TAQA is operating in a multi-billion-dollar global market oil and energy market. As a result of this, the financial performance of TAQA is determined by the trend in the global market. Lately, the price of oil has been erratic, and this has also affected the economic standing of many oil companies worldwide, TAQA inclusive. Some of the major competitors of TAQA are Shell, Chevron, British Petroleum, and Exxon Mobil.
These financial analyses will unravel the suitability of TAQA for investment as it reveals the level of profitability, durability and the benefits any future investors could gain by putting their hand-earned money on the company.
(I) Level of Profitability: From the fiscal year 2007 to 2009, Abu Dhabi National Energy Company demonstrates a healthy level of profitability. This observation can be supported with the following data:
In 2007, TAQA’s average profit margin was 0.12, and its returns on equity was approximately 0.12. These are encouraging figures because 2007 was a terrible year in the energy market. It was the period the oil price shot up to the sky and made energy business almost seemed unprofitable. However, TAQA was able to have an appreciable return on assets that worth 0.015. The following year (in 2008), TAQA’s profit margin increased considerably to 0.19, and its returns on equity did a lot better coming to 0.2, while the returns on asset surprisingly came to 0.02. These results indicate the fact that the profitability of TAQA increases every year. Although, the year 2009 is different because the financial crisis that began in the United States also affected TAQA, bringing its profit margin down to 0.01, its returns on equity plummeted to 0.014 and its returns on assets shrank to 0.001. However, there is every possibility that once the financial crisis is over, TAQA will be able to rebound to its profitability level.
(ii) Degree of Solvency: The analyses