Financial Interpretation

Running head: FINANCIAL INTERPRETATION
Financial Interpretation
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FINANCIAL INTERPRETATION1
Table of Contents
Trend and Cross Sectional Financial Analysis................................................................................2
Profitability Ratio........................................................................................................................2
Operational Ratio.........................................................................................................................4
Liquidity Ratio.............................................................................................................................6
Solvency Ratio.............................................................................................................................7
Market Performance Ratio...........................................................................................................8
References......................................................................................................................................10

FINANCIAL INTERPRETATION2
Trend and Cross Sectional Financial Analysis
The financial or trend analysis for the Cochlear Ltd has been done for the period 2014-
2018 whereby relevant changes in the financials for the company has been taken into
consideration for the company. The changes that were observed for the company in the financial
report will be assessed with the help of quantitative assessment tool namely ratio analysis for the
company whereby changes in the financial analysis for the company for the period 2014-2018
will be taken down into consideration. The analysis of the company will be done based on the
profitability that will be earned by the company, operational efficiency, liquidity, solvency and
market performance ratios for the company .
Profitability Ratio
The profitability ratio’s that will be analysed for the company will be stating about the
earning capacity of the company and the ability of the company in turning out the overall wealth
for the shareholders of the company (Marketscreener.com 2019).
Particulars Formula
201
4 2015 2016 2017 2018
Indus
try
Avg.
Gross Profit
5566
51
6503
10
79695
9
8954
65
1002
500
Total Sales
8049
36
9256
30
11305
52
1253
838
1363
700
Gross Profit Margin
Gross Profit/Total
Sales
69.1
5%
70.2
6%
70.49
%
71.42
%
73.51
%
67.26
%
Net Profit
9370
9
1458
40
18892
1
2236
16
2458
00
Total Sales
8049
36
9256
30
11305
52
1253
838
1363
700
Net Profit Margin Net Profit/Total Sales
11.6
4%
15.7
6%
16.71
%
17.83
%
18.02
%
10.00
%

FINANCIAL INTERPRETATION3
Total Sales
8049
36
9256
30
11305
52
1253
838
1363
700
Total Assets
7890
36
8690
56
95736
3
1136
359
1156
900
Asset Turnover Ratio
Total Sales/Total
Assets
92.6
2%
106.
51%
118.0
9%
110.3
4%
117.8
8%
1.14
%
Net Profit
9370
9
1458
40
18892
1
2236
16
2458
00
Shareholder's Equity
3292
05
3553
86
44855
7
5436
47
6108
00
Return on
Shareholder's Equity
Net
Profit/Shareholder's
Equity
28.4
7%
41.0
4%
42.12
%
41.13
%
40.24
%
11.21
%
Gross Profit Margin: The gross profit margin for the company has been increasing in the trend
period analysed from 69.15% in the year 2014 to around 73.51% in the year 2018. The increase
in the gross profitability of the company can be well attributed to the increasing revenue base for
the company (Annualreports.com 2019). On the other hand, when compared with the industry
average ratio the industry average was around 67.26% and for the company the same was
73.51% in the period 2018.
Net Profit Margin: The net profit margin for the company has been increasing for the company
in the trend period 2014-2018 from 11.64% in the year 2014 to around 18.02% in the year 2018,
whereby the company saw an increase in the revenue base for the company (St 2019). The net
profit margin in the industry level has been around 10% for the period 2018.
Asset Turnover Ratio: The Asset Turnover Ratio for the company has increased in the stated
period reflecting the efficiency level for the company which states that more amount of sales is
generated by the company in quantitative terms with a defined level of assets deployed
(BusinessDictionary.com 2019). The asset turnover ratio for the company was around 92.62% in
the year 2014 and the same has increased consistently to around 117%. On the other hand, the