Accounting and Financial Analysis of ARB Corporation Limited

Running Head: Accounting and financial analysis report
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Accounting and financial analysis report

Accounting and financial analysis report 2
Executive summary
In the report, financial statement analysis and capitals structure analysis of ARB
Corporation limited has been done. The report express that the capitals structure of the
organization is not at all competitive and due to it the cost of capital is also high. On the basis
of the report, it is suggested to the comapny o reduce the equity amount to manage the capital
structure and reduce the cost of capital.

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Contents
Introduction.......................................................................................................................4
Company overview...........................................................................................................4
Financial analysis..............................................................................................................4
Capital structure........................................................................................................4
WACC......................................................................................................................5
CAPM.......................................................................................................................5
Capital structure comparison........................................................................................6
Financial ratios of ARB................................................................................................6
Significant changes into capital structure.....................................................................7
Shareholder wealth maximization................................................................................7
Recommendation and conclusion.....................................................................................7
References.........................................................................................................................9
Appendix.........................................................................................................................10

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Introduction:
Financial analysis is financial processes which s conducted by the financial analyst,
financial managers, investors and other stakeholders of the company to evaluate the
performance of the company. The financial analysis process takes the concern of various
factors to evaluate the performance of an organization. In the report, capital structure,
WACC, CAPM, Financial ratios, comparison with Competitors Company, shareholder
wealth maximization etc points have been evaluated.
Company overview:
ARB corporation limited is an Australian company which manufactures, distributes
the off road vehicle accessories. It also deals in light metal engineering work. The company
has been founded in 1975 and currently, the total revenue of the company has been estimated
around $ 385 million (Bloomberg, 2018). The financial analysis study has been done on the
company to recognize the performance, risk factors, return etc of the company.
Financial analysis:
Financial analysis is mathematical tool which evaluates the financial statement of an
organization to recognize the various financial factors of an organization which are great base
to make better decision about financial position of the company.
Capital structure:
Capital structure of an organization explains about the relationship of total debt
amount and the total stockholder’s equity amount of an organization. On the basis of capital
structure of ARB Corporation limited, it has been evaluated that the 15% of funds are raised
by the company through debt amount and 85% of the funds are raised by the company
through equity amount (Margaritis & Psillaki, 2010). The below image explains about the
capital structure of the company: