Financial Statement Analysis and Ratio Analysis Report - MBA504

This report presents a financial analysis of AGL Limited and Buru Energy Limited, examining their financial performance through ratio analysis and comparison. The analysis covers key financial statements, including balance sheets, income statements, and cash flow statements. The report highlights fluctuations in the financial market and evaluates the companies' liquidity, profitability, and investor perceptions. It compares the current and quick ratios of both companies, assessing their ability to meet short-term obligations. The report also analyzes the gross profit margins and sales performance of AGL Limited, while considering market capitalization and earnings per share (EPS) to assess the stability of earnings. The references provided support the findings and analysis presented in the report.

SUMMARY

Summary
From the entire calculation given in the ratio analysis, change in equity, income and expense,
revenues, and change in liabilities, it is seen that fluctuation is an integral part of the financial
market because of fluctuating business environment (Senteney, Stowe, & Stowe, 2019). AGL
limited leads to improvement in 2018 by increasing its cash and cash equivalents that was
derived from sale of financial assets but there is scope of improvement by increasing the sales
of the company (Schmidgall, & DeFranco, 2016). In this regards, a competitor has also been
used named Buru energy limited (Díaz, & Ramírez, 2018). It is seen that competitor`s current
ratio was not quite good in 2017 but it was enhanced to the extent of 8 in 2018, which
symbolizes the company has increased its current assets. On the other hand, quick ratio for
Buru energy limited, quick ratio is appropriate which more than 1:1 is as in 2017, it was 1.37,
and it increased to 7.73 (Agrawal, & Tambe, 2016). AGL limited earns 27 percent and 29
percent in 2017 and 2018 where it can be seen that sales is appropriately high so as with the
reduction in COGS (Misund, 2017). An increase in gross profit can be due to increase in
sales. In case of AGL limited, it is seen that there is no huge difference between the
maintenance of liquidity in both the years as it is maintained at it level (AGL limited, 2018).
While seeing at the perception of the investors, it is important to overview the share price and
its related fluctuations. AGL`s market capitalisation is nearly 12.467 billion (Liang, Lu, Tsai,
& Shih, 2016). Per share ratio is 13.76 percent and EPS (Earning per share) is nearly 1.38
percent. Among both the companies named as Buru energy limited and AGL limited, it is
seen that AGL has more stable earning as compared to Buru Energy limited (Hanselaar,
Stulz, & Dijk, 2019).

References
AGL limited, (2018). Annual reports. Retrieved from:
http://www.annualreports.com/HostedData/AnnualReports/PDF/ASX_AGK.AX_201
8.pdf
Agrawal, A., & Tambe, P. (2016). Private equity and workers’ career paths: the role of
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Hanselaar, R. M., Stulz, R. M., & Van Dijk, M. A. (2019). Do firms issue more equity when
markets become more liquid?. Journal of Financial Economics, 133(1), 64-82.
Liang, D., Lu, C. C., Tsai, C. F., & Shih, G. A. (2016). Financial ratios and corporate
governance indicators in bankruptcy prediction: A comprehensive study. European
Journal of Operational Research, 252(2), 561-572.
Misund, B. (2017). Financial ratios and prediction on corporate bankruptcy in the Atlantic
salmon industry. Aquaculture economics & management, 21(2), 241-260.
Morales-Díaz, J., & Zamora-Ramírez, C. (2018). The impact of IFRS 16 on key financial
ratios: a new methodological approach. Accounting in Europe, 15(1), 105-133.
Schmidgall, R. S., & DeFranco, A. (2016). How to best use financial ratios in benchmarking
and decision making in clubs: Review of the decade 2003–2012. International Journal
of Hospitality & Tourism Administration, 17(2), 179-197.
Senteney, M., Stowe, D. L., & Stowe, J. D. (2019). Financial Statement Change and Equity
Risk. Available at SSRN 3335910.
Wong, K., & Joshi, M. (2015). The impact of lease capitalisation on financial statements and
key ratios: Evidence from Australia. Australasian Accounting, Business and Finance
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