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Financial performance in Organisation Assignment

   

Added on  2021-01-02

22 Pages3997 Words285 Views
Financial performance of twocompanies 1) Jupiter EnergyLtd ASX code -JPR GIfinancial performance

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................11. Describing operation and competitive advantage of both selected organization...............12. Calculation and comparison of past 3 years.......................................................................23. Analysing share price movements of companies on monthly basis over last two years..144. Identifying factors leading to influence prices of shares..................................................155. Computation of beta and expected rates of return by incorporating CAPM of ASX listedcompanies.............................................................................................................................166. Comparing dividend policies of companies.....................................................................177. Recommending client regarding inclusion of organisation in his portfolio.....................18CONCLUSION..............................................................................................................................18REFERENCES..............................................................................................................................19

INTRODUCTIONFinancial statements plays very important role for assessing financial performance andwealth of organization in appropriate manner. The present report will discuss about Jupiterenergy Ltd and Oil Search Ltd as both comprise in similar industry. It will provide briefdescription of operation and comparative advantage of both organization. It would signifyperformance comparison with application of financial ratio. It will analyse monthly share pricemovements within 3 years. In the similar aspect, it will determine significant factors which mightinfluence share price of our both selected organizations. Further, it will extract value of beta andexpected rate of return with application of CAPM. It will determine and compare dividend policyalong with recommendation.1. Describing operation and competitive advantage of both selected organizationOil Search Ltd: It was founded in 1929 and in 2006 it was responsible for GDP of Papuaas 13%. It is the largest gas and oil exploration and development organization which is situatedin Papua New Guinea. This organization also operates in Yemen, Libya, Egypt and Kurdistanregion of Iraq. In year 2013, it was listed on Dow Jones Sustainability Index Australia. Its majoroperation is via PNG business unit, exploration and various other segments. It is engaged inproduction, and sale of crude oil, natural gas, naphtha, liquefied natural gas, power generationactivities and major refined products. It believed in competitive entry price. There is presence ofsignificant appraisal along with upside exploration within leases. It has observed Oil searchleverage along with core competencies for managing local stakeholders and operation in remotelocation and rebalancing its portfolio of organization between gas and oil. In the similar aspect,characteristics of high performance culture considers commitment of innovation and wish to seekor create innovative opportunities for competitive advantage (Annual Report of Oil search Ltd.2017).Jupiter Energy Ltd: It operates as production and oil exploration organization inKazakhstan. It is based in West Perth, Australia. It has acreage in Kazakhstan with ownership of100% block 31. Majority of its employees are based on Aktau Office, the operational centre ofbusiness entity with location of 80 km from block 31. It has strong belief on local content andfocused to local employment on basis of employees of Aktau being Kazakh. It is currentlygenerating three wells on Akkar East field with their own trial production license (JupiterEnergy Ltd, 2018). The company is performing towards returning its 2 west Zhetybai well to trial1

production in third quarter. It has only capability for selling oil which is produced in TrialProduction period in domestic market.In year 2008, it had acquired 100% of block 31 which is situated in oil rich Mangistauwhich is near to port city of Aktau. This organization has proven in country management teamthrough experienced, international board for possessing skills, network, knowledge and attentionto detail required for operating in efficient aspect. The topside infrastructure is referred as keyelement for moving toward long term production and attainment of self funding for various otherdevelopments.2. Calculation and comparison of past 3 yearsLiquidity ratioCurrent ratio: JPR201520162017Current Asset1882256772855577089Current liability1342472755133877359Current ratio1.401.020.66Oil search201520162017Current Asset114191511340381287360Current liability576599551837626776Current ratio1.982.062.052

Interpretation: The above two graphs are indicating liquidity position of bothorganization. Graph 1 depicts Jupiter Energy Ltd's position. The ideal ratio is of 2:1 but fromyear 2015 to 2016 it ios decreasing because of proportion of current asset and current liability.The organization is not capable to meet its obligations from its current asset. However, OilSearch Ltd shows proper position of liquidity as in year 2015 it was in sufficient but in 2016 and2017, it copes up by 2.06 and 2.05 respectively. The liquidity position of Oil Search Ltd is goodas it can repay its obligations from current asset.Quick ratio:JPR201520162017Inventory685351788618352Quick Asset1813721754969558737Current liability1342472755133877359Quick ratio1.351.000.643

2015201620170.000.200.400.600.801.001.201.401.60Q uic k ra t ioOil search201520162017Inventory13678610681795018Quick Asset100512910272211192342Current liability576599551837626776Quick ratio1.741.861.902015201620171.651.701.751.801.851.901.95Q uic k ra t ioInterpretation: The above graph is depicting quick ratio of both organization. The idealratio is of 1:1. Jupiter Profit Ltd was exceeding as of 1.35: 1 but it started decreasing till 2017which signifies it is not capable to repay its short term obligations from current liability.However, Oil Search Ltd was in very good position to repay its short term obligations in short4

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