Financial Analysis Report for BCI Minerals Limited

FINANCIAL ANALYSIS
REPORT
BOARD OF DIRECTORS, BCI MINERALS LIMITED

EXECUTIVE SUMMARY
The company BCI Minerals Limited has been engaged in the business of the metals and
mining industry particularly in potash and iron ore and is publically listed on the Australian
Stock Exchange. It has been observed though the falling share prices of the enterprise that the
business performance of the entity has been consistently deteriorating. In order to understand
the reason behind the same, an evaluation in the form of financial analysis has been
undertaken. Financial analysis of the financial statements refers to the comprehensive
evaluation of the various aspects of the business operations of the enterprise. The popular
techniques of ratio analysis, trend analysis and the common size financial statements have
been used to assess the issues. The ratio analysis highlighted the declining profitability and
efficiency margins of the entity. The fact was further accorded in the trend analysis as visible
in the declining revenue trends. The vertical analysis further suggested that the entity is
currently heavily dependent on the in house funds and savings to sustain and the operations
are considerably declining. As a result of the above issues, the investors are seeking better
stocks than that of this company. The directors of the company are further suggested to
examine a new area of operation incidental to the mining and metal industry to aid the falling
operational performance.

Contents
Introduction................................................................................................................................3
Overview of the company..........................................................................................................3
Financial Analysis......................................................................................................................4
Ratio Analysis.......................................................................................................................4
Horizontal Analysis..............................................................................................................6
Vertical Analysis...................................................................................................................9
Conclusion................................................................................................................................11
References................................................................................................................................13

Introduction
Over the years, there can be seen a significant enhancement in the globalised business
practices and the competition in context of the global corporate scenario. Accordingly, the
managers of the entities are required to consistently evaluate the business environment
together with the monitoring of the financial statements over the years to formulate the
business strategies suitable in the current business scenario (Fridson and Alvarez, 2011). The
few popular techniques that can be used by the senior management of the enterprise for the
analysis of the financial statements and to draw conclusions thereon are the ratio analysis,
horizontal or trend analysis and the common size financial statements or the vertical analysis.
The following report is aimed at guiding the board of directors of the enterprise BCI Minerals
Limited in context of the financial progress of the enterprise over the last five years from the
year 2014 to 2018. The report will begin with the overview of the company in terms of the
core business operations, corporate structure, geographic locations, and the industry of
operation of the said company. This will be followed by the critical examination of the
financial statements and the conclusions on the financial progress of the enterprise. It is
imperative to note that the said financial analysis is subject to the financial figures as derived
from the financial statements prepared by the company, which are further subjected to the
inherent limitations of the accounting.
Overview of the company
The company BCI Minerals Limited is a mineral exploration company based out of West
Perth, Australia. The company is extensively engaged in the salt and the royalty earnings of
the iron ore and the proceeds from divestment further support potash business and the
operations. The organisation operates in the form of a corporate and is listed on the
Australian Stock Exchange since the year 2006 when it was known as BC Iron Limited. The
corporate structure of the organisation is elaborated as follows. The current board of directors
of the company is comprised of four directors out of which three are non-executive director
and one is the managing director. In addition, the organisation has appointed a company
secretary for overseeing the affairs of the company. The company has been in news because
of the whopping 92 percent fall in the share prices over the last few years. In addition, the
same falling momentum has been continuing for the organisation during the last thirty days as
well as evident by the 14 percent fall in the share prices in the last thirty days too (Simply