Business Finance

658 Words Feb 17th, 2013 3 Pages
Company Analysis (Aqua America)

Investment decisions are of vital importance to all, since they determine the potential to succeed. The decision whether or not to invest in a particular business would be based on a careful consideration of some key financial indicators of that particular business.
Aqua America (formerly Philadelphia Suburban Corp.) is the largest U.S.-based publicly traded water utility, providing water and waste services in 10 states: Pennsylvania, Ohio, Illinois, Texas, New Jersey, Indiana, North Carolina, Virginia, Florida and Georgia (unregulated).
The first factor considered is ‘Volume’; volume here refers to the number of stocks bought and sold in a single day of trading. The average volume of stock traded
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More so, the company has a positive cash flow. CPS gives a true account of how much cash a company really has on hand, and how effective its operations are. This is a crucial statistic in itself to determine if there is enough cash to pay off debt and engage in future endeavors that contribute to stock price increases.
Another factor considered is the firms standing in the industry, Aqua America is ranked 5th in the industry. A good standing to a long extent determines how much influence a company has in its industry. Been ranked fifth in the industry, Aqua America hold an important position in the industry which shows their competitors can’t easily get them off the market, the economic outlook of the company shows favorable trend over the next few years as many aging pipeline would have to be replaced. In conclusion, after having considered Aqua America’s industrial conditions, their financial position and their economic outlook it could be concluded that investing in this company is a good decision.

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References
Brealey, R. A., Myers, S. C., Marcus, A. J. Fundamentals of Corporate Finance. (McGraw- HillIrwin. New York. 2012).

Karpoff, J. (1987). The Relation Between Price Changes And Trading Volume: A survey. Journal of Financial and Quantitative Analysis, vol. 22, 109-125.

Lintner, John. (1965). The Valuation of Risk Assets and

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