Financial Statement Analysis

FINANCIAL STATEMENT
ANALYSIS

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
INTRODUCTION...........................................................................................................................1
REPORT..........................................................................................................................................1
Codan Limited.............................................................................................................................1
Profitability..................................................................................................................................2
Efficiency.....................................................................................................................................4
Liquidity......................................................................................................................................6
Capital Structure..........................................................................................................................6
Market performance.....................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
APPENDICES.................................................................................................................................9
Ratio Analysis..............................................................................................................................9

INTRODUCTION
Financial statement provides the detailed information about the health and position of the
company. The financial analysis is conducted to assess the performance of the company. This
shows the investors and the company the efficiency of the company in managing its financial
resources. Company is concerned with increasing its productivity and efficiency where the
investors are concerned with the returns over their investment and wealth maximisation.
Codan limited is the manufacturer & supplier of the metal detection, communications and
mining technology. It is headquartered in the Adelaide, South Australia. The report will provide
the analysis of financial statement of the company. It will cover the different financial aspects
that could impact the company. Financial statement provides the details about the assets,
liabilities and equity position along with the performance of company.
REPORT
Codan Limited
Codan Limited is deals in both manufacturing and supplying of the communications and
metal detection. Company is performing well from the last few years. It has performed
excellently well in the year 2019. Company has made the record sale of 271 million with
statutory net profit of 45.7 million. It has also paid the annual dividend of 9 cents. The financial
figures show that the company is effectively performing during the years. The financial position
of the company is also strong as it is having the net cash available of 37.5 million. Company has
adopted various investments plans for increasing the sales and business expansion
Financial Analysis
Financial analysis is done by the company using the various tools and techniques.
Companies conduct the financial analysis using tools such as ratio analysis. Financial statement
comprises of income statements, balance sheet and cash flows.
Income statement is used by the analysts for assessing the performance of the business. It
represents the incomes and expenses the profits generated in carrying out the business. It do not
represents the performance and not the financial position of the company. Balance contains the
assets, liabilities and capital structure of company that shows position of company. This requires
the company to assess the various obligations of the enterprise (Otekunrin and et.al., 2018).
Liquidity position of the company is assessed by the cash flow statements for the business.
Analysts assess the inflow and outflow of the cash of the business.
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Financial analysis of Codan Limited.
The financial statement of the company shows the financial analysis of 2019 and 2018.
Profitability
Profitability of the company is assessed using various profitability of the ratios. It requires
the company to have adequate profitability and sustainability of the business.
Return on Capital Employed
It shows the return of company over the capital employed. Codan is having ROCE of
28.71% that shows increase from the last year of 27.33%. There has been upward movement in
the returns of the company from last year. ROCE shows the efficiency of company in managing
its available resources for the generation of the positive returns. It should effectively use the
resources of company by applying effective strategies for increasing the productivity of the
existing resources. The above return of the company is adequate and however it could be further
increased by taking more effective steps for the utilisation of the resources.
High returns helps the company in getting approval of the project for its expansion plan.
Experts and analysts measures the efficiency of company in managing the resources to generate
adequate returns. It is influenced by the market forces affecting the functioning of company.
Company should write off assets from the balance sheet that are not productive (Khalilov and
Garcia Osma, 2019). Returns will be increased by reducing the unproductive assets. Return over
the capital employed is required to be high for representing the efficient management of the
existing resources of company.
Return on Equity
This is the ratio that shows the management and the users of financial statements the
return over the equity investments of company. This return is required for generating the
adequate returns over the equity. Return on equity of company is 29.97% in 2019 that was
28.28%. Net income of the shareholders has increased from last year. Share capital shows that
company has issued new class of equity shares of the company (Patil and Mohanthy, 2017).
Company is gibing adequate return to its investors over their investments in equity capital of the
company. A firm with high returns on equity gets higher confidence of the people.
Return shows that the company is performing well and is generating adequate returns
over the business. The rate from last two years shows that the company is managed consistency
in its operations and the strategies adopted by the company in its operations are adequate.
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