FIN203 Corporate Finance Assignment | Woodside Petroleum Ltd
11 Pages2049 Words76 Views
Added on 2020-05-28
FIN203 Corporate Finance Assignment | Woodside Petroleum Ltd
Added on 2020-05-28
ShareRelated Documents
Running head: CORPORATE FINANCECorporate FinanceName of the Student:Name of the University:Authors Note:
CORPORATE FINANCE1Table of Contents2a. Describing background and the industry in which company operates. Identifying one keyopportunity and two key threats of the company:......................................................................22b. Calculating cash conversion cycle and comparing it with previous year and industry peer:....................................................................................................................................................32c. Stating example of short term debt financing instrument and long-term debt financinginstrument, while depicting whether the company has used debt financing in 2016:................42d.i) Conniving bond price for 6/12/2018:................................................................................42d.ii) Evaluating the bond price with calculated figure and mentioned figure, while detectingthe reason behind its selling at par:............................................................................................52e.) Portraying share price of Shell in euros:.............................................................................53a) Portraying FCF of Shell’s gas project:.................................................................................63b.a) Portraying Net present value of the project at WACC 5.94%:.........................................73b.b) Portraying Net present value of the project at WACC 8.00%:.........................................7Reference and Bibliography:......................................................................................................9
CORPORATE FINANCE22a. Describing background and the industry in which company operates. Identifyingone key opportunity and two key threats of the company:Woodside Petroleum Ltd is linked with petroleum exploration and production, whichis used in Australia. The company comes under Oil and Gas industry, while they deal inproducing petroleum products. Petroleum and LNG are the key product that is produced byWoodside Petroleum Ltd, which is allowed them to accumulate profits over the past fiscalyears (Woodside.com.au 2018). From the valuation of company's operations relevantopportunity and threats could be identified, which might affect its revenue generationcapacity. The major opportunity for your organization is the rising demand for Petroleumproducts around the world. Majority of the manufacturing, production houses, and vehiclesuses petroleum products, which is an adequate opportunity for the company to improve itsprofitability in future. This rising trend of using petroleum product has allowed majority ofthe oil producing companies to increase their revenue to support future oil explorationprojects. However, certain threats are also identified from the evaluation,which could hamperprofitability of the organization in immediate future.Threats from substitute is a majorproblem for oil producing companies, where thermal power and solar energy are replacingmaximum of the sales conducted by oil producing companies. The second threat for Oil andGas companies is the declining value of crude oil in the market, which is reducing actualrevenue collection of Oil and Gas organization. The constant decline in value of oil in theworld market is threatening oil and gas company’s existence, which is a major threat toWoodside Petroleum Ltd revenue.Both the threats identified would directly affect revenuegeneration capacity of Woodside petroleum Limited and increase their expenditure. On theother hand, Atil, Lahiani and Nguyen (2014) argued that due to the reduced prices of crude
CORPORATE FINANCE3oil products the increment in substitute demand is declining, which is relatively a positiveaction for oil and gas companies.2b. Calculating cash conversion cycle and comparing it with previous year and industrypeer:Particulars201620152014Net sales407550307435Cost of goods sold223430732883Inventory149170247Accounts receivable446489478Accounts payable546813605Days inventory Outstanding26.0624.76Days receivable outstanding41.8735.08Days payable outstanding111.0284.21Cash conversion cycle-43.09-24.36From the evaluation of above table, cash conversion cycle of Woodside petroleumcans be identified, which is relatively declining in 2016, as compared to 2015. This is due todeclining sales, which was conducted during 2016. In comparison to its peers the cashconversion cycle is relatively depraved, leaving BHP Billiton. This indicates low financialposition of the organisation and depraved cash availability to support its operationalactivities. Nobanee (2014) stated that with the help of cash conversion cycle investors candetect cash availability of an organization, which allows them to meet at a good investmentdecision. Improvement in Woodside petroleum cash conversion is needed or problems mayarise in conducing daily operations.2c. Stating example of short term debt financing instrument and long-term debtfinancing instrument, while depicting whether the company has used debt financing in2016:Example of short term debt financing is short term bank loan, which is accumulatedby companies to support their obligations. in addition, long term debt financing example is
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Finance Assignment- Woodside Petroleum Ltdlg...
|5
|809
|52
Oil Gas and Energy Managementlg...
|8
|1304
|20
Financial Analysis of Santos Limited: Comparative Analysis with Woodside Petroleumlg...
|14
|2058
|4
Strategic Management Practices of Woodside Petroleumlg...
|10
|2513
|121
Project Report on Oil and Gas Businesslg...
|10
|2532
|32
Financial Performance Analysis of Woodside Petroleumlg...
|23
|6043
|95