Arconic corporation financial review.
Arconic corporation is a competitive company, and trade at arconic corporation May fluctuate significantly depending on the market position. For this reason, the company publicizes its financial statements to help stakeholders evaluate the progress and also in the determination of their dividend share. A dividend policy formulated regarding economic conditions, earnings, and capital requirements (AICPA, 2017): it’s the financial ability that enables the Arconic Corporation to sustain its competitive advantage. The budget allocation has to be considerate in ensuring that the company has increased its value that leads to value addition in capital and profitability. The Board of directors decides on the current and future dividends using the historical data on the financial statements. Consistent raise of profits have made the management directors increase the bonuses for the last two years, with a rate of 0.7%. The historical data also helps in making projections of earnings. The accountant preserves the information for financial statements to show the business performance. Financial statements reviewed in most instances are the balance sheet, income statement, and Cash flow statement.
Debts and equities have unified the financial transactions for the last three years. The average debt inflow has been $253 million. The equity capital that has affected the company cash flows are common stocks, parent company net investment, comprehensive income accumulated From previous year’s statements, and non-controllable interests. Sales report from the income statement shows that the sales have been declining for the last three years. Consequently, net loss has also been decreasing. The value of the total assets has been maintained constant despite other fluctuations in financial transactions.
The Arconic Corporation combined financial statements, which indicates the trends from pro forma information that gives an effect of data from the provided information. The trends in economic performance are a result of many influences. The separation of assets into different equity levels and liabilities related to the company from Parents Company and transfer of those assets and liabilities to Arconic Corporation has shown some positive trends in the performance. The company has distributed 100% of both issued and common stocks to its shareholders, and this connection has brought separation among shareholders, which negatively affects the company. The effect of our anticipated Post-separation capital structure includes the occurrence of indebtedness of approximately $253 million. The debt advantage in interest payment has positive trends in company financial performance. The positive trends are as a result of the impact of transactions contemplated by the separation agreement in the tax matters, employees matters, intellectual properties licenses, Davenport plant agreements, the agreement with the metal suppliers and lease of the real estate between the suppliers and the parent company (Bainbridge & Henderson, 2018). All available information is factual accounting figures and information based on the assumptions of the management.
The company’s financial position’s potential weaknesses are a lack of consistency in sales and debts and equities financing. From the last three years of historical data, sales have been consistently dropping. Improper capital allocation strategies can lead to poor allocation, which has led to poor predictability of capital formation. Arconic Corporation requires to allocate extra funds to the marketing department to improve the company brand in the market. An unstable Price of raw materials has resulted in rising in cost Price. High expenses on current activities than collected revenues have led to a consistent record of net loss over the last three years.
References
AICPA. (2017). Accounting trends and techniques: U.S. GAAP financial statements–best practices in presentation and disclosure. John Wiley & Sons.
Bainbridge, S. M., & Henderson, M. T. (2018). Outsourcing the Board: How board service providers can improve corporate governance. Cambridge University Press.