American International Group

This paper presents an attempt to review the above article published in The Washington Post and authored by Yang Lynn, a staff writer at The Washington Post. The heading of the article provides an overview to the reader to the effect that AIG relives hopes to the taxpayers for their money to be repaid by the firm.

To that note, the author starts by noting that the $1. 5 billion reported by the American International Group provides sufficient evidence that the bailout will not be a wasted venture on the firm. The author bases the confidence of repayment on the fact that the firm reported profits three times in the four quarters. In bid to reconcile the author’s concerns with the current and past performance of AIG, I checked the firm’s income statement from 2007 to 2009. According to the company’s income statement availed by Yahoo Finance, AIG recorded total revenue of $110.1 billion in 2007 while the net profit for the same year was $6. 2 billion. In the following year, the company’s total revenues dismally went down tenfold from the previous mark. This kind of performance led to the company recording a net loss of $99. 289 million. And it seems by this time the loss-making stage was already set for the firm. This is because even in the year that followed (2009 financial year), AIG’s net loss increased over the 2008 record to stand at $122. 44 million.

Therefore, it is evident from previous financial performance of the company that a $1. 5 billion profit is worth reliving the hopes to the taxpayer. Nevertheless, Yang Lynn quickly observes that the $182 billion assistance from the Federal Reserve still puts the company on the hook despite increasing its credit line by an amount equal to the profit it recorded (that is, $1. 5 billion). At paragraph 8, the author points to another hindrance to the company’s future hopes. The author notes that the kind of capital structure for AIG is highly hinged on debt finance.

Given that about 89% of the capital constitutes debt and only 11% company’s equity, AIG still has an uphill task since they owe more than what they earn. According to Venture Capital Dispatch (2010), a company that highly depends on debt finance should reconsider its position because it is in a high risk bracket even though lenders may not accept this especially when a business is in the startup stage (Para. 4). This thus strengthens the author’s concerns that having 89% of the capital sourced from debt finance places AIG at an unpredictable state since it puts it in high risk status. Interesting article Deronde International

Lastly, Yang Lynn identifies market volatility as a vital factor in the company’s future. To this end, the author notes that if the stock market becomes stable, this will assure healthy investment holdings for the American International Group. The author throws a pessimistic perspective to the possibility of AIG having healthy investment holdings by noting that the stock market has unexpectedly become volatile and therefore this brings a lot of uncertainty even though it might exhibit improvements as the $1.5 billion profit it posted. In conclusion, the article systematically evaluates the recent profit mode of AIG on the backdrop of myriad of challenges that the company faces. The danger of leaning the capital structure on debt finance is highlighted even though it is not dealt with at an in-depth perspective. Market forces also have been identified to present a challenge to the company’s balance sheet and income statement. The future of AIG is therefore uncertain.

Reference List:

Venture Capital Dispatch (2010), “Silicon Valley Bank Spreads Debt Financing to Europe” Wall Street Journal; Available at: http://blogs. wsj. com/venturecapital/2010/06/09/silicon-valley-bank-spreads-debt-financing-to-europe/ Yahoo Finance (2010) “AIG: Balance Sheet for American International Group” Accessed online from URL: http://finance. yahoo. com/q/bs? s=AIG+Balance+Sheet&annual Yahoo Finance (2010) “AIG: Income Statement for American International Group” Accessed online from URL: http://finance. yahoo. com/q/is? s=AIG+Income+Statement&annual

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with MyStudyWriters
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Thank you for your hard work and help.
Customer 452773, February 13th, 2023
Business and administrative studies
always perfect work and always completed early
Customer 452773, February 21st, 2023
excellent job
Customer 452773, August 12th, 2023
Leadership Studies
awesome work as always
Customer 452773, August 19th, 2023
Human Resources Management (HRM)
excellent work
Customer 452773, July 3rd, 2023
Human Resources Management (HRM)
excellent job
Customer 452773, June 25th, 2023
Business and administrative studies
Thank you for your hard work and effort. Made a 96 out of 125 points Lacked information from the rubic
Customer 452773, October 27th, 2023
I just need some minor alterations. Thanks.
Customer 452547, February 10th, 2021
Social Work and Human Services
Great work I would love to continue working with this writer thought out the 11 week course.
Customer 452667, May 30th, 2021
Great job
Customer 452773, February 13th, 2023
Business and administrative studies
Thank you for your hard work
Customer 452773, October 19th, 2023
Business and administrative studies
excellent work
Customer 452773, March 9th, 2023
Customer reviews in total
Current satisfaction rate
3 pages
Average paper length
Customers referred by a friend
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat

Sometimes it is hard to do all the work on your own

Let us help you get a good grade on your paper. Get professional help and free up your time for more important courses. Let us handle your;

  • Dissertations and Thesis
  • Essays
  • All Assignments

  • Research papers
  • Terms Papers
  • Online Classes
Live ChatWhatsApp