Financial Analysis of Carsales.com Ltd

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Introduction
Car sales.com Ltd is the largest online auto motive business in Australia. The company has been
listed in the ASX and was founded in 1997. The current C.E.O is Cameron McIntyre who took
over reigns in March 2017. The company offers online advertisement services for people and
specifically Australians who want to buy or sell cars, trucks, motorcycles, boats e.t.c(Tan and
Robinson, n.d.). The company has also been credited for developing world leading technology
and advertising solutions that are vital in driving its business around the world. The company is
based in Richmond, Australia which is also its main geographic area of activity. Like most listed
companies, Carsales.com ltd closes its books on 30th June of every year. Therefore, ending date
of the last financial year was 20th June 2016. The company’s share was trading at $14.22 at the
ASX on 14September 2017. On 20th March 2017 the company issued an interim dividend of 18.7
cents per share.
Industry situation and company plans
a) Industry and its outlook
As the largest marine, motorcycle and auto mobile classified company or business venture in
Australia, it has become a local brand in the country and a leader in the industry. The company is
attracting more and more Australians willing to sell and buy automobiles from their websites. In
fact, carsales.com has become so popular that its websites has some of the highest traffic in
internet search for selling and buying of automobiles. The industry situation is also looking
increasingly very well. The industry has witnessed an upsurge of people in Australia willing to
buy and sell their motor-vehicles via the websites(Balasundaram, 2012). This is an industry that
is growing exponentially and carsales.com and its peers are happy for the industry.

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With a growing industry, the company has been a focal point of meeting between dealers,
consumers, sellers, advertisers and manufacturers. It has employed at least 600 people in
Australia.
b) Company future plans
as the leading automobile classified business, its ahead of its peers in the industry. Carsales.com
aims at developing an advertising solution and a technological hub that is world leading. It aims
at expanding its business across the world and has already build an extensive network in the
pacific asia region. It also holds great business interests in Thailand, Brazil, Malaysia and South
Korea(Balasundaram, 2012).
Financial Statement Analysis
Statement of financial position
Gross profit
The gross profits for carslaSes.com are $ 372 million in 2017, $ 344 million in 2016 and $312
million in 2015 respectively. There is an increase in gross profit mainly due to increase in
business for the classified business. Also by the end of financial year 2014 the companys gross
profit stood at $ 289 million.
The income from operations is $ 167million in the year 2017, $ 165 in the year 2016 and $153
million in the year 2015. Net income from operations is also increasing partly due to good
business strategies(Easton et al., n.d.).

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Net income for the business is $ 109 million in the year 2017, $ 109 million in year 2016 and $
103 million in the year 2015 respectively. As it is seen, there is stagnation in net profit for the
year 2016 and 2017 and this can be attributed to increased cost of doing business in the
year2017. This is after increase in net income from $ 103 million in the year 2015(Robinson et
al., 2015). In 2014, the net income stood at $ 105 million .
Common size statement analysis technique
Trend Analysis
ASSETS 2017 % 2016 % 2015 % 2014 %
Total Revenue 372 0% 344 0% 312 0% 289 0%
Operating Expenses
Cost of revenue total 34 9.1% 30 8.7% 26 8.3% 24 8.34%
Selling, Adm expenses 162 43.5% 114 33.1% 112 35.8% 96 33.21%
Depreciation 9.97 2.68% 7.53 2.1% 6.93 2.21% 5.97 2.06%
Unusual expenses (0.27) -
0.17%
(1.89)
-0.05%
(0.97) -0.31% (0.79
) -0.02%
Total Operating
Expenses 205 55.1% 179 52% 163 52.24% 156 53.9%
Net income b4 Taxes 161 43.3% 162 47.1% 163 52.24% 164 56.74%
Net income after taxes 113 30.4% 114 33.1% 114 36.5% 114 39.44%
Net income B4 extra
items
109 29.3% 109 31.69% 107 34.29% 105 36.33%
NET INCOME 109 109 107 105