Performance Analysis of Caltex Australia Limited

Company
FIN600 TX YYYY
NAME: STUDENT ID:

Student name – ID FIN600 TX YYYY
Assignment – Company
Executive Summary
This report summarizes the overall performance of Caltex Australia Limited by conducting a proper
analysis of the company. Caltex is an Australian retailer engaged in supplying the transport fuel and
convenience facilities to its customers. The first part of the report deals with a brief introduction and
background of the business. It states that the core activities of Caltex include refining, purchasing
and distribution of petroleum products and operation of convenience stores across the country. The
second part deals with the company analysis which includes the examination of its financial
statements and its economic outlook. The net profit after tax increases by $9 million along with the
upsurge in the EBIT of its two main segments. A 19% increase was noticed in the total revenue of
the firm and the working capital rises by $199 million in the same year. However, the cash inflow
from operating activities reduces by $193 million. From the economic outlook, it is observed that
the market for diesel and jet will grow strongly in future.
The third part of the report deals with the ratio analysis which calculates various types of ratios. The
ratios show an overall reduction in company’s profitability, liquidity and gearing. The efficiency of
the company has improved in 2017 that it has made more turnover by utilizing its assets efficiently.
The last part of the report consists of the recommendations which include various other external
factors and ethical standards that are required to be kept in mind while analyzing an entity.
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Student name – ID FIN600 TX YYYY
Assignment – Company
Contents
Page Number
1 Introduction 2
1.1 Background and Business
2 Company Analysis
2.1 Analysis of financial statements of the business
Current Financial performance, economic outlook
3 Ratio Analysis
3.1 Profitability ratios
3.2 Efficiency ratios
3.3 Liquidity ratios
3.4 Gearing ratios
4 Recommendations and overall assessment
5 References/Bibliography
Appendices – attached Excel Spreadsheet
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Student name – ID FIN600 TX YYYY
Assignment – Company
1 Introduction
1.1 Background and Business
Caltex Australia Limited is a petroleum company that began its operations long back in 1940s when
all-Australian oil importer Ampol was listed on Australian Securities Exchange (ASX). Both the
companies opened their refineries in 1950s and 1960s and became tough competitors in oil market
industry of Australia. Later on, the company acquires Golden Fleece but still it was relatively small
on global grounds. Caltex and Ampol decides to get merged in 1995 and as a result of which, the
company became the largest refiner in Australian market. It is the only firm that operates
independently within its industry and all the decisions are taken by the management and board in
Australia (Caltex. 2018).
The company operates convenience stores in the country and is indulged in the refining and
marketing of petroleum products across the nation. It basically operates through two segments
named as Supply and Marketing, and Lytton. The first segment is an integrated transport fuel supply
chain that provides the refined products to international markets. In addition, the chain sells out the
fuels and lubricants of Caltex along with the store’s goods in global market through the national
network of Caltex (Reuters.com. 2018). The Lytton segment of the company is operating in
Brisbane and is engaged in engaged in the refining of crude oil into petrol, jet fuel, diesel and
various others fuel products like Liquid Petroleum Gas (LPG). Caltex follows five values that help
the company to achieve success. It focuses on collaborating and expanding their networks,
innovating new ways, being accountable for their actions, personalize the customer experience and
working with integrity and ethically in the industry (Reuters.com. 2018).
As of now the firm has 3500 employees working across Australia and is listed on ASX. It is traded
on the stock exchange with a ticker CTX.AX. Its current share price is $ 33.11 per share with the
market capitalization of $8.642 billion. Steven Gregg is the Chairman and independent director of
Caltex and Julian Segal is the chief executive officer and managing director of the company (Yahoo
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Student name – ID FIN600 TX YYYY
Assignment – Company
Finance. 2018).
2 Company Analysis
2.1 Financial statements, Current Financial performance, economic outlook
Company analysis
Analysis of the financial statements deals with the critical review and examination of the company’s
financial so to judge its performance from all the aspects. It also helps in taking the suitable
business and economic decisions. However, such analysis is performed by using various techniques
such as ratio analysis, vertical and horizontal analysis and many more. These techniques measure
the performance and position of the company from every financial aspect. In case of Caltex, the
firm generates its revenue mostly from the sale of its goods and petroleum products. Apart from
them, its revenue comprises of rental income received from the leased sites and the franchise
income recognized according to the agreement. Moreover, its total interest bearing borrowings
increases over the year.
The current financial performance of Caltex is been analysed on the basis of the data provided in its
annual reports.
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Student name – ID FIN600 TX YYYY
Assignment – Company
(Source: Caltex. 2017).
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