Financial Analysis of Cooper Energy Limited

Running head: REPORT
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ACCOUNTS FOR MANAGERS
SEPTEMBER 10, 2019
STUDENT DETAILS:

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Executive summary
There are four major areas of the financial health that must be investigated are
liquidity, profitability, solvency as well as efficiency. Nevertheless, of four, likely
the better measurement of the financial health of company is a level of the
profitability. There are various financial ratios, which may be reviewed to gauge the
complete financial health of company as well as, to create the determination of the
possibility of the corporation continuing as the practical business. The individual
numbers like net profit or debt are less meaningful than financial ratios that connect
and compare the various numbers on the income statement or balance sheet of
Cooper Energy Limited. The general trends of the financial ratios, whether they are
increased, are very significant consideration. In the following parts, the ratio
analysis as well as trend analysis of Cooper Energy limited is discussed. This report
also made the recommendations.

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Contents
Introduction.................................................................................................................... 2
Company overview.......................................................................................................... 2
Ratio analysis................................................................................................................. 3
Profitability Ratios........................................................................................................ 3
Efficiency ratio............................................................................................................ 4
Liquidity ratios............................................................................................................ 5
Solvency ratios............................................................................................................ 6
Trend analysis-................................................................................................................ 8
Conclusion..................................................................................................................... 9
References................................................................................................................... 11
Appendix 1: Financial statements....................................................................................... 13

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Introduction
The financial analysis is analysis of cash flow statement, company’s income statement as well as
cash flow statement of company with the help of ratio analysis as well as trend analysis. The
main aim to conduct financial analysis is to know the liquidity position and profitability
condition of company. The financial analysis also assesses the stability along with solvency of
entity for confirming the investments. It can be useful in taking decision related to selection of
the best project to make investment. The financial analysis provides best information to the
stakeholder of company. It is used in the financial policies, approaches, trends, as well as longer-
term plans in the activities of business. The management of entity is accountable to make
decisions related to the plan and strategies for future. These following parts tell the financial
strength of Cooper Energy Limited by conducting proper ratio as well as trend analysis.
Company overview
Cooper Energy Ltd is the energy corporation. This company is upstream oil as well as the gas
exploration and manufacturing organisation whose main objective is to, search, establish,
manufacture and trade the hydrocarbons. The functions of this entity contain oil production in
South Sumatra Basin (onshore Indonesia) as well as Cooper Basin (onshore Australia). The
Business Units in Australia include exploration along with assessment for gas as well as oil,
development, manufacturing along with sale of crude oil in the numerous fields within Cooper
Basin, Otway Basin along with Gippsland Basin. This holds the interest in about 3 exploration
licenses, upon thirty retention licenses as well as about ten manufacturing licenses in South-

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Australian Cooper Basin. It also holds interest upon 4 exploration licenses as well as the
retention licenses in onshore Otway Basin. This is involved discovery, commercialization and
sale of gas to south-east Australia and low-cost Cooper Basin oil production. Mostly, it gets
revenue from South East Australia. The company projects involve the Sole Gas as well as Manta
Projects in Southern-east Australia (Reuters, 2018).
Ratio analysis
The ratio analysis is very significant tool to assess the company’s financial health. The ratio
analysis means the evaluation of financial performance of the corporation in relation to solvency,
efficiency, profitability, efficiency ratios along with liquidity ratio (Alexander, 2011). The ratio
analysis is quantitative assessment of data involved in organization’s financial statements. In this
way, the ratio analysis is helpful in making comparison between one company’s data and
industry data (Annual report, 2018). Following are the ratios to assess financial position of
company-
Profitability Ratios
The profitability ratio is best ratio. The profitability ratio evaluates the net income of company to
get sales made by company (Al Quait and Doherty, 2016). The gross margin is another good
method of the financial ratios. It states sales revenue that entity keeps after having direct cost of
manufacturing services as well as goods to sell. In 2014, the gross margin was 63.96 %. Further,
it was reduced to 41.54 % in year 2015. It was reduced to 39.87% in 2016, and then again

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increased to 42.11% in 2017. Further, it slightly increased to 42.98% in 2018. When making
comparison to industry, it can see that, the industry average ratio is 45.70%. It means company is
not performing good. (Williams and Dobelman, 2017).
The net profit margin is very useful for the investor that can be helpful in to make investment in
business to assess financial position of entity. The profitability ratio is beneficial to evaluate
entity’s profitability. The high net margin ratio states proper management of the activities of
company. In 2014, the net margin is 30.36%. In 2015, it is reduced to -189.40%, and -171.98 %
in 2016. Furthermore, it came to -35.53% in 2018. Then, in 2018 it is increased 40.04%. When
compare to industry data, it is found that industry average ratio is -1955119.82%. It means that
company is doing well in comparison of industry but not doing well.
Efficiency ratio
The efficiency ratio is helpful because it evaluates entity’s capability in using resources as well
as assets. It include credit period along with inventory turnover ratio (Vogel, 2014). The
inventory turnover ratio states that how many time entity has replaced and traded inventories in a
provided period. The lower inventory turnover ratio signifies the weak sale and overstock