Fundamental Analysis Method - PDF
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Running Head: Bachelor or professional accounting
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Project Report: Bachelor of professional accounting
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Project Report: Bachelor of professional accounting
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Contents
Introduction.......................................................................................................................3
Company overview...........................................................................................................3
AUSTRALIA MINES LIMITED.................................................................................3
AUSTRALIAN PACIFIC COAL LTD........................................................................3
Fundamental analysis........................................................................................................4
Financial ratios..................................................................................................................4
Short term solvency......................................................................................................4
Long term solvency......................................................................................................6
Asset utilization............................................................................................................9
Profitability ratios......................................................................................................11
Recommendation and conclusion...................................................................................14
References.......................................................................................................................16
Contents
Introduction.......................................................................................................................3
Company overview...........................................................................................................3
AUSTRALIA MINES LIMITED.................................................................................3
AUSTRALIAN PACIFIC COAL LTD........................................................................3
Fundamental analysis........................................................................................................4
Financial ratios..................................................................................................................4
Short term solvency......................................................................................................4
Long term solvency......................................................................................................6
Asset utilization............................................................................................................9
Profitability ratios......................................................................................................11
Recommendation and conclusion...................................................................................14
References.......................................................................................................................16
Bachelor or professional accounting 3
Introduction:
The report focuses on the fundamental analysis method. It measures that how the
investment opportunity and the investment position of an organization could be evaluated.
The report explains about the two companies Australia mines limited and Australia pacific
coal limited. It measures the financial stamen of both the companies and identifies that which
comapny is performing in an efficient way in the industry and how much returns could be got
by the investors through investing into the company.
For evaluating the investment opportunity of both the company, fundamental ratios
study has been performed on the companies. The short term solvency, liquidity, long term
solvency, profitability, efficiency position etc has been evaluated and it has been measured
that how well the companies are performing in the market and which company would offer
more return to the investors of the company.
Company overview:
For the report, metals industry of Australia has been evaluated. The Australia mines
limited and Australia pacific coal limited has been taken into the concern. The company
overview of both the companies is as follows:
AUSTRALIA MINES LIMITED:
Australia mines limited is a metal company which supplies and manufactures the
battery and technological metals in the international market. The Australia mines limited
develops the cobalt-scandium-nickel projects in the Australian market. The projects of the
company are among the largest project of Australian market (Bloomberg, 2018). The pre
feasibility study of the company explains about the competitive position of the company.
Financial performance of the comapny explains that the company has not generated any
revenue from last few years. The company is facing huge loss from last 3 years.
AUSTRALIAN PACIFIC COAL LTD:
Australia pacific coal limited is a coal mining company which supplies and
manufactures the coals and the metals in the international market. The Australia pacific coal
limited develops the coal treatments in the Australian market. The pre feasibility study of the
company explains about the competitive position of the company (Reuters, 2018). The
company is operated its business form the head office which is situated at Queensland.
Introduction:
The report focuses on the fundamental analysis method. It measures that how the
investment opportunity and the investment position of an organization could be evaluated.
The report explains about the two companies Australia mines limited and Australia pacific
coal limited. It measures the financial stamen of both the companies and identifies that which
comapny is performing in an efficient way in the industry and how much returns could be got
by the investors through investing into the company.
For evaluating the investment opportunity of both the company, fundamental ratios
study has been performed on the companies. The short term solvency, liquidity, long term
solvency, profitability, efficiency position etc has been evaluated and it has been measured
that how well the companies are performing in the market and which company would offer
more return to the investors of the company.
Company overview:
For the report, metals industry of Australia has been evaluated. The Australia mines
limited and Australia pacific coal limited has been taken into the concern. The company
overview of both the companies is as follows:
AUSTRALIA MINES LIMITED:
Australia mines limited is a metal company which supplies and manufactures the
battery and technological metals in the international market. The Australia mines limited
develops the cobalt-scandium-nickel projects in the Australian market. The projects of the
company are among the largest project of Australian market (Bloomberg, 2018). The pre
feasibility study of the company explains about the competitive position of the company.
Financial performance of the comapny explains that the company has not generated any
revenue from last few years. The company is facing huge loss from last 3 years.
AUSTRALIAN PACIFIC COAL LTD:
Australia pacific coal limited is a coal mining company which supplies and
manufactures the coals and the metals in the international market. The Australia pacific coal
limited develops the coal treatments in the Australian market. The pre feasibility study of the
company explains about the competitive position of the company (Reuters, 2018). The
company is operated its business form the head office which is situated at Queensland.
Bachelor or professional accounting 4
Financial performance of the comapny explains that the company has not generated any
revenue from last few years. The company is facing huge loss from last 3 years.
Fundamental analysis:
Fundamental analysis is a process of evaluating the financial position and the
investment position of an organization on the basis of the financial statement of the company
of last few years. The fundamental analysis uses the related factor and the financial factors of
an organization to identify the performance of the company and make a decision about the
financial performance of the company.
It evaluates the stock of an organization on the basis of the intrinsic value and the
financial factors of the company in the basis of the financial statement analysis methods to
measure the performance of the company and the investment position of the company for
long term (Du and Girma, 2009).
In the report, fundamental analysis study has been performed on two Australian
companies to identify their performance and the investment opportunity of the company. The
financial ratios have been calculated to measure the performance and the position of the
company.
Financial ratios:
Financial ratios are the part of fundamental analysis which evaluates the financial
statement and the financial transactions and market position of an organization on the basis of
the various studies to measure the performance and the position of the company. Financial
ratios evaluate the main items of the financial statement and the market value of the stock of
the company to measure the profitability position, liquidity position etc of the company.
The financial ratios study of both the companies is as follows:
Short term solvency:
Short term solvency ratios explain about the skill and the ability of a business to meet
entire short term financial debts and the obligations of the company. It measures the
capability of a firm to neglect the financial distress in short term. The two main ratios of short
term solvency are current ratio and the quick ratio which explains about the liquidity position
of the company and the capability of the business.
Current ratio:
Financial performance of the comapny explains that the company has not generated any
revenue from last few years. The company is facing huge loss from last 3 years.
Fundamental analysis:
Fundamental analysis is a process of evaluating the financial position and the
investment position of an organization on the basis of the financial statement of the company
of last few years. The fundamental analysis uses the related factor and the financial factors of
an organization to identify the performance of the company and make a decision about the
financial performance of the company.
It evaluates the stock of an organization on the basis of the intrinsic value and the
financial factors of the company in the basis of the financial statement analysis methods to
measure the performance of the company and the investment position of the company for
long term (Du and Girma, 2009).
In the report, fundamental analysis study has been performed on two Australian
companies to identify their performance and the investment opportunity of the company. The
financial ratios have been calculated to measure the performance and the position of the
company.
Financial ratios:
Financial ratios are the part of fundamental analysis which evaluates the financial
statement and the financial transactions and market position of an organization on the basis of
the various studies to measure the performance and the position of the company. Financial
ratios evaluate the main items of the financial statement and the market value of the stock of
the company to measure the profitability position, liquidity position etc of the company.
The financial ratios study of both the companies is as follows:
Short term solvency:
Short term solvency ratios explain about the skill and the ability of a business to meet
entire short term financial debts and the obligations of the company. It measures the
capability of a firm to neglect the financial distress in short term. The two main ratios of short
term solvency are current ratio and the quick ratio which explains about the liquidity position
of the company and the capability of the business.
Current ratio:
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Current ratio is a short term solvency ratio which measures the ability of an
organization to pay the entire short term obligation of the company on the basis of the total
current assets available (Shapiro, 2005).
The current ratio of Australia mines limited has been evaluated firstly and it has been
recognized that the current ratio of the company is 7.2, 1.88 ad 3.18 in 2015, 2016 and 2017
respectively. It explains that the performance of the company has been improved as well as
the current position also explains that the company could easily pay all the short term debts of
the company.
Current Ratio 2015 2016 2017
Current Assets / 1727500 398611 1559609
Current liabilities 239940 211620 490340
Answer: 7.20 1.88 3.18
(Annual report, 2017)
The current ratio of Australia pacific coal limited has been evaluated further and it has
been recognized that the current ratio of the company is 0.08, 1.39 and 0.26 in 2015, 2016
and 2017 respectively. It explains that the performance of the company has been lowered as
well as the current position also explains that the company is not able to pay all the short term
debts of the company in current year.
Current Ratio 2015 2016 2017
Current Assets / 146770 30097139 12905764
Current
liabilities 1732936 21646941 48929152
Answer: 0.08 1.39 0.26
The current ratio of both the comapny explains that the performance of Australia
mining limited is better than the Australia pacific coal limited due to the debt payment
capability of the company.
Quick ratio:
Quick ratio is also a short term solvency ratio which measures the ability of an
organization to pay the entire short term obligation of the company on the basis of the total
quick assets which could be converted into cash at any time (Bierman and Smidt, 2012).
The quick ratio of Australia mines limited has been evaluated firstly and it has been
recognized that the quick ratio of the company is 7.2, 1.88 ad 3.18 in 2015, 2016 and 2017
Current ratio is a short term solvency ratio which measures the ability of an
organization to pay the entire short term obligation of the company on the basis of the total
current assets available (Shapiro, 2005).
The current ratio of Australia mines limited has been evaluated firstly and it has been
recognized that the current ratio of the company is 7.2, 1.88 ad 3.18 in 2015, 2016 and 2017
respectively. It explains that the performance of the company has been improved as well as
the current position also explains that the company could easily pay all the short term debts of
the company.
Current Ratio 2015 2016 2017
Current Assets / 1727500 398611 1559609
Current liabilities 239940 211620 490340
Answer: 7.20 1.88 3.18
(Annual report, 2017)
The current ratio of Australia pacific coal limited has been evaluated further and it has
been recognized that the current ratio of the company is 0.08, 1.39 and 0.26 in 2015, 2016
and 2017 respectively. It explains that the performance of the company has been lowered as
well as the current position also explains that the company is not able to pay all the short term
debts of the company in current year.
Current Ratio 2015 2016 2017
Current Assets / 146770 30097139 12905764
Current
liabilities 1732936 21646941 48929152
Answer: 0.08 1.39 0.26
The current ratio of both the comapny explains that the performance of Australia
mining limited is better than the Australia pacific coal limited due to the debt payment
capability of the company.
Quick ratio:
Quick ratio is also a short term solvency ratio which measures the ability of an
organization to pay the entire short term obligation of the company on the basis of the total
quick assets which could be converted into cash at any time (Bierman and Smidt, 2012).
The quick ratio of Australia mines limited has been evaluated firstly and it has been
recognized that the quick ratio of the company is 7.2, 1.88 ad 3.18 in 2015, 2016 and 2017
Bachelor or professional accounting 6
respectively (Investors, 2018). It explains that the performance of the company has been
improved as well as the quick position also explains that the company could easily pay all the
short term debts of the company from its quick assets.
Acid test ratio 2015 2016 2017
Current Assets -
Inventory / 17,27,500 3,98,611 15,59,609
Current Liabilities 2,39,940 2,11,620 4,90,340
Answer: 7.20 1.88 3.18
(Morningstar, 2018)
The quick ratio of Australia pacific coal limited has been evaluated further and it has
been recognized that the current ratio of the company is 0.08, 1.39 and 0.26 in 2015, 2016
and 2017 respectively. It explains that the performance of the company has been lowered as
well as the current position also explains that the company is not able to pay all the short term
debts of the company in current year.
Quick Ratio 2015 2016 2017
Current Assets -
Inventory / 146770 30097139 12905764
Current
liabilities 1732936 21646941 48929152
Answer: 0.08 1.39 0.26
The quick ratio of both the comapny explains that the performance of Australia
mining limited is better than the Australia pacific coal limited due to the debt payment
capability of the company.
Thus, it has been found that the liquidity position of Australia mining limited is better
than the Australia pacific coal limited. It explains that the risk position of Australia mining is
lower and explains that the investment into the Australia mining limited is better option.
Long term solvency:
Long term solvency ratios explain about the skill and the ability of a business to meet
entire long term financial debts and the obligations of the company. It measures the capability
respectively (Investors, 2018). It explains that the performance of the company has been
improved as well as the quick position also explains that the company could easily pay all the
short term debts of the company from its quick assets.
Acid test ratio 2015 2016 2017
Current Assets -
Inventory / 17,27,500 3,98,611 15,59,609
Current Liabilities 2,39,940 2,11,620 4,90,340
Answer: 7.20 1.88 3.18
(Morningstar, 2018)
The quick ratio of Australia pacific coal limited has been evaluated further and it has
been recognized that the current ratio of the company is 0.08, 1.39 and 0.26 in 2015, 2016
and 2017 respectively. It explains that the performance of the company has been lowered as
well as the current position also explains that the company is not able to pay all the short term
debts of the company in current year.
Quick Ratio 2015 2016 2017
Current Assets -
Inventory / 146770 30097139 12905764
Current
liabilities 1732936 21646941 48929152
Answer: 0.08 1.39 0.26
The quick ratio of both the comapny explains that the performance of Australia
mining limited is better than the Australia pacific coal limited due to the debt payment
capability of the company.
Thus, it has been found that the liquidity position of Australia mining limited is better
than the Australia pacific coal limited. It explains that the risk position of Australia mining is
lower and explains that the investment into the Australia mining limited is better option.
Long term solvency:
Long term solvency ratios explain about the skill and the ability of a business to meet
entire long term financial debts and the obligations of the company. It measures the capability
Bachelor or professional accounting 7
of a firm to ignore the long term financial distress (Shapiro, 2005). The two main ratios of
long term solvency are gearing ratio and interest coverage ratio which explains about the long
term solvency position of the company and the capability of the business.
Gearing ratio:
Gearing ratio is a long term solvency ratio which measures the ability of an
organization to pay the entire long term obligation of the company on the basis of the total
assets and the equity available to the business.
The gearing ratio of Australia mines limited has been evaluated and it has been
recognized that the gearing ratio of the company is 0, 0 and 0.03 in 2015, 2016 and 2017
respectively. The gearing amount has been 0 because of no long term debt of the company. It
explains that the company has raised the debt amount in 2017 to maintain the capital structure
position.
Gearing ratio 2015 2016 2017
Long term liabilities / 0 0 10965
Capital employed 3533521 2146188 3983111
Answer: % - - 0.003
The gearing ratio of Australia pacific coal limited has been evaluated and it has been
recognized that the gearing ratio of the company is 0, 0.034 and 0.174 in 2015, 2016 and
2017 respectively. It explains that the long term liabilities of the company have been
improved as well as the capital structure position has also been enhanced which explains that
the company is managing the long term debt as well but the capital structure of the company
is not stable (Romney, Steinbart, Zhang and Xu, 2006).
Gearing ratio 2015 2016 2017
Long term liabilities / 0 93343 9259279
Capital employed 2715692 2758417 53271023
of a firm to ignore the long term financial distress (Shapiro, 2005). The two main ratios of
long term solvency are gearing ratio and interest coverage ratio which explains about the long
term solvency position of the company and the capability of the business.
Gearing ratio:
Gearing ratio is a long term solvency ratio which measures the ability of an
organization to pay the entire long term obligation of the company on the basis of the total
assets and the equity available to the business.
The gearing ratio of Australia mines limited has been evaluated and it has been
recognized that the gearing ratio of the company is 0, 0 and 0.03 in 2015, 2016 and 2017
respectively. The gearing amount has been 0 because of no long term debt of the company. It
explains that the company has raised the debt amount in 2017 to maintain the capital structure
position.
Gearing ratio 2015 2016 2017
Long term liabilities / 0 0 10965
Capital employed 3533521 2146188 3983111
Answer: % - - 0.003
The gearing ratio of Australia pacific coal limited has been evaluated and it has been
recognized that the gearing ratio of the company is 0, 0.034 and 0.174 in 2015, 2016 and
2017 respectively. It explains that the long term liabilities of the company have been
improved as well as the capital structure position has also been enhanced which explains that
the company is managing the long term debt as well but the capital structure of the company
is not stable (Romney, Steinbart, Zhang and Xu, 2006).
Gearing ratio 2015 2016 2017
Long term liabilities / 0 93343 9259279
Capital employed 2715692 2758417 53271023
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Answer: % - 0.034 0.174
(Morningstar, 2018)
The gearing ratio of both the comapny explains that the performance of Australia
pacific coal limited is better than Australia mining limited due to the optimal capital structure
of the company.
Interest coverage ratio:
Interest coverage ratio is also a long term solvency ratio which measures the ability of
an organization to pay the interest on the debt amount to the debt holders of the company on
the basis of the total profit available to the company.
The interest coverage ratio of Australia mines limited has been evaluated to recognize
that interest payment capability of the company. The interest coverage ratio of the company
was nil in 2015, 2016 and 2017 respectively. It explains that the no interest amount has been
paid by the company in last 3 years due to the fact that the company has not issued any debts
in the market and thus the interest coverage ratio of the company is nil.
Interest Coverage
Ratio 2015 2016 2017
EBIT / -1087473 -1023221 -2413740
Net Finance Costs
(used net interest
expense) 0 0 0
Answer:
times
p.a #DIV/0! #DIV/0! #DIV/0!
(Bloomberg, 2018)
Further, the interest coverage ratio of Australia pacific coal limited has been evaluated
further and it has been recognized that the interest coverage ratio of the company is 0, -7.07
and -3.39 in 2015, 2016 and 2017 respectively. It explains that the earnings before interest
Answer: % - 0.034 0.174
(Morningstar, 2018)
The gearing ratio of both the comapny explains that the performance of Australia
pacific coal limited is better than Australia mining limited due to the optimal capital structure
of the company.
Interest coverage ratio:
Interest coverage ratio is also a long term solvency ratio which measures the ability of
an organization to pay the interest on the debt amount to the debt holders of the company on
the basis of the total profit available to the company.
The interest coverage ratio of Australia mines limited has been evaluated to recognize
that interest payment capability of the company. The interest coverage ratio of the company
was nil in 2015, 2016 and 2017 respectively. It explains that the no interest amount has been
paid by the company in last 3 years due to the fact that the company has not issued any debts
in the market and thus the interest coverage ratio of the company is nil.
Interest Coverage
Ratio 2015 2016 2017
EBIT / -1087473 -1023221 -2413740
Net Finance Costs
(used net interest
expense) 0 0 0
Answer:
times
p.a #DIV/0! #DIV/0! #DIV/0!
(Bloomberg, 2018)
Further, the interest coverage ratio of Australia pacific coal limited has been evaluated
further and it has been recognized that the interest coverage ratio of the company is 0, -7.07
and -3.39 in 2015, 2016 and 2017 respectively. It explains that the earnings before interest
Bachelor or professional accounting 9
and tax of the company are negative and due to it, the company is not able to pay the interest
expenses from the profits of the company.
Interest Coverage
Ratio 2015 2016 2017
EBIT / -1922562 -5991001 -8942416
Net Finance Costs
(used net interest
expense) 0 847340 2638203
Answer:
time
s p.a
-
7.07
-
3.39
The interest coverage ratio of both the comapny explains that the performance of
Australia mining limited is better than the Australia pacific coal limited as the company is
facing loss and thus no amount has been raised by the company through debt amount (Kaplan
and Atkinson, 2015).
Thus, it has been found that the long term solvency position of Australia mining
limited is better than the Australia pacific coal limited. The company has managed the
optimal capital structure in such a way that the company could bear the losses.
Asset utilization:
Asset utilization ratio explains about the efficiency position of the company and cash
conversion cycle of the company. It measures that how effectively a business could run its
business and the activities. The asset utilization ratios of the company are as follows:
Payment turnover ratio:
Payment turnover ratio explains about the total average time in which the company
pays the amount to the creditors.
The payment turnover ratio of Australia mines limited explains that the payment
turnover ratio of the company is 0, 0 and 0 days in 2015, 2016 and 2017 respectively. The
and tax of the company are negative and due to it, the company is not able to pay the interest
expenses from the profits of the company.
Interest Coverage
Ratio 2015 2016 2017
EBIT / -1922562 -5991001 -8942416
Net Finance Costs
(used net interest
expense) 0 847340 2638203
Answer:
time
s p.a
-
7.07
-
3.39
The interest coverage ratio of both the comapny explains that the performance of
Australia mining limited is better than the Australia pacific coal limited as the company is
facing loss and thus no amount has been raised by the company through debt amount (Kaplan
and Atkinson, 2015).
Thus, it has been found that the long term solvency position of Australia mining
limited is better than the Australia pacific coal limited. The company has managed the
optimal capital structure in such a way that the company could bear the losses.
Asset utilization:
Asset utilization ratio explains about the efficiency position of the company and cash
conversion cycle of the company. It measures that how effectively a business could run its
business and the activities. The asset utilization ratios of the company are as follows:
Payment turnover ratio:
Payment turnover ratio explains about the total average time in which the company
pays the amount to the creditors.
The payment turnover ratio of Australia mines limited explains that the payment
turnover ratio of the company is 0, 0 and 0 days in 2015, 2016 and 2017 respectively. The
Bachelor or professional accounting 10
turnover ratio explains that the company has not generated any profit and thus the turnover
days of the company could not be calculated in 2015, 2016 and 2017.
Trade payable
payment period ratio 2015 2016 2017
Accounts payable/ 190861 164080 328830
Cost of sales 0 0 0
Answer: (note the
above needs to be x
365) #DIV/0! #DIV/0! #DIV/0!
The payment turnover ratio of Australia pacific coal explains that the payment
turnover ratio of the company is 0, 112481 days and 0 days in 2015, 2016 and 2017
respectively. The turnover ratio explains that the company has not generated any profit and
thus the turnover days of the company could not be calculated in 2015 and 2017.
.
Trade payable
payment period ratio 2015 2016 2017
Accounts payable/ 291536 523579 2701937
Cost of sales 0 1699 0
Answer: (note the above
needs to be x 365) #DIV/0! 112481.66 #DIV/0!
Inventory turnover and receivable turnover:
These ratios are calculated to identify the efficiency and the cash conversion cycle of
the company. The Inventory turnover and receivable turnover ratio of Australia mines limited
explains that the company has not generated any revenue from last 3 years and due to it, the
turnover days of the company could not be calculated in 2015, 2016 and 2017 (Annual report,
2017).
turnover ratio explains that the company has not generated any profit and thus the turnover
days of the company could not be calculated in 2015, 2016 and 2017.
Trade payable
payment period ratio 2015 2016 2017
Accounts payable/ 190861 164080 328830
Cost of sales 0 0 0
Answer: (note the
above needs to be x
365) #DIV/0! #DIV/0! #DIV/0!
The payment turnover ratio of Australia pacific coal explains that the payment
turnover ratio of the company is 0, 112481 days and 0 days in 2015, 2016 and 2017
respectively. The turnover ratio explains that the company has not generated any profit and
thus the turnover days of the company could not be calculated in 2015 and 2017.
.
Trade payable
payment period ratio 2015 2016 2017
Accounts payable/ 291536 523579 2701937
Cost of sales 0 1699 0
Answer: (note the above
needs to be x 365) #DIV/0! 112481.66 #DIV/0!
Inventory turnover and receivable turnover:
These ratios are calculated to identify the efficiency and the cash conversion cycle of
the company. The Inventory turnover and receivable turnover ratio of Australia mines limited
explains that the company has not generated any revenue from last 3 years and due to it, the
turnover days of the company could not be calculated in 2015, 2016 and 2017 (Annual report,
2017).
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Inventory Turnover (days) 2015 2016 2017
Average Inventory / 0 0 0
Cost of Sales # days 0 0 0
Answer: (note the above needs
to be x 365) #DIV/0! #DIV/0! #DIV/0!
Receivables Turnover (days) 2015 2016 2017
Average trade debtors / 27013 1500 639
Sales revenue (note used
operating revenue) # days 0 0 0
Answer: (note the above needs
to be x 365) #DIV/0! #DIV/0! #DIV/0!
The Inventory turnover and receivable turnover ratio of Australia pacific coal explains
that the ratio of the company is 128899.35 and 4592.26 days in 2016 respectively. The
turnover ratio explains that the company has not generated any revenue in 2015 and 2017 and
thus the turnover days of the company could not be calculated in 2015 and 2017 (Elliott and
Elliott, 2007).
Inventory Turnover (days) 2015 2016 2017
Average Inventory / 0 600000 0
Cost of Sales
#
days 0 1699 0
Answer: (note the above needs to be x
365) #DIV/0! 128899.35 #DIV/0!
Receivables Turnover (days) 2015 2016 2017
Average trade debtors / 17389 48615 241677
Sales revenue (note used operating
revenue)
#
days 0 3864 0
Answer: (note the above needs to be x
365) #DIV/0! 4592.26 #DIV/0!
Thus, it has been found that the efficiency position of Australia mining limited and
the Australia pacific coal limited is quite similar. Both the companies have not generated any
revenue and thus the efficiency position cannot be calculated.
Profitability ratios:
Profitability ratio explains about the profitability position of the company and the
capability of the company to generate the profit. It measures that how well the company is
Inventory Turnover (days) 2015 2016 2017
Average Inventory / 0 0 0
Cost of Sales # days 0 0 0
Answer: (note the above needs
to be x 365) #DIV/0! #DIV/0! #DIV/0!
Receivables Turnover (days) 2015 2016 2017
Average trade debtors / 27013 1500 639
Sales revenue (note used
operating revenue) # days 0 0 0
Answer: (note the above needs
to be x 365) #DIV/0! #DIV/0! #DIV/0!
The Inventory turnover and receivable turnover ratio of Australia pacific coal explains
that the ratio of the company is 128899.35 and 4592.26 days in 2016 respectively. The
turnover ratio explains that the company has not generated any revenue in 2015 and 2017 and
thus the turnover days of the company could not be calculated in 2015 and 2017 (Elliott and
Elliott, 2007).
Inventory Turnover (days) 2015 2016 2017
Average Inventory / 0 600000 0
Cost of Sales
#
days 0 1699 0
Answer: (note the above needs to be x
365) #DIV/0! 128899.35 #DIV/0!
Receivables Turnover (days) 2015 2016 2017
Average trade debtors / 17389 48615 241677
Sales revenue (note used operating
revenue)
#
days 0 3864 0
Answer: (note the above needs to be x
365) #DIV/0! 4592.26 #DIV/0!
Thus, it has been found that the efficiency position of Australia mining limited and
the Australia pacific coal limited is quite similar. Both the companies have not generated any
revenue and thus the efficiency position cannot be calculated.
Profitability ratios:
Profitability ratio explains about the profitability position of the company and the
capability of the company to generate the profit. It measures that how well the company is
Bachelor or professional accounting 12
using the sources and the assets to enhance the profitability level of the company. The
profitability ratios of the company are as follows:
Profitability ratios:
Return on capital employed, gross profit margin and net profit margin ratio explains
about the profit generation capability of the company to measure the performance and the
position of the company (Horngren et al, 2005).
The profitability ratio of Australia mines limited explains that the return on capital
employed level explains about the negative performance of the company as well as the gross
profit margin and the operating profit margin of the company cannot be calculated because of
any sales generation in last 3 years.
AUSTRALIAN MINES LTD
Profitability Ratios: 2015 2016 2017
Return on Capital
employed 2015 2016 2017
Operating profit / -1087473 -1023221 -2413740
Capital employed (total
assets - current liabilities) 3533521 2146188 3983111
Answer: % -30.78% -47.68% -60.60%
Gross Profit Margin 2015 2016 2017
Gross profit / 462184 304571 1382984
Sales Revenue (note used
operating revenue) 0 0 0
Answer: #DIV/0! #DIV/0! #DIV/0!
Operating profit margin 2015 2016 2017
Operating profit / -1087473 -1023221 -2413740
Sales Revenue % 0 0 0
Answer: #DIV/0! #DIV/0! #DIV/0!
The profitability ratio of Australia pacific coal limited explains that the return on
capital employed level explains about the negative performance of the company as well as the
gross profit margin and the operating profit margin of the company was 127.43% and
127.43% in 2016. The ratios of 2015 and 2017 cannot be calculated because of any sales
generation.
AUSTRALIAN PACIFIC
using the sources and the assets to enhance the profitability level of the company. The
profitability ratios of the company are as follows:
Profitability ratios:
Return on capital employed, gross profit margin and net profit margin ratio explains
about the profit generation capability of the company to measure the performance and the
position of the company (Horngren et al, 2005).
The profitability ratio of Australia mines limited explains that the return on capital
employed level explains about the negative performance of the company as well as the gross
profit margin and the operating profit margin of the company cannot be calculated because of
any sales generation in last 3 years.
AUSTRALIAN MINES LTD
Profitability Ratios: 2015 2016 2017
Return on Capital
employed 2015 2016 2017
Operating profit / -1087473 -1023221 -2413740
Capital employed (total
assets - current liabilities) 3533521 2146188 3983111
Answer: % -30.78% -47.68% -60.60%
Gross Profit Margin 2015 2016 2017
Gross profit / 462184 304571 1382984
Sales Revenue (note used
operating revenue) 0 0 0
Answer: #DIV/0! #DIV/0! #DIV/0!
Operating profit margin 2015 2016 2017
Operating profit / -1087473 -1023221 -2413740
Sales Revenue % 0 0 0
Answer: #DIV/0! #DIV/0! #DIV/0!
The profitability ratio of Australia pacific coal limited explains that the return on
capital employed level explains about the negative performance of the company as well as the
gross profit margin and the operating profit margin of the company was 127.43% and
127.43% in 2016. The ratios of 2015 and 2017 cannot be calculated because of any sales
generation.
AUSTRALIAN PACIFIC
Bachelor or professional accounting 13
COAL LTD
Profitability Ratios: 2015 2016 2017
Return on Capital
employed 2015 2016 2017
Operating profit /
-
1922562
-
5991001 -8942416
Capital employed (total
assets - current liabilities) 2715692 2758417 53271023
Answer: % -70.79%
-
217.19% -16.79%
Gross Profit Margin 2015 2016 2017
Gross profit / 0 2165 0
Sales Revenue (note used
operating revenue) 0 1699 0
Answer: 127.43%
Operating profit margin 2015 2016 2017
Operating profit / 0 2165 0
Sales Revenue % 0 1699 0
Answer: 127.43%
(Morningstar, 2018)
On the basis of the above ratios, it has been found that the comparison study cannot
be done because of no proper ratios and the values of sales.
.Market value ratios:
Market value ratios explain about the market position of the company. On the basis of
the market value ratios of Australia mines limited, it has been found that earnings per share of
the company explain s about the negative position and the company has not paid any
dividend amount to the shareholders of the company (Deegan, 2013).
AUSTRALIAN MINES LTD
Market value Ratios 2015 2016 2017
Earnings per share 2015 2016 2017
Net income -2573585 -1023221 -2413740
Weighted average shares
outstanding 821163864 1072990676 1303750788
Answer:
-
0.003
-
0.001
-
0.002
Dividend coverage ratio 2015 2016 2017
COAL LTD
Profitability Ratios: 2015 2016 2017
Return on Capital
employed 2015 2016 2017
Operating profit /
-
1922562
-
5991001 -8942416
Capital employed (total
assets - current liabilities) 2715692 2758417 53271023
Answer: % -70.79%
-
217.19% -16.79%
Gross Profit Margin 2015 2016 2017
Gross profit / 0 2165 0
Sales Revenue (note used
operating revenue) 0 1699 0
Answer: 127.43%
Operating profit margin 2015 2016 2017
Operating profit / 0 2165 0
Sales Revenue % 0 1699 0
Answer: 127.43%
(Morningstar, 2018)
On the basis of the above ratios, it has been found that the comparison study cannot
be done because of no proper ratios and the values of sales.
.Market value ratios:
Market value ratios explain about the market position of the company. On the basis of
the market value ratios of Australia mines limited, it has been found that earnings per share of
the company explain s about the negative position and the company has not paid any
dividend amount to the shareholders of the company (Deegan, 2013).
AUSTRALIAN MINES LTD
Market value Ratios 2015 2016 2017
Earnings per share 2015 2016 2017
Net income -2573585 -1023221 -2413740
Weighted average shares
outstanding 821163864 1072990676 1303750788
Answer:
-
0.003
-
0.001
-
0.002
Dividend coverage ratio 2015 2016 2017
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Bachelor or professional accounting 14
Net income / -25,73,585 -10,23,221 -24,13,740
Dividend paid to shareholders 0 0 0
Answer: #DIV/0! #DIV/0! #DIV/0!
Further, the market value ratios of AUSTRALIAN PACIFIC COAL LTD explain that
the market value of the company is not at all competitive. Company has not paid any
dividend to the shareholders in last 3 years.
AUSTRALIAN PACIFIC COAL LTD
Market value Ratios 2015 2016 2017
Earnings per share 2015 2016 2017
Net income -1922562 -5991001 -8942416
Weighted average shares
outstanding 2948567 29990577 44875472
Answer:
-
0.652
-
0.200
-
0.199
Dividend coverage ratio 2015 2016 2017
Net income / -19,22,562 -59,91,001 -89,42,416
Dividend paid to shareholders 0 0 0
Answer: - - -
(Annual report, 2017)
On the basis of the above evaluation and the study, market value of Australia mines
limited is way better than Australia pacific coal limited. However, both the position is
negative and does not explain about the better market position.
Recommendation and conclusion:
On the basis of the above evaluation and the study, it has been recognized that the
liquidity position of Australia mining limited is better than the Australia pacific coal limited.
Further it has been found that the risk position of Australia mining is lower and explains that
the investment into the Australia mining limited is better option.
In addition, the efficiency position of Australia mining limited and the Australia pacific
coal limited is quite similar. Both the companies have not generated any revenue and thus the
efficiency position cannot be calculated.
The profitability position and the market value ratios of the company have also not
been calculated because of any sales generation.
On the basis of this evaluation, it has been found that the of Australia mining limited
is better than the Australia pacific coal limited for the purpose of investment. Though, no
Net income / -25,73,585 -10,23,221 -24,13,740
Dividend paid to shareholders 0 0 0
Answer: #DIV/0! #DIV/0! #DIV/0!
Further, the market value ratios of AUSTRALIAN PACIFIC COAL LTD explain that
the market value of the company is not at all competitive. Company has not paid any
dividend to the shareholders in last 3 years.
AUSTRALIAN PACIFIC COAL LTD
Market value Ratios 2015 2016 2017
Earnings per share 2015 2016 2017
Net income -1922562 -5991001 -8942416
Weighted average shares
outstanding 2948567 29990577 44875472
Answer:
-
0.652
-
0.200
-
0.199
Dividend coverage ratio 2015 2016 2017
Net income / -19,22,562 -59,91,001 -89,42,416
Dividend paid to shareholders 0 0 0
Answer: - - -
(Annual report, 2017)
On the basis of the above evaluation and the study, market value of Australia mines
limited is way better than Australia pacific coal limited. However, both the position is
negative and does not explain about the better market position.
Recommendation and conclusion:
On the basis of the above evaluation and the study, it has been recognized that the
liquidity position of Australia mining limited is better than the Australia pacific coal limited.
Further it has been found that the risk position of Australia mining is lower and explains that
the investment into the Australia mining limited is better option.
In addition, the efficiency position of Australia mining limited and the Australia pacific
coal limited is quite similar. Both the companies have not generated any revenue and thus the
efficiency position cannot be calculated.
The profitability position and the market value ratios of the company have also not
been calculated because of any sales generation.
On the basis of this evaluation, it has been found that the of Australia mining limited
is better than the Australia pacific coal limited for the purpose of investment. Though, no
Bachelor or professional accounting 15
company would offer return to the investors. However, the risk of Australia mines limited is
lower.
company would offer return to the investors. However, the risk of Australia mines limited is
lower.
Bachelor or professional accounting 16
References:
Annual report. 2017. Australia pacific coal Limited. (Online). Available at:
http://www.aqcltd.com/irm/content/annual-reports.aspx?RID=382 (Accessed 24/05/2018).
Bierman Jr, H. and Smidt, S., 2012. The capital budgeting decision: economic analysis of
investment projects. Routledge.
Bloomberg. 2018. Australia Mines Limited. (Online). Available at:
https://www.bloomberg.com/quote/AUZ:AU (Accessed 24/05/2018).
Bloomberg. 2018. Australia pacific coal limited. (Online). Available at:
https://www.bloomberg.com/quote/AQC:AU (Accessed 24/05/2018).
Deegan, C. 2013. Financial accounting theory. McGraw-Hill Education Australia.
Du, J. and Girma, S., 2009. Source of finance, growth and firm size: evidence from
China (No. 2009.03). Research paper/UNU-WIDER.
Elliott, B., and Elliott, J. 2007. Financial accounting and reporting. Pearson Education.
Horngren, C.T., Sundem, G.L., Stratton, W.O., Burgstahler, D. and Schatzberg, J.,
2005. Introduction to management accounting. Upper Saddle River, New Jersey: Prentice
Hall.
Investors. 2018. Australia Mines Limited. (Online). Available at:
https://australianmines.com.au/investors (Accessed 24/05/2018).
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.
Morningstar. 2018. Australia Mines Limited. (Online). Available at:
http://financials.morningstar.com/income-statement/is.html?t=0P00006W9T&culture=en-
US&platform=sal (Accessed 24/05/2018).
Morningstar. 2018. Australia pacific coal Limited. (Online). Available at:
http://financials.morningstar.com/income-statement/is.html?
t=AQC®ion=AUS&culture=en_US (Accessed 24/05/2018).
Reuters. 2018. Australia Mines Limited. (Online). Available at:
https://www.reuters.com/finance/stocks/company-profile/AUZ.AX (Accessed 24/05/2018).
References:
Annual report. 2017. Australia pacific coal Limited. (Online). Available at:
http://www.aqcltd.com/irm/content/annual-reports.aspx?RID=382 (Accessed 24/05/2018).
Bierman Jr, H. and Smidt, S., 2012. The capital budgeting decision: economic analysis of
investment projects. Routledge.
Bloomberg. 2018. Australia Mines Limited. (Online). Available at:
https://www.bloomberg.com/quote/AUZ:AU (Accessed 24/05/2018).
Bloomberg. 2018. Australia pacific coal limited. (Online). Available at:
https://www.bloomberg.com/quote/AQC:AU (Accessed 24/05/2018).
Deegan, C. 2013. Financial accounting theory. McGraw-Hill Education Australia.
Du, J. and Girma, S., 2009. Source of finance, growth and firm size: evidence from
China (No. 2009.03). Research paper/UNU-WIDER.
Elliott, B., and Elliott, J. 2007. Financial accounting and reporting. Pearson Education.
Horngren, C.T., Sundem, G.L., Stratton, W.O., Burgstahler, D. and Schatzberg, J.,
2005. Introduction to management accounting. Upper Saddle River, New Jersey: Prentice
Hall.
Investors. 2018. Australia Mines Limited. (Online). Available at:
https://australianmines.com.au/investors (Accessed 24/05/2018).
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.
Morningstar. 2018. Australia Mines Limited. (Online). Available at:
http://financials.morningstar.com/income-statement/is.html?t=0P00006W9T&culture=en-
US&platform=sal (Accessed 24/05/2018).
Morningstar. 2018. Australia pacific coal Limited. (Online). Available at:
http://financials.morningstar.com/income-statement/is.html?
t=AQC®ion=AUS&culture=en_US (Accessed 24/05/2018).
Reuters. 2018. Australia Mines Limited. (Online). Available at:
https://www.reuters.com/finance/stocks/company-profile/AUZ.AX (Accessed 24/05/2018).
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