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Corporate Finance in Australia: Assignment

Added on - 01 Apr 2020

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Running head: CORPORATE FINANCECorporate FinanceName of the Student:Name of the University:Author’s Note:Course ID:
1CORPORATE FINANCETable of ContentsAnswer to Part A:............................................................................................................................2Answer to Part B:.............................................................................................................................2Answer to Part C:.............................................................................................................................3Answer to Part D:............................................................................................................................4References:......................................................................................................................................7
2CORPORATE FINANCEAnswer to Part A:Long-term Debt / Total AssetsASX Code20122013201420152016Period 2012 - 2016Australian AgriculturalCompany Limited0.410.410.280.320.320.35Industry Average0.500.450.250.300.300.36Table 1: Long-term debt/ total assets of Australian Agricultural Company Limited and theAustralian agricultural industry for the years 2012-2016(Source: AACo 2017)Answer to Part B:Based on the above table, it could be evaluated that the long-term debt/overall assets ofthe organisation has remained the same at 0.41 in 2012 and 2013, which has fallen sharply to0.28 in 2014. In 2015, the ratio has increased marginally to 0.32 and it has remained the same in2016 as well. Thus, the overall average of the ratio for the five-year period is obtained as 0.35.On the other hand, the industrial average of the ratio for the five-year period is obtained as 0.36.In this context, Ehrhardt and Brigham (2016) stated that lower ratio is always preferable for anorganisation, as it helps in minimising the overall debt burden. In addition, the assets could beutilised for future expansion or carrying out the daily operations, which would further help inincreasing the cash flows from operating activities. Hence, it could be stated that AustralianAgricultural Company Limited is in a better position in comparison to the other organisations inthe industry.
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