Financial Analysis of Origin Energy

Part B: Financial Analysis of Origin Energy –ASX Listed Company

Part B
Company Background
The company selected for analysis purpose is Origin Energy, an ASX listed entity that is
involved in production and exploration of energy resources for meeting the domestic and
commercial consumption of electricity within Australia. The major business functions of the
company include generation of energy products such as electricity, natural gas, LPG and other
renewable sources for meeting the power requirements of people within the country. It is
regarded as a major energy company of Australia.
Ratio Analysis
The profitability and efficiency performance of the company has been analyzed by the
use of calculating the following ratios for the financial year 2016:
Profitability Ratios
Financial Items 2014 2015 2016
Net profit after tax (590.00)$ (576.00)$
Net Sales 11,550.00$ 11,923.00$
Shareholder's equity 15,129 14,159.00$ 14,530.00$
Average shareholder's equity 14,644.00$ 14,344.50$
Total Assets 30,941 33,367.00$ 28,898.00$
Average total assets 32,154.00$ 31,132.50$
Financial Data used to calculate profitability ratio
Amount in $ Million
Ratios Formula 2015 2016
Net profit ratio Net profit/Sales -5.11% -4.83%
Return on equity
Net profit after
tax/Average
shareholder's equity
-4.03% -4.02%
Return on total assets Net profit after
tax/Average total assets -1.83% -1.85%
Profitability Ratio
(Origin Energy, 2016)

2015 2016
-6.00%
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
-5.11%
-4.83%
-4.03% -4.02%
-1.83% -1.85%
Profitability Ratio of Origin Energy
Percentage
 Net Profit Ratio: The ratio for the company has depicted a negative trend in the year 2016
which depicts that it is incurring financial losses and not realizing any profits. It needs to
reduce its operational expenses for improving the profitability position (Damodaran,
2011).
 Return on Equity (ROE): The ROE of the company is also negative over the financial
year 2016 of (-4.02%) which means that it is not realizing any return on the equity
investments of its shareholders. This can prove to be detrimental for supporting its future
financial growth by not seeking funds from the investors (Gibson, 2011).
 Return on total assets: The return realized on asset base is also negative of (-1.85%)
which means that it is not able to derive returns on its asset base (Bragg, 2010).
Efficiency Ratios