Principles of Financial Markets Executive Summary

Financial Analysis 1
Principles of Financial Markets

Financial Analysis 2
Table of Contents
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................4
Origin Energy Limited.................................................................................................................4
Caltex Australia Limited..............................................................................................................5
Top-down analysis...........................................................................................................................7
Existing Gross Domestic Product (GDP).....................................................................................7
Existing interest rate.....................................................................................................................8
Existing value of currency of Australia.......................................................................................8
Existing inflation rate...................................................................................................................9
Existing rate of unemployment....................................................................................................9
Bottom up Analysis.......................................................................................................................10
Analysis of Liquidity Ratio (Albrecht et. al., 2010)..................................................................10
Analysis of Profitability Ratio (Daly, 2011)..............................................................................11
Analysis of Efficiency Ratio (Coe, 2011)..................................................................................12
Analysis of Capital Structure ratio.............................................................................................13
Analysis of Market Performance ratio.......................................................................................14
Ratio Analysis................................................................................................................................15
Description of Liquidity Ratio...................................................................................................15

Financial Analysis 3
Description of Profitability Ratio...............................................................................................16
Description of Efficiency Ratio.................................................................................................17
Description of capital structure Ratio........................................................................................17
Description of Market Performance ratio..................................................................................17
Conclusion.....................................................................................................................................18
Recommendations..........................................................................................................................18
References......................................................................................................................................19

Financial Analysis 4
Executive Summary
Economic analysis and financial analysis are very important components to identify the factors
which influence the financial performance of any company and decision of investors for the
purpose of investment. The overall report determined the current situation of companies Origin
Energy Limited and Caltex Australia Limited in the energy sector in Australia.
Top down analysis and bottom up analysis have been conducted for the purpose of finding
impact of economic environment of country on the performance of both the companies in energy
sector and to analyze and compare the financial performance of companies in terms of industry.
Various factors are considered in top down analysis such as current growth rate of GDP, inflation
rate, unemployment rate and interest rate which have direct and indirect impact on the energy
sector in Australia. Financial performances of both the companies are compared with the help of
different ratios such as operating ratio, profitability, liquidity, efficiency and ratios which shows
capital structure of the companies.

Financial Analysis 5
Introduction
In this report micro and macro economic analysis and financial analysis of the companies Origin
Energy Limited and Caltex Australia Limited in the energy and gas industry in Australia will be
conducted. The companies under the energy sector of Australia which are listed in the Australian
Stock Exchange mainly involved in the growth and development and exploration of oil, coal,
gas, uranium and renewable energy resources. There is largest contribution of the energy sector
in generating revenue and in enhancing the rate of Gross Domestic Product and the growth and
development of economy of Australia (Bahadori, et al., 2013). Natural resources and energy
generating resources are available in large quantity in Australia. Australia is largest provider of
uranium and LNG and one of the biggest exporters of coal in the whole world and particularly in
the regions of Asia. Energy sector also provides largest contribution in boosting capital market of
the country and known by largest developed and growing market in the economy.
Origin Energy Limited
Origin Energy is one of the biggest and leading companies in the Oil and Energy Industry of
Australia headquartered in Australian Square, Sydney. The company mainly involves in the
buying, generating, selling, exploration and delivery of natural gas and energy in Australia and
worldwide (Origin, 2017). Origin Energy Company was found in 2000 because of the separation
from another company Boral Ltd. for the purpose of forming a new and single company in
energy sector. From the year 2002 to 2015 Origin Company was involved in merger and
acquisition and conducted deals with various companies in energy sector worldwide such as
Victorian electricity, Kupe Gas Field, Contact Energy of New Zealand, Sun Retail Private
Limited and Eraring Energy. The major products and services of the Origin Energy Company are
natural gas, electric vehicle charging services, electricity, solar panels, cooling and heating, LPG,

Financial Analysis 6
and hot water (Origin, 2017). It is also one of the largest suppliers of products of less carbon
which includes Green Gas and electricity of Green Power for the purpose of reducing pollution
in the environment.
Origin is the biggest retailer in energy sector in Australia having 4500 million consumers
worldwide which includes residential customers and small and big market customers with 9000
employees working currently (Origin, 2017). Origin is also provider of renewable energy with
the use of upgraded technology like solar cell technology, wind and geothermal power plant.
Natural gas and coal are considered as natural sources of energy which are utilized by company
for generating the electricity. Mission statement of the company is to offer reliable, secure and
affordable energy services to customers and communities and provide better opportunities for
shareholders, communities, customers and business partners.
Caltex Australia Limited
Caltex was found in 1936 known as California Texas Oil Company as a result of merger between
the Standard Oil in California and Texas Company headquartered in Sydney. In the year 1968, it
was received the name Caltex Petroleum Corporations. Caltex is the biggest retail company in
the sector of oil and fuel industry having approximately 1850 service outlets in Australia (Caltex,
2017). Major products offered by the company are Petrol, Autogas, Motor oil, Diesel, Lubricants
and different retail stores such as Star Mart, Woolworths and Star Shop. This company is
providing its products and services in Australia as well as worldwide such as New Zealand,
China, Malaysia, Hong Kong, Philippines, South Africa, India, Taiwan and South Korea.
As the leading company in Australia in the oil, gas and fuel sector it is fulfilling the needs of one
third customers in Australia of fuel requirement for transport. With the help of exclusive supply
chain management it is supplying reliable, affordable, safe and best quality of fuel for different