Lafarge Financial Statements Case Study Example | Topics and Well Written Essays - 2250 words

Lafarge Financial Statements - Case Study ExampleThe trend analysis of Lafarges P&L statement shows that the increase in companys sales has been stable over the years with a hike in sales by roughly 17% in 2005. The cost of sales has also been rising with the increase in sales and they withstand finally mounted by about 17% during the last financial year. It reflects that the percentage change in sales is almost same as the percentage change in cost of sales, however a reduction in depreciation account by 4.1% has magnified the companys gross profit by 22% in 2005. The SG&A have expanded drastically during the year 2005 i.e., by 13% (1.2% in 2004). However, due to a substantial increase in gross profit, the company managed to display a rise in the operating income by about 32%. The company has had a substantial decline in the interest payable for two years, however it seems to have rebuilt during 2005. The companys pre-tax income had declined by almost 3% in 2004, which recovered surprisingly with an increase of 36% in 2005 as comp bed to the year 2003. With a 50% increase in displace income, the companys retained earnings has flourished by 54% while the dividend distributed have increase by 41%. Thus, an analysis of profit and loss suggests that the company has risen up from the decline that took place in its financial performance in 2004. Three-Year Earning Per Share AnalysisEPS200520042003Earning Per Share6.395.164.92Common shareholders and potential investors in common stock start-off look at a companys earning record (Meigs & Meigs, p934, 1993). The EPS analysis of Lafarges financial statements reflects that the company has had an increasing trend in the earnings per share for the last three years. The companys EPS increased by 4.8% in the year 2004, which further rose by almost 24% in 2005. This sudden enhancement of the companys earnings has also been evident in its P&L statement, which highlights a pleasant reform in the companys financial performa nce in the year 2005 owing to a drastic increase in sales revenue. EBITDA AnalysisEBITDA200520042003Lafarge Group14.8%14.7%14.2%Cement 23.3%23.0%23.0%Aggregates & Concrete7.4%7.1%6.3%Gypsum Products10.3%9.6%7.0%Roofing6.5%10.0%9.4%Speciality products-285.7%-128.3%-38.7%EBITDA refers to the Earnings Before Interest, Taxation, Depreciation and Amortization. Therefore this analysis takes into account all the major(ip) costs and expenses other than the items mentioned above. The EBITDA margins presented in the above graph reflect a segregated view of the companys earnings in terms of the group as a whole and its subsidiaries (on the basis of products). The groups EBITDA margin represents a stable and subtle rise in the companys earnings, which is a sum up of its subsidiaries. Cement and A&C are also having a stable uplift in earnings, while Gypsum products section is showing a remarkable growth in terms of EBITDA. Roofings earnings have declined in the year 2005 whereas the specialty pr oducts section has had a substantial increase in the declining state of earnings, which