Detailed Financial Analysis Report of OZ Minerals Company Performance

This report provides a financial analysis of OZ Minerals, a modern mining company based in Australia. It begins with a background of the company, tracing its history and ownership. The core of the report focuses on a detailed financial analysis, examining key aspects such as profitability, liquidity, and debt-to-equity ratios over a three-year period. The analysis compares OZ Minerals to its competitor BHP Billiton, highlighting trends in profit margins, return on capital employed, and efficiency ratios. The report also assesses the company's debt levels and their impact on business growth and costing. Furthermore, the report provides investment recommendations based on the financial data, suggesting both short-term and long-term investment potential. References from financial literature and the company's annual report are included to support the analysis.

RUNNING HEAD: - OZ Minerals Company 0 | P a g e
FInancial analysis
[Document subtitle]

OZ Minerals Company 1 | P a g e
Table of Contents
Introduction................................................................................................................................1
History and background of company.....................................................................................1
Financial analysis of Company..................................................................................................1
Recommendation........................................................................................................................2
References..................................................................................................................................3

OZ Minerals Company 2 | P a g e
Introduction
This report divulges the key aspects and how the measurement of the firm's key assets
is influenced by underlying accounting conventions and by managerial judgments are
influenced throughout the time.
History and background of company
The Oz Mineral Company is sophisticated modern mining company which is based
in Adelaide, Australia and incorporated after the merger of Oxiana limited company. This
company owned by the China Minmetals which was proposed after the purchase of their
Heavily indebted company. Currently, the share price of the company has been traded at
OZL (ASX) A$11.54 +0.07 (+0.61%) which reveals that company has increased its share
price value and currently it is traded at over market value (Oz Minerals Company, 2019).
Financial analysis of Company
The profitability of the Oz Mineral company has been changed since last three years
and revealing that company has increased its profitability by average 4% since last three
years. The net profit margin increased to 19.9% in 2018 which is 5% higher as compared to
last three year data(Oz Minerals Company, 2019). However, the return on capital employed
or equity share return of company has increased by average 14% since last three years with
the increase of the overall turnover (Robinson, et al. 2015). However, in context with its
closed business rival BHP Company, the Oz Mineral Company has increased its profitability
by average 12% (Robinson, et al. 2015). The liquidity ratio of the company has decreased
with the decrease in the current assets investment. However, company needed to reduce it
more to strengthen the return on capital employed with the reduced cost of business (Oz
Minerals Company, 2019). This shows that company has failed to manage its business which
has negatively impacted the business growth and also lower down its business complexities
(Piketty, 2015). In addition to this, debt to equity ratio of company has also been higher
which reflects that OZ Minerals has kept higher debt funding which may impact the business
growth and also lower down the business costing. This shows that OZ Minerals might need to
lower down its fixed debt funding by either increasing the overall equity funding or by
redeeming or pay off its existing equity funding (Oz Minerals Company, 2019).

OZ Minerals Company 3 | P a g e
This has revealed that company has kept lower cost of capital but the bifurcation of
the capital blockage in the business is way too disturbed. However, the BHP Billiton has kept
its debt to equity ratio by 40% average which reflects that company has kept optimum debt to
equity ratio which manage the debt costing and also manage the optimum financial leverage
(Philippon, 2015). Therefore, in context with the debt to equity funding, it could be inferred
that company needs to lower down its debt funding if it wants to keep its business on
sustainable basis. Higher debt funding will put negative impact if the profitability of company
goes down and fails to cover its interest charges in the given time manner (Stanley, &
Doucouliagos, 2015). The increased turnover and positive profitability has put positive
impact on the business growth. The debt holders and shareholders are given good amount of
return and they have been positively given higher amount of return. The increased
profitability has increased dividend pay-out ratio and return on equity of company which
resulted to the increased share price of company (Waitzinger, Ohlhausen, & Spath, 2015).
The efficiency ratio of the company has also shown how well OZ Minerals has been
effective in deploying its business funds and capita. It is analyzed that company needs to
lower down its business costing by keeping the capital deployed effectively. Currently, OZ
Minerals has kept the sustainable receivable turnover ratio to 9.16 points which shows that
company has managed its capital effectively. However, in terms of the creditor’s turnover,
company needs to increase its overall credit purchase by average 15% which may result to
decrease in the overall business costing (Oz Minerals Company, 2019). In addition to this, it
is found that BHP Billiton Company has increased its efficiency ratio by average 12% since
last three years with a view to lower down its business costing. This has revealed that Oz
Minerals might have higher business costing as compared to its rivals. However, the
increased turnover and profitability has kept the Oz Minerals ahead of BHP Billiton
Company which shows the positive indicator for its future growth (Oz Minerals Company,
2019).
Recommendation
After assessing the financial details and given information in the annual report of the
OZ Minerals, it could be inferred that investors could invest their capital in OZ Minerals for
short term and long term basis. This will be helpful for the investors to create the value on the
investment. This company is highly profitability and keeping very low financial leverage risk
which is positive indicator for its future growth.

OZ Minerals Company 4 | P a g e
References
Philippon, T. (2015). Has the US finance industry become less efficient? On the theory and
measurement of financial intermediation. American Economic Review, 105(4), 1408-38.
Piketty, T. (2015). About capital in the twenty-first century. American Economic Review, 105(5), 48-
53
Robinson, T. R., Henry, E., Pirie, W. L., & Broihahn, M. A. (2015). International financial
statement analysis. John Wiley & Sons
Robinson, T. R., Henry, E., Pirie, W. L., & Broihahn, M. A. (2015). International financial
statement analysis. John Wiley & Sons.
Stanley, T. D., & Doucouliagos, H. (2015). Neither fixed nor random: weighted least squares meta ‐
analysis. Statistics in medicine, 34(13), 2116-2127.
Oz Minerals Company, 2019, Annual report and financial data, retrieved from
https://www.ozminerals.com/media/reports/annual/
Waitzinger, S., Ohlhausen, P., & Spath, D. (2015). The industrial internet: Business models as
challenges for innovations.