Financial Analysis of Perpetual Limited and Platinum Asset Limited

RUNNING HEAD: FINANCIAL ANALYSIS
Financial Analysis

Financial analysis 2
Contents
Introduction.................................................................................................................................................3
Description of the companies......................................................................................................................3
Perpetual Limited....................................................................................................................................3
Platinum Asset Limited...........................................................................................................................4
Calculation and analysis of performance ratios...........................................................................................4
Short term solvency.................................................................................................................................4
Long term solvency.................................................................................................................................6
Asset utilization.......................................................................................................................................8
Profitability ratios....................................................................................................................................9
Market value ratios................................................................................................................................11
Graphs and comparison of share price movements....................................................................................12
Share valuation..........................................................................................................................................14
Recommendation.......................................................................................................................................15
Conclusion.................................................................................................................................................16
References.................................................................................................................................................17

Financial analysis 3
Introduction
The report provides overall financial analysis of the two Australian companies named as
Perpetual Limited and Platinum Asset limited. It measures the performance and position of both
the companies from all the aspects covering the financial data presented in their annual reports
for the past two years. The report commences with a brief introduction about the entities and
their core activities. It also reports about the competitive advantage of both the firms. Further, the
financial performance of both entities has been measured by calculating the performance ratios
including liquidity, solvency, efficiency, profitability and market based ratios. All these are
financial metrics which evaluates the position of the organizations over the past two years that
are 2016 and 2017.
Later on, the fluctuations in the share price movements of both the firms is analysed against the
fluctuations in the market indices. The variations are compared against the changes in ASX S&P
200 and it is observed that whether the stock is volatile or not and highly dependent on market or
not. The report also explains Constant Dividend Growth Rate model which is used to calculate
the future value of stock. The determined value is then compared with the current share price of
the company’s stock and conclusions are been made. In the last, a recommendation and
conclusion is provided suggesting that which company is financially healthy and is performing
better than the other.

Financial analysis 4
Description of the companies
Perpetual Limited
It is an Australian company that offers wide range of financial services and products across the
country. It provides services like portfolio management, financial planning, trustee, funds
management, investment administration and custodian services and others. In addition, the
company offers various investments across the range of asset classes that include cash and fixed
interest, mortgages, Australian and global equities and Australian listed property. Apart from
this, it also provides trust advices and fiduciary advices to its clients. The competitive advantage
of the business is that it has declared high profitability recently and its divisions have reported
high growth in revenue. The company does not pursue any sort of competitive advantage but has
enjoyed success and growth in the business as per the latest annual report (Bloomberg. 2018).
Platinum Asset Limited
Formerly the company is known as Platinum Investment Management Limited engaged in the
business of the funds management. Platinum manages approximately AUD 22 billion with over
7% of this from investors in Europe, America, New Zealand and Asia. It offers investment
management services to its party units named as Platinum Trust Funds and Platinum Global
Fund, its two Australian investment companies listed on ASX and Platinum World Portfolios
Plc. The product range offered by PTM is on global, regional and sector level for the purpose of
investment. The competitive advantage of PTM is that it has expertise in investing in the
international equities. The company deals with all the challenges and threats in a manner that it
can maintain its competitive advantage to a certain extent. It formulates its strategies in a way
that will safeguard its competitive edge (Reuters. 2018).