Financial Analysis Industry Analysis The Research Proposal

Length: 9 pages Sources: 8 Subject: Business Type: Research Proposal Paper: #24595764 Related Topics: Landfill, Financial Institution, Financial Ratio Analysis, Debt Financing
Excerpt from Research Proposal :

Clearly, Republic holds very low inventory levels. Waste Management holds high inventory levels, with the industry average falling in between. This relatively inefficiency has certainly not hurt Waste Management, though, judging by the other aspects of its financial performance.

Analysis of External Environment

While nationwide there are 15,000 firms in the waste services industry, in any given market Waste Management will have only a small handful of competitors. Most of these are relatively small, being either local or regional players. Republic is one of the only competitors with a size and scale anywhere approaching that of Waste Management. Competition in any given market can vary in intensity, but competition for high stakes bids -- such as civic or large institutional bids -- can be intense. Bids are almost always based on price, highlighting the need for cost control in this industry.

The customers are waste services range from municipalities to institutions to manufacturing firms with special disposal needs that municipal services cannot meet. Remediation services also have a wide range of clients, looking for waste management solutions that cannot be handled by conventional means (removal of asbestos, oil spills, etc.). Many customers typically have high buying power as they represent large components of an area's business. Only recently have firms like Waste Management been able to counter that buying power.

The suppliers to the industry are the equipment suppliers. For trucks, dumpsters and other basic equipment, the suppliers are large industrial concerns that can dictate prices and terms to most industry players (the top firms excepted). For remediation services, however, technology is more specialized, which means that there are few suppliers and they can command a premium for their products (Hoover's, 2009).

The strategic allies of this industry are the governments in the regions in which the company operates and any potential landfill operators as well. Governments have a specific need to provide waste management services to their communities, in order to maintain the cleanliness of those communities. The governments may be responsible to waste collection contracts, but also are valuable partners in working towards broader waste management solutions and may have influence over landfill operators as well. For firms involved in waste collection, the landfill operator is a vital strategic partner. The waste collection companies work with landfill operators every day in order to move the waste from its home site to a storage location.

The main body of regulation affected the waste management industry are environmental laws. These laws dictate the degree of care that is required for the disposal of a wide range of goods. This includes case law, which sets the bounds of liability in anti-dumping cases (Koncept Analytics, 2009). Waste management firms use these laws and potential liability to help drive their own business, but they must also work within the confines of those laws in order to ward off legal difficulties themselves. Environmental laws can also impact how much waste is produced, impacting the upside growth of the waste services industry.

Sources of Funding

Waste Management's primary source of funding is through


There are three main reasons for this. The first is that the company has a strong position with respect to liquidity -- they have better liquidity ratios than those of their competitors. The second is that they are not in a strong position to issue more equity. Without growth to fuel interest in an equity offering, Waste Management would simply dilute the value of its stock by issuing more equity. Lastly, Waste Management has a favorable capital structure for a mature firm in a mature industry. An equity issue could jeopardize that, which minor debt issues can easily be absorbed.

For Republic Services, the Allied acquisition was paid for with equity. Republic offered 0.45 shares in Republic for every share in Allied Waste. This was made possible by Republic's strong growth, in addition to the strategic synergies between the two companies. The use of equity was necessary for this merger for two reasons. The first is that the amount of debt that Republic would have needed to absorb Allied would have crippled the company. The second is that the use of equity is commonplace for such mergers. With the strategic synergies between the two firms, it is expected that most shareholders in Allied would wish to remain shareholders in the new company. Allied management had, for example, wished to re-enter key Sunbelt markets, and a merger with Republic allowed for this.

One of the outcomes for Republic of this merger is that Republic's balance sheet has apparently improved. While the company's balance sheet may still be below the industry average in some respects, it better than it was before Allied was absorbed.

With this balance sheet improvement, future growth can now be funded through debt or equity. The firm at this point would probably like to bring its debt levels down further before biting off another huge competitor. It has the ability to take on more debt, and because of its growth is a riskier company than Waste Management.

When the Allied deal closed, the stock price was expected by many industry observers to improve from its $25 level at the time to the $28 level where it sits today. The stock is expected to appreciate even further as post-merger cost savings begin to accrue. The result of a rising stock price is the ability of Republic to use equity again for large mergers. To the extent that such mergers enhance shareholder value, as the one with Allied has, shareholders are willing to accept some degree of merger risk.

Overall, Waste Management is the stable industry leader, with exceptional operations that far exceed the performance of its peers. Republic is responding to the maturation of its industry by embarking on a course of consolidation, building market share through acquisition, using its strong equity to make the deals.

Works Cited:

No author. (2009). Waste management: Industry overview. Hoover's. Retrieved November 23, 2009 from -- /free-ind-fr-profile-basic.xhtml

Waste Management Financial Statements from MSN Moneycentral. (2009). Retrieved November 23, 2009 from

Republic Services financial statements from MSN Moneycentral. (2009). Retrieved November 23, 2009 from

No author. (2009). U.S. waste management industry: An analysis. Koncept…

Sources Used in Documents:

Works Cited:

No author. (2009). Waste management: Industry overview. Hoover's. Retrieved November 23, 2009 from -- /free-ind-fr-profile-basic.xhtml

Waste Management Financial Statements from MSN Moneycentral. (2009). Retrieved November 23, 2009 from

Republic Services financial statements from MSN Moneycentral. (2009). Retrieved November 23, 2009 from

No author. (2009). U.S. waste management industry: An analysis. Koncept Analytics. Retrieved November 23, 2009 from

Cite this Document:

"Financial Analysis Industry Analysis The" (2009, November 23) Retrieved June 17, 2021, from

"Financial Analysis Industry Analysis The" 23 November 2009. Web.17 June. 2021. <>

"Financial Analysis Industry Analysis The", 23 November 2009, Accessed.17 June. 2021,

Related Documents
Financial Analysis of International Airlines
Words: 5321 Length: 19 Pages Topic: Transportation Paper #: 14575221

The company's promotional literature emphasizes the synergistic effects of this corporate structure: "IAG combines the two leading airlines in the UK and Spain, enabling them to enhance their presence in the aviation market while retaining their individual brands and current operations. The airlines' customers benefit from a larger combined network for both passengers and cargo and a greater ability to invest in new products and services through improved financial

Financial Analysis Case Study Assessing a Company's Future Financial...
Words: 2923 Length: 9 Pages Topic: Business Paper #: 4288766

Financial Analysis of a Coach Inc Financial Analysis Case Study: Assessing a Company's Future Financial Health Financial analysis of a Coach Inc. Leather industry is a lucrative area of investment that entails manufacturing of products from leather. Coach Inc. is one of the many companies that work along this line of business. Coach Inc. started from manufacturing small leather goods in 1941 and expanded to produce in bulk of variety of products from

Financial Analysis of Medassets Company
Words: 2111 Length: 8 Pages Topic: Business Paper #: 9160352

By May 2012, MedAssets long-term debts are approximately $959.94 Million. Additionally, MedAssets secures loans that carry interest rates. With significant amount of loans that the company has secured and notes that the company has issued, the company faces interest rates risks. To mitigate the effect of risks associated with the fluctuation of the interest rates, the company enters into the series of financial instrument to guide against the risks from

Financial Analysis of Walmart
Words: 2905 Length: 11 Pages Topic: Business Paper #: 9135593

Financial Analysis of Wal Mart Financial Analysis of Wal-Mart Company Overview Wal-Mart Stores Inc. (WMT) is the largest global retail and chain stores operating in various formats. The company operates more than 8000 stores globally across its business segments, which include electronics, groceries, apparel, and small appliances. Although, Wal-Mart operates a global business, however, more than half of the company businesses are located in the United States. Wal-Mart also operates its global businesses

Financial Analysis of Brocade Communications
Words: 1885 Length: 6 Pages Topic: Business Paper #: 78978236

This will attract more customers leading to more profits in the organization. In addition, this will create customer loyalty and the company will have a competitive advantage over its rival. Conclusion In conclusion, it is true that Brocade is a successful company. This is due to its increased realization of profits over the last few years. This is evidence from its financial statements including income statements, balance sheet as well as

Financial Analysis: Wal-Mart in This
Words: 2046 Length: 6 Pages Topic: Economics Paper #: 11985999

Indeed, the retailer's current ratio has not exceeded 1.0 in recent times. It is however important to note that given its profitability, it is likely that Wal-Mart converts its inventory into cash at a rate that is much faster than that of its peers in the same industry. For this reason, it is highly unlikely that in the normal course of doing business, the retailer could encounter challenges paying