Kinder Morgan Case Study

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When analyzing a company for investment, there are many quantitative and qualitative measurements to be considered. Not only is the financial information important, but so too is the analysis of the company’s ethics, political environment, and long-term sustainability of the company’s services. In analyzing Kinder Morgan, the quantitative data considered were things such as the trading volume, average stock prices, as well as financial ratios such as the liquidity ratio or earnings per share ratio. Qualitatively, Kinder Morgan has many community outreach programs, sound political ethics, as well as a desire to protect the environment. Kinder Morgan is the largest energy infrastructure company in the North America and has an interest …show more content…

Kinder and William V. Morgan when they bought the publicly traded pipeline limited partnership, Enron Liquids Pipeline. In 1999, Richard Kinder took over KN Energy, which became Kinder Morgan, Inc. In 2001, Kinder Morgan Management, LLC was formed to facilitate ownership of Kinder Morgan Energy Partners. Richard Kinder in 2006 led a buyout of Kinder Morgan Inc. to make it a private company. On February 11, 2011, Kinder Morgan became once again publicly traded with an IPO of nearly 110 million shares, and raised $3.3 billion dollars. Kinder Morgan Inc. acquired all shares of Kinder Morgan Energy Partners and Kinder Morgan Management, LLC to become one publicly traded company Kinder Morgan Inc. (KMI). This transaction was a $76 billion dollar transaction, which closed on November 26, …show more content…

The return on equity ratio is calculated by dividing the net income minus dividends by the equity. Per the Principles of Accounting textbook, “return on equities ratio enables the comparison of capital utilization among firms…this can help assess of effective the firm is in using borrowed funds”. Kinder Morgan’s return on equity ratio for December 2015 was .59%. In 2013 the ratio was 9.14% and in 2014 it was 3.01%. The return on equity ratio, like the return on assets ratio significantly declined over the past three years. One significant decrease to cause this decline is due to the deterioration of net income. Kinder Morgan’s net income from 2013 to 2015 was $1.19 billion, $1.02 billion, and $240 million successively. This sharp decline in net income can cause misplaced judgment on the decline of the debt ratios. When Kinder Morgan had a much higher income, their debt ratios were much

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