Comprehensive Financial Analysis Report of 32South Limited (2019)

This report provides a financial analysis of 32South Limited, a diversified metals and mining organization. It examines the company's financial performance based on its 2019 annual report, highlighting decreases in assets and equity, and increasing liabilities. The analysis includes an evaluation of accounting conventions and managerial judgment's impact on financial reporting. The report focuses on key financial ratios, including Return on Assets (ROA), Return on Equity (ROE), current ratio, and quick ratio, to assess the company's profitability, liquidity, and efficiency. The analysis reveals trends and provides insights into the company's financial position and management's ability to improve its performance. The report concludes with a brief overview of efficiency ratios like asset turnover and equity turnover ratios, offering a comprehensive view of the company's financial health.

Running head: SUMMARY REPORT 0
ACCOUNTING AND FINANCE
DECEMBER 14, 2019
STUDENT DETAILS:

SUMMARY REPORT 1
Summary report on 32South Limited-
South32 Limited is diversified metals & mining organisation. The main business of the
company is to make coal, silver, zinc, as well as alumina. It also produces lead, aluminium,
manganese along with nickel. The company runs its operations at the international level. Further,
it is assessed by analysing annual report of company that the liabilities are increased to $4547 in
2019. It was $4424 in 2018. The equity was decreased to $10168 in year 2019. It can see that it
was $10709 in 2018. Additionally, the assets were also decreased to $14715 in 2019. It can also
see that the expenditures are increasing and income is decreasing from the past years (Annual
report, 2019). It does not state good financial position of company. Moreover, it is evaluated that
the company is using constant accounting conventions to record the accounting data in the proper
and effective way. These accounting conventions affect measurement of the key assets.
Additionally, the company is able to take managerial decisions with the help of managerial
judgment to improve financial position of company (Bloomberg, 2018).
The key purpose to conduct financial analysis is for analyzing the liquidity and
profitability condition of the organization. The financial analysis is also helpful in assessing
stability and solvency to affirm the investment. The profitability condition can be analyzed from
return on assets and return on equity ratio. ROA assess how efficiently company can handle the
asset to generate profits. The return on assets is 0.09 in 2018. It was decreased to 0.03 in 2019. It
means that the organization is not handling the assets effectively. ROE measures how effectively
company is making advantage of the equity base and capital base. The return on equity is 0.13 in
2018. It was decreased to 0.03 in 2019. The company should improve the ratio by increasing the
debt relative to equity (Investing.com, 2018).

SUMMARY REPORT 2
The current ratio defines the financial position of the corporation. The idle ratio is 2:1.
The current ratio was 2.89:1 in 2018. Further, it was decreased to 2.01:1 in 2019. It can see that it
is ideal current ratio. Furthermore, the liquidity ratio evaluates ability of company to fulfil the
short-run obligations with liquid assets. The ideal ratio is 1:1 or higher. It was 2.85.1 in 2018.
Moreover, it was decreased to 1.97:1 in 2019. It is ideal quick ratio but company should improve
the ratio. The efficiency ratios include the equity turnover and asset turnover ratio. The asset
turnover ratio assesses revenue made relative to assets. It was 0.50 times in 2019. It was slightly
reduced to 0.49 times. It means company should use the assets in a proper and effective way.
Additionally, the equity turnover ratio evaluates the proportion of sales of organisation to the
stockholder equity. The asset turnover ratio was 0.70 times in 2018. However, it was increased to
0.71 times. It can say that the company is doing well (Reuters, 2019).

SUMMARY REPORT 3
References
Annual report (2019). 32South Limited. Retrieved from: https://www.south32.net/docs/default-
source/exchange-releases/annual-report-2019.pdf?sfvrsn=8bb8d211_2
Bloomberg (2018). 32South Limited. Retrieved from:
https://www.bloomberg.com/profile/company/S32:SJ
Investing.com (2018). 32South Limited. Retrieved from:
https://au.investing.com/equities/south32-ltd-historical-data
Reuters (2019). 32South Limited. Retrieved from: https://www.reuters.com/companies/S32.AX