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Principles of Financial Management 4 Principles of Financial Management

   

Added on  2020-04-07

20 Pages4290 Words484 Views
FinanceLeadership ManagementEconomics
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Principles of Financial Management 1Principles of Financial Management
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Principles of Financial Management 2Executive Summary:The main purpose of this report is to analyse the financial performance of two companies on thebasis of top down and bottom up analysis. Caltex and BHP Billiton Petroleum two majorAustralian petroleum companies have been selected for this report. Top down analysis mainlyanalyses the economical factors which can affect financial performance of companies whereas,bottom up approach analysed the financial position of companies on the basis of differentfinancial ratios. In this report, two major petroleum companies across Australia are selected foranalysing their performance in both global as well as domestic market conditions. Top downapproach has analysed various factors like economical, industry or company which can affectfinancial performance. Both companies are playing their significant role in economical growth ofAustralia. It is analysed from current GDP, value of currency, inflation rate or interest rate thatpresent economical conditions of Australia are favourable for business operations of companies.In addition, different ratios like profitability, market structure, or efficiency ratios have been usedin bottom up approach in order to analyse the financial performance of two companies. Thedifferent ratios have signified that BHP Billiton Petroleum is performing far better than Caltexand have higher profitability as well as revenues in 2017. The different recommendations havealso been suggested at end of this report for improving market share or financial performance oftwo petroleum companies.
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Principles of Financial Management 3Table of ContentsExecutive Summary:........................................................................................................................2Introduction:....................................................................................................................................4Industry Profile:...............................................................................................................................5Company’s Profile:..........................................................................................................................6Caltex Australia:..........................................................................................................................6BHP Billiton Petroleum:..............................................................................................................6Top Down analysis:.........................................................................................................................7Current GDP:...............................................................................................................................7Current rate of Interest:................................................................................................................7$AUD’s Current Value:...............................................................................................................8Current rate of Inflation:..............................................................................................................8Personal income for Disposable:..................................................................................................9Bottom Up analysis:......................................................................................................................10Profitability Ratio:......................................................................................................................11Efficiency Ratio:........................................................................................................................11Capital Structure:.......................................................................................................................12Market Performance:..................................................................................................................12Comparative Analysis:...............................................................................................................14Summary and Recommendations:.................................................................................................15References:....................................................................................................................................16
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Principles of Financial Management 4Introduction:The main purpose of this report is to analyse the financial performance of Caltex and BHPBilliton Petroleum which are considered as major petroleum companies across Australia. Inorder to analyse the financial performance, top down analysis and bottom up analysis has beenperformed in this report. The company analysis, industry analysis and economical analysis arevital aspects for the top down analysis which has been used in this report. The entire analysis isbased on the key statistics of petroleum industry across Australia. Further, different financialratios have been analysed for both companies on basis of 2017 data during the bottom upanalysis. The different ratios like profitability, capital structure, and market performance as wellas efficiency ratios have been analysed in order to compare the financial performance of twocompanies in this report.
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