Financial Ratio Analysis

Individual Financial Ratio Analysis

Cal Coleman

FIN/571

May 4, 2016

Dr. Yvan Nezerwe, DBA

Individual Financial Ratio Analysis

Financial analysis is the selection, evaluation and interpretation of financial data, along with other pertinent information, to assist in investment and financial decision-making. Financial analysis may be used internally to evaluate issues such as employee performance, the efficiency of operations and credit policies. It may also be used externally to evaluate potential investments and credit-worthiness of borrowers, among other things. This paper will examine the financial well-being of NRG Energy, Inc. through the use of financial ratio analysis. First, the paper will briefly describe the company and its business. Next, the paper will calculate all liquidity, efficiency, profitability, capital structure and market value ratios. Finally, the paper will analyze the financial position of the company and its improvement over the last three years.

The Company, NRG Energy, Inc. (NYSE: NRG)

According to NRG Energy, Inc., Investors - Overview (2016), "NRG Energy, Inc., or NRG, is an integrated competitive power company, which produces, sells and delivers energy and energy products and services in major competitive power markets in the U.S. while positioning itself as a leader in the way residential, industrial and commercial consumers think about and use energy products and services. NRG has one of the nation's largest and most diverse competitive generation portfolios balanced with the nation's largest competitive retail energy business. NRG owns and operates approximately 50,000 MW of generation; engages in the trading of wholesale energy, capacity and related products; transacts in and trades fuel and transportation services; and directly sells energy, services, and innovative, sustainable products and services to retail customers. NRG was incorporated as a Delaware corporation on May 29, 1992” (2015 Annual Report).

Liquidity...