Evaluate long-term financing instruments and strategies for Alcoa, Inc
Here are the end of year reports for 2009
Alcoa, Inc.: Analysis of Long Term Financing
Alcoa, Inc. Was established in 1888 and currently is the world leader in the production and management of primary aluminium, fabricated aluminium, and alumina combined, through its active and growing participation in all major aspects of the industry: technology, mining, refining, smelting, fabricating, and recycling (Alcoa, 2009, p. 3). An interesting bit of information the researcher just learned about Alcoa is that it manufactures and provides the aluminium casing of the Kindle, the electronic book reading tablet of the e-retail giant Amazon.com.
Given Alcoa's businesses it has to maintain a specific blend of short and long term financing to be able to deliver the optimal value to its shareholders. The following section of the paper evaluates the long term financing instruments the company has utilized and the strategies it has implemented.
Alcoa is currently implementing several expansion programs including a smelter in Iceland and an anode facility in Norway which are in lined with the organization's strategy of placing growth projects into service (Alcoa, 2009, p. 50).
An analysis of the company's consolidated balance sheet for the years ended December 31, 2008 and 2009 shows that the long term component of the firm's debt increased by 465 million US dollars from 2008 to 2009. The total long term component of its financing is about 23 per cent of its total assets. This means that for every dollar of assets, about 23 cents was financed by the company's long term financing. The table below presents the breakdown of the 2008 and 2009 balances of the long term debt of Alcoa.
Description 2009 2008
7.375% notes due 2010 511 511
6.5% notes due 2011 584 584
6% notes, due 2012 517 517
5.375% notes due 2013 600 600
6% notes due 2013 750 750
5.25% convertible notes due 2014 575 -
5.55% notes due 2017 750 750
6.5% bonds due 2018 250 ...
Long-term financing instruments and strategies are examined.