FINANCIAL ANALYSIS OF ECOTECH PTY Ltd Case Solution
Description of Ecotech Pty Ltd
Ecotech Environmental Monitoring Solutions is an Australian based company with about 35 years in the Environmental Services industry of Australia. It was founded in the year 1976 and established by Robert Dal Sasso. It was in the year 1979 that the company had started to its first air quality monitoring analyzers. The company has been providing its customers with environmental monitoring services and instruments. A range of solutions are provided by the company in order to meet the pollution needs and the company specializes in water, process gas, dust, emission, ambient air and blast monitoring solutions.
The owners of the company have an experience of about 30 years of working with the mining industry. Through these years, the management has implemented a variety of the solutions in order to monitor the gas and the dust emissions through many source applications. The company is NATA accredited and ISO 9001/14001 Company.The vision of the company is emphasized upon striving continuously and persistently for growth, working as an open business, committing itself for greater good and acting as true problem solvers. In the year 2009, the company had won the Australia-Latin America business excellence award for Environmental Solutions. The company has expanded its territory across 80 countries around the world through 53 distributors, 9 branch offices and 2 manufacturing facilities.
Capital Budgeting Process of Company
Since the company has no published financials such as annual reports and the official website of the company does not provide us with any sort of the financial information, therefore, analyzing the capital budgeting process of the company is quite critical due to unavailability of the information. However, the corporate profile of the company describes that an ongoing and a continuous process of research and development is always going on at the company. Thus, huge investments in capital budgeting would be made by the company in order to support its researches and develop the latest innovative services and products for their customers.
Capital Structure of Company
As stated previously that the annual reports of the company are not published and there is no financial information for the company available on its official website or other internet sources such as Yahoo Finance and Google Finance, therefore, the required information for answering this part and analyzing the capital structure of the company is not available. However, still we can infer from the size of the company and its global operations around the world that the company would be using a mix of debt and equity in its capital structure. There is no news of the company dealing in convertible bonds or preferred stocks however, it is certain that the company would be having a mix of debt and equity in its capital structure.
Optimal Capital Structure of Company
Since the financial information for Ecotech is not available therefore, analyzing this part is also not possible. However, we can make a good estimate of the capital structure and the most optimal capital structure of Ecotech by looking at the most comparable companies in Australia in the environmental services industry. The most leading companies within the environmental services industry which are the environmental consultants of Australia are the HDL Holdings Ltd, Veolia Environmental S.A., Astron ltd and Cardno Ltd. The capital structure of all of these companies has been computed as shown in the excel spreadsheet. Based upon those, the most probable optimal capital structure has been calculated which comprises of 36.31% debt and 63.69% equity. The capital structure of Ecotech Pty Ltd would be near to this capital structure as this is the average capital structure within the environmental services industry. The chart below depicts these different capital structures......................
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