasonable basis for providing recommendations to investors and suppliers on whether to invest or continue business for the company, and finally see the various methods through which the company access the capital market. Having said this, the sections that follow will be structured as follows. Section two provides an overview of the company. Part three provide a table of the various ratios, section four compares these ratios to the industry benchmark, while the next section examine the capital structure of the company and provides recommendations to various interest groups. Granite Construction Inc is a heavy civil construction contractor in the United States. The Company operates nationwide, serving both public and private sector clients. In the public sector, th e company primarily focuses on infrastructure projects, including the construction of roads, highways, bridges, dams, canals, mass transit facilities and airport infrastructure. (Annual report 2007). In the private sector, Granite Construction Inc performs site preparation and infrastructure services for residential development, commercial and industrial buildings, plants and other facilities (www.graniteconstruction.com). According to the (2007), the company owns and leases substantial aggregate reserves and own a number of construction materials processing plants. The Company also have a contractor-owned heavy construction equipment fleets in the United States (www.graniteconstruction.com). Bodie et al (2002), defines the macro economy as the environment in which all firms operate. According to Bodie et al (2002), based on a study on the S&P 500, stock price tends to rise with earnings per share. Although ones ability to forecast the macro economy environment can lead to speculative investment performance, it is not enough to forecast the m

Bonds Essay Example | Topics and Well Written Essays - 500 words

Bonds - Essay Example Bonds carrying premium are issued at a price above the face value of the bond whereas bonds issued at discount are normally below the face value of the bond. There are various reasons as to why the bonds are normally issued at face value, or at discount or at premium and this largely depends upon the different circumstances. If the overall reputation and creditworthiness of the firm is relatively good in the market and investors have relatively better expectations of the future performance of the firm than the firm may be able to sell its bonds at premium. Selling on premium may also be because of the fact that existing bond issues having similar risk characteristics may be offering lower interest rates therefore by if the issuer is willing to offer higher rate of return to the lenders than it may be possible that the bond will be issued at premium. Similarly, bonds may be offered at discount because issuing firm may not enjoy the relatively better credit ratings in the industry and investors are not willing to put more money into the firm. Selling at discount can also be due to the fact that overall yield offered by the bond may be significantly lower than the existing bonds of same risk category thus investors, in order to get compensated for the opportunity forgone to earn higher interest demand from issuing firms to offer their bonds at discount. (Navarro, 2003) Finally issuing bonds at face value indicates the indifference of the investors towards the company i.e. investors may not have relatively more trust in the future prospects of the company and may be expecting to earn normal rate of returns on their investment. Selling at face value does not however mean that the firm is not doing well or may be facing difficulties in future but in actual it indicates the ability of the firm to match its offerings according to the market expectations. There are different reporting requirements for bonds issued at premium, discount and face