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Trend Analysis El Paso Cgp Company

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El Paso CGP Company


El Paso CGP incorporated in Delaware in 1972 as a successor to a company founded in 1955. On Jan. 29, 2001, Co. merged with The Coastal Corporation, which was my initial choice of a company to research. They adopted their present name one-day after the merger, on Jan. 30, 2001. El Paso's principal operations include the transportation, gathering, processing and storage of natural gas, the exploration, development and production of natural gas and oil. Energy and energy-related commodities and product marketing.

El Paso CGP's operations are segregated into four primary business segments. Pipeline segment provides natural gas transmission, storage and related services. They conduct these activities primarily through three wholly owned and partially owned interstate transmission systems along with four underground natural gas storage entities. Production segment explores for, acquires, develops and produces natural gas, oil and natural gas liquids. Productions have onshore and coal seam operations and properties in 10 states and offshore operations and properties in federal and state waters in the Gulf of Mexico. Internationally, El Paso has exploration and production rights in Australia, Bolivia, Brazil, Canada, Hungary and Indonesia. Field Services segment provides customers with processing and gathering services. Merchant Energy segment owns and has interests in domestic and international power, El Paso owns or has interests in 19 power plants in 8 countries.

Current Ratio

This trend showed a decline from years 2000 through 2002. It increased in 2003 and fell again in 2004. Considering this ratio shows a company's ability to pay back its short-term liabilities, a decline is bad. According to this ratio, this company had a 91% ability to pay its short term liabilities versus a 69% ability in 2004. The closest this company came to showing a 100% ability to pay short term liability was in 2003 at a 95%.

Acid-Test Ratio

This trend showed a massive increase from 2000 to 2001, and it balanced off in years 2001 and 2002. There was an 11% decline in 2003 with a bounce-back in 2004 to 49%. Regardless of this trend, the company never achieved a score of 1 or better, meaning it cannot pay its current liabilities. Although in 2004 it had the best score of the five-year period that I examined.

Working Capital

This trend showed a major decline from 2000 to 2001. There was only a slight increase in 2002, but rose significantly in 2003, followed by another slight decline. I was unable to see any year where this company was able to achieve a positive working capital. The significant decline from 2000 to 2001 could indicate a possible decline in sales volume, although I am not certain how that could be considering the type of business.

Return on Investment (DuPont Model)

I was unable to locate the total sales for this company, leaving me unable to perform this calculation. I did locate a tool that allowed me to run a report that gave me this information. I have included it as an attachment to this paper. This trend showed a massive decline between 2000 and 2003. It began a climb in 2004. An increase in this trend could be good, but it does not tell where the return in generated. An increase would indicate how well a company allocates capital into its operation.

Return on Equity

I could not perform this calculation correctly either, so I used the information mentioned above. This trend showed a slight increase between 2000 and 2003. And it declined again through 2004. This company never seemed to reach even a 10% profit with the shareholders invested money.

Profit Margin

This trend showed a tremendous decline between 2000 and 2003. It began an to show an increase in 2004. Considering it this ratio shows how much of every dollar in sales a company actually keeps in earnings, an increase here would be good. However, it may not mean that a company is improving.

From the standpoint of a banker or an investor, this company would not get my money. With only 2 years out of the last five showing positive profits generated on invested funds, their track record shows that I would not see any return. Never achieving an Acid-Test Ratio score of a one or better, it would indicate that they would not be able to pay back any short



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