Finance for Business: Financial Analysis of Caltex Australian Ltd.

Running head: Finance for business
Finance for business

Finance for business
Abstract
Financial analysis is the main concept and all the companies are required to perform this. By the
help of this, it is possible to evaluate the financial position of the business and then take the
required actions. The report has been prepared in this context and here the evaluation for Caltex
Australian Ltd. has been made. The details in regards to the company have been collected and
then they have been used to carry out various analyses for performance evaluation. The ratio
analysis has helped in ascertain the relationships that exist and with that, the position of the
business in terms of profitability is identified. The sensitivity analysis is performed to determine
the variable which is most variable. The cash management shall be strong and all the concepts
for the same have been considered. All of the risks which are involved in the business have been
ascertained and then the recommendations for their improvement have been provided.
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Finance for business
Table of Contents
Abstract............................................................................................................................................2
Introduction......................................................................................................................................4
Caltex Australian Limited and its financial analysis.......................................................................4
Company’s overview...................................................................................................................4
Ratio analysis...............................................................................................................................5
Analysis of Cash management.....................................................................................................8
Sensitivity analysis......................................................................................................................9
Systematic and un-systematic risk.............................................................................................10
Dividend payout ratio and dividend policy...............................................................................11
Recommendations..........................................................................................................................12
Conclusion.....................................................................................................................................12
References......................................................................................................................................14
Appendix 1.....................................................................................................................................17
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Finance for business
Introduction
In the global market, it is necessary that continuous improvement shall be made in the business
to maintain its position and also to further enhance the same. The report is prepared in respect of
the financial analysis which is performed for Caltex Australia Ltd. there is the coverage of the
description of the company in this report. All the details will be provided in that and also the
products and areas in which the operations are performed by the business will be determined.
There will be the performance of the ratio analysis for the past years in which the measurement
for the performance will be made and then the trend in the same will be calculated and
represented on the graph. The marketable securities which are held by the company shall be
identified and by the use of that the position of the company in cash aspect will be ascertained.
There will be an undertaking of this process so that cash management is made in the most
effective manner. The sensitivity analysis is important as by that the impact on the variable is
identified and that will be performed in the report below. All the factors in relation to net present
value will be covered in this. There will be involvement of the systematic and unsystematic risks
which are involved in the business. The risk and their impact will be analyzed so that they can be
avoided in the coming period. The dividend policy of the company will be undertaken and there
will be a calculation of the dividend payout ratio. This will be useful for the investors to take
further decisions and also recommendations will be provided on the basis of all the findings
which will be made.
Caltex Australian Limited and its financial analysis
Company's Overview
Caltex Australian limited is the company which is established in Australia and deals in the
transportation of the fuel and also the convenience retailer. The main operations which are
performed by the company are purchase, distribution, and selling of the petroleum products
(Caltex Australia Limited, 2019). The company operates in many countries and that involves
New Zealand, Australia, and Singapore. The various segments through which the operations are
carried by the company include infrastructure segment, fuels, and convenience retail. There are
various stores which are involved in the network of Caltex and all the working is carried through
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Finance for business
them (Bloomberg, 2019). There are various depots and pipelines which are used by fuel and
infrastructure segment.
The company enjoys various comparative advantages over others such as there is a better facility
for the supply and also the marketing infrastructure of the business is strong. By the help of this,
it is able to provide the facilities which are above other competitors. As there is growth which is
experienced in the marketing sector so this has led to the enhancement in the profitability of
Caltex (Mbaskool, 2019). There are various acquisitions which are made and by the help of that
a continuous increase has been observed in the revenues.
Ratio analysis
The performance of the company is required to be evaluated and that too on a timely basis. In
that, there will be the use of some of the other technique which helps in the ascertainment of the
correct results. This will be done with the help of ratio analysis in the given assignment
(Efinance management, 2019). The ratio is the comparison of the two aspects of the business so
that the relation between them can be evaluated and monitors. The results which will be obtained
will be used for the analyzation of the performance. After that, it will be possible for the
company to use the outcomes in the making of the required decisions for the coming period
(Thebalancesmb, 2019). The efficiency and profitability with which the operations are carried in
the company will be ascertained with the use of the ratios calculated in this respect.
Particulars 2015 2016 2017 2018
Net profit 610482 620752 561590
Equity 2797399 3094418 3376007
Sales 17933201 17933201 21731342
Inventorie 969885 1080920 1694915 1616125
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Finance for business
s
Average
Inventories
1025402.5 1387918 1655520
Total
assets
5104741 5302734 6355220 6727623
Average
assets
5203737.5 5828977 6541422
Efficiency ratios
In the company, there are various tasks which are performed and it is required that they are
carried with full potential. For that, it is required that the efficiency in various areas is required to
be measured and analyzed. This will be done with the help of the efficiency ratios. Under the
given case two ratios are calculated which includes asset turnover and inventory turnover ratio.
This will be describing the level of efficiency with which two of the assets have been utilized by
Caltex (Caltex Australia Limited, 2018). There will be proper evaluation and that will be
describing the overall abilities of the company to use the available resources. The calculation of
the ratios is presented below:
Particulars Formula 2016 2017 2018
Inventories
turnover
Net sales/Average Inventory 17.49 12.92 13.13
Asset turnover Net sales/Average Total 3.45 3.08 3.32
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