There are many public limited companies in the United Kingdom. These public limited companies have contributed a lot to the economy. These public limited companies are playing a vital role in the financial markets too. The public limited company that has been functioning from several years in the United Kingdom is the Avon rubber. This company was founded in the year 1885. It is a world leading manufacturer of rubber based products. This manufactures rubber for a variety of sectors. The present revenue of the Avon Company is 55 million dollars. The biggest achievement of the Avon plc is that has acquired its rival company. This was done in the year 1956. Then the Avon public limited company has manufactured the George spencer moulton company. The Avon public limited company has been sustaining in the market for long run only because of the quality products which it sells and also the tag of the leading rubber seller. This achievement is not one day’s effort. Through all these years the Avon plc has been to sustain the vigorous challenges that have been posed by the challenging business environmental factors. The performance of the company can be known through its acquisitions. The company has acquired its competitors company and this is not an easy task. Moreover the company has been able to exist in the market for a longer period of time because it manufactures rubber for different sectors rather than limiting itself to one particular sector.
The present share value of the Avon public limited company is 98 pounds. This indicates that the price value is quite healthy. The shares have been performing well in the secondary market. The secondary market is a place where the shares that were issued in the primary financial market as a part of the initial public offer are purchased and sold in the secondary market. The financial performance of the company is indicted from the revenue that is earned. The company has been able to earn the revenue which has proved quite beneficial to the company. The share price of the company indicates the performance of the company. Based on this the number of the shareholders increase.
CAPITAL STRUCUTRE
The financial management subject provides various formulas through which the value of the company is found out. There exist various theories in the capital structure to find out the value of the firm. The theories are the net income approach; this theory is a part of the relevance theory of capital structure. The other two theories are the net operating income approach and the Modigliani and miller approach. These two theories are termed as the irrelevance theories of capital structure. Apart from these theories we also have another theory of capital structure termed as the traditional approach. There are different patterns of capital structure. They are equity shares only, equity and preference shares, equity shares and debentures and equity shares, preference shares and debentures. According to the net income approach a firm can minimize the weighted average cost of capital and increase the value of the firm as well as market price of equity shares by using debt financing to the maximum possible extent. The next is the net operating income approach. The net operating income approach is exact opposite to the net income approach. Here the change in the value of the company does not affect the market value of the firm. The traditional approach is known as the compromising approach between the net income approach and the net operating income approach.
The operations of the Avon public limited are concentrated on the research and development. This research and development operations have become essential for them as they are supplying the rubber to different sectors. They cannot supply similar type of rubber or the rubber possessing similar features. So the Avon company plans to establish various research and development centers in order to cater the needs of the different sectors. The Avon public limited company needs more capital so as to invest the same in the research and developmental operations. The company can opt to ask the creditors who are available to advance the loans or it can also issue shares too. If they issue the shares to the equity share holders then the number of the share holders will increase and if they issue the preference shares then they have to pay a fixed dividend to them even if they run into losses. So the other option is to issue the debentures. So the issue of the debentures helps to form the capital structure of the company. The debenture holders are liable to receive the interest that is payable to them by the company. The debenture holders advance certain amount that is payable at the maturity of the period. The company can also apply for loans. The performance of the company plays a very important role while forming the capital structure. This is because the creditors or the other parties who are interested to finance the company calculate the pay back capacity of the company based on its previous or the recent performance. Not only this they will also evaluate the project for which they are planning to advance the loan. So the company should always strive to build a positive attitude towards it in the financial market. All these will be helpful for the company to easily approach the various possible ways to finance the activities or the projects that have been undertaken by it.
CORPORATE RISK
Risk is defined as the possibility of incurring loss. The business activities are not certain. This means that all the activities follow the same path that has been designed by the company. There may be possibilities of deviations. When the company uses the amount that has been advanced by different possible means has been put into use to finance the projects there may be chances that the project may prove bad to the company. This means that the project work may acquire huge losses. In this case the company faces the credit risk. Here the default company fails to pay the amount that has been advanced by the bank. So, the company should take utmost care of the capital, it should also make the proper use of it. And should carefully evaluate and plan the activities ahead so as to avoid the chances of facing the risks.
http://en.wikipedia.org/wiki/Avon_Rubber
http://www.Avon-rubber.com/
