Project Report Assignment | Corporate Finance Assignment

Added on - 28 May 2020

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Running Head: Corporate Finance1Project Report:Corporate Finance
Corporate Finance2Part 2: Company PerspectiveBackground:Woodside petroleum limited is an exploration and manufacturing company. Thiscompany is operating its business in Australian market. Woodside petroleum has the largestshare in the gas and oil exploration industry of Australia. Head office of this company issituated is at Perth in Australia. This company has registered its stock in stock exchange ofAustralia. The main operations of this company are to exploration and deliver the oil and gasproducts in the Australian market. Various mines are owned by the company in Australiaitself (Home, 2018). This company has most of the natural gas projects in Australia. 13.5%share of oil and gas exploration industry is held by Woodside petroleum limited only. Thismarket share is the highest in the Australian market.Oil and gas exploration industry of Australia is one of the largest industries in ASX.This industry contributes 2.58% in the total GDP of the country. The current reports and thefuture trends of oil and gas exploration industry of Australia explains that the company hasfaced few losses in last year due to natural and environment factor and future trend explainsthat the firms in oil and gas industry must run the business though concerning about naturalaspects (Annual report, 2018).The main key opportunity of Woodside petroleum limited is high technology of whichwould assist the organization to grab more market share. Through the help of technology,international project could also be owned by the company and the mission of the companycould be accomplished. On the other hand, huge competition at international level is the mainthreat of the company and the bad relations of the company with its stakeholders would alsoimpact over the performance of the company. Thus the company is required to manage thethreats by identifying and taking a better step at fair time.Cash conversion cycle:Cash conversion cycle (CCC) is a financial analysis process which is used by thecompanies, management and the professionals to evaluate the cash turnover of the company.It directly impacts over the liquidity and working capital management position of thecompany. Cash conversion cycle calculations express about the total time in which the cash
Corporate Finance3of the company would be get back. Below table express about the cash conversion cycle oflast 2 years:Calculation of cash conversion cycle of 2016Sales£4,075COGS£2,234Inventories£5AR£172AP£546Days/year365Cash conversioncycle (CCC)=Inventoryconversion period+Receivablescollectionperiod-Payablesdeferral period=Inventory/Sales perday+AR/Sales perday-AP/COGS perday=0.45+15.41-48.91=33.05 daysCalculation of cash conversion cycle of 2015Sales£5,030COGS£3,073Inventories£19AR£93AP£813Days/year365
Corporate Finance4Cash conversioncycle (CCC)=Inventoryconversion period+Receivablescollectionperiod-Payablesdeferral period=Inventory/Sales perday+AR/Sales perday-AP/COGS perday=1.38+6.75-59.00=- 50.87(Arnold, 2013)The above table of cash conversion cycle expresses about the total days which wouldbe required by the company to get back the total investment cash for operations and dailyactivities. The CCC of 2015 was -50.87 days and in 2016, it was -33.05 days. This explainsthat the average receivable collection days have been enhanced in 2016. Though, the currentCCC position of the company expresses that the current working capital position of thecompany is in negative. It expresses that the current asset of the company is quite lower thanthe current liabilities of the company. Though, the cash turnover of the company is quitehigher and explains that the good position could be maintained by the company.Short term and long term debt financing:In addition, financing options have been evaluated which had been opted by thecompany to raise its short term and long term funds. For short term financing, accountingpayable is the most used source for the company. The current payables of the company are $546. On the other hand, for long term financing, interest bearing liability is the most usedsource for the company. The current interest bearing liability of the company is $ 4897. Atthe same time, total short term debt of the company is $ 963 and total long term liabilities ofthe company are $ 8128 (Brealey, Myers and Marcus, 2007).It explains that the long term as well as short term, both financing sources have beenused by the company to manage its performance and the position in the market. Further, italso explains that the debt financing sources have been used by the company to reduce thelevel of the cost of the company.Bond valuation:
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