Financial Analysis Report

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Market Investment Co is an investment company. The company has major investments in several Australian public companies, one of which is Santos Limited,an Australian resource company with activities in the gas, oil and resources industry.The accountant of the Market Investment Co has approached you to provide a financial analysis of Santos Ltd.

You access the Santos 2013 Annual Report from the following website:

You are required to provide a written report to the accountant of Market Investment Company. Your advice should address the following:

  1. A brief discussion of the various regulatory influences on external reporting for public companies in Australia;
  2. A brief discussion of what is meant by the term “corporate governance”. Include in your discussion the various regulatory influences on public companies in Australia in relation to corporate governance. Also provide your opinion as to the possible strengths and weakness of corporate governance at Santos Ltd;
  3. Using the information contained in the financial statements of Santos Ltd, calculate the following ratios for the years 2013 and 2012:
  • Profitability – Net Profit Margin; Gross Profit %; Return on Assets; Earnings per Share
  • Efficiency – Accounts Receivable Turnover; Inventory Turnover
  • Short-Term Solvency – Current Ratio; Acid Test; Cash Flow from Operations to Liabilities
  • Long-Term Solvency – Debt to Equity; Debt to Total Assets; Cash Flow from Operations to Total Liabilities
  • Market Based – Price Earnings; Dividend Yield
  1. Comment on trends revealed by the ratios calculated in (3) above. Use the headings Profitability, Efficiency, Short-term Solvency, Long-term Solvency and Market Based. Where possible, relate the changes observed in these ratios to events in the business environment in general as discussed in (5) below.
  1. Discuss two (2) recent events which have recently occurred in the business environment which may have impacted on/or will impact on results of Santos Ltd in general. Where possible support your argument with newspaper articles or other references e.g. extracts from reports from the gas and resources industry.
  1. Briefly discuss any possible limitations your analysis presents.

General Requirements:

  1. A report style assignment is required. Choose a report structure, with the use of appropriate headings you deem to be of a professional standard. There is no prescribed structure.
  2. Full referencing is required in accordance with the USQ preferred Harvard Referencing style.
  3. Attach the detailed workings of your calculations as an Appendix to your report. Provide a table summarizing the ratios in the body of your report.
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