Finance for Business

Running head: FINANCE FOR BUSINESS
Finance for Business
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FINANCE FOR BUSINESS
Table of Contents
Introduction...............................................................................................................................2
Discussion..................................................................................................................................3
Ratio Analysis.......................................................................................................................3
Profitability Ratios.................................................................................................................3
Gearing Ratios.......................................................................................................................7
Efficiency Ratios.................................................................................................................10
Conclusion...............................................................................................................................14
Reference.................................................................................................................................15

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FINANCE FOR BUSINESS
Introduction
The main purpose of the assessment is to analyse the business of assessment is to analyse
the financial performance of a business which is listed in stock exchange of Australia. The
company which is selected for the purpose of analysis is Insurance Australia ltd which is
engaged in the business of insurance sector in the country. The company is regarded to be one of
the leading providers of insurance coverage in the country and therefore the performance of the
business considered for the purpose ascertaining whether the business is doing appropriately or
not. In order to effectively analyse the performance of the business, certain key financial ratios
are computed which would covering different aspects of performance of the business such as
profitability efficiency and solvency of the business (Annualreports.com. 2019). The assessment
would also he including certain recommendations which can help the management of the
company to improve the financial structure of the business.
Overview of the Company
The company which is considered in the assessment is Insurance Australia Ltd is engaged
in the business of providing insurance products and different services to the customers of the
business. Insurance Australia Group (IAG) is the parent company which controls the operations
in insurance sectors in Australia and New Zealand. The company is regarded as one of the
leading providers of underwriting services in the country. businesses underwrite over $11 billion
of premium per annum, selling insurance under many leading brands (Iag.com.au. 2019). The
origin of the company dates back to 1920 when the company was established with a different
name and still then the company provided a range off insurance products to the customers of the
business.

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FINANCE FOR BUSINESS
As per the recent trend, the management of the company is trying to enhance the
profitability and overall services which is provided by the business for the purpose of enhancing
the revenue and profitability of the business. In addition to this, the management of the company
has made changes in the capital structure if the business in order improve the overall efficiency
of the business.
Discussion
Ratio Analysis
The financial performance of a business of Insurance Australia Group would be measured
from the annual report which is prepared by the management of the company depicting all the
income and expenses of the business. In order to appropriately analyse the performance of the
business relating to different areas some key financial ratio s are considered. Ratio analysis is a
tool which is used by the business to analyse the performance of a business in terms of different
aspects of performance (Babalola and Abiola 2013). Ratio analysis is used by the management of
the company to take vital decisions regarding the operational process of the business. In case of
Insurance Australia ltd, the key financial ratios of the business are computed for the profitability,
solvency and efficiency (Easton and Sommers 2018). The ratios for the company are for a period
of five years so that appropriate trend can be presented regarding the growth and development of
the business over a period of five years. The analysis of different ratios of the business are
appropriately presented in below:
Profitability Ratios
Profitability Ratios
Particulars 2018 2017 2016 2015 2014
$m $m $m $m $m