Eatons Financial Situation

ECO 2020 week 3 SLP Assignment
Name
Course
Instructor
Date
Background
Eaton’s financial situation is affected by internal factors, external factors including, economic policies and outlook of the diversified machinery industry. The company’s main strengths are diversified geographical presence and product portfolio (World Market Intelligence, 2014). However, stringent regulations, volatility in input prices and increasing labor cost in America pose a challenge to the company’s efforts to expand and improve operational performance (World Market Intelligence, 2014). Eaton has followed the merger, acquisition and partnership strategy to expand to new areas, with diversification also necessary to improve the company’s competitiveness. The strong dollar also affects the company’s performance since the company’s exports become more expensive. This is an analysis on Eaton’s financial health and the impact of fiscal and monetary policies on the company.
Eaton’s financial health
Eaton’s acquisition of Cooper industries was expected to yield positive results, but the synergies may not be experienced for long. This is likely because of the slowdown in the energy sectors, which is an important segment for the company. However, there is likely to be a sportive impact of higher car sales, since vehicle manufactures some components manufactured by the company. The electrical products segments will continue to play an important role in the growth of the company. The company’s performance is dependent on the economic environment, and a slowdown in the manufacturing sector in China provides an opportunity to expand the company’s operations into new markets. The operating revenue figures are worrying since the company’s revenue grew marginally between 2013 and 201 at 2.3% (Morning Star, 2015). On the other hand, the operating income and net income fell in the same period. This indicates that the company’s expenses while the ...