Accounting and Financial Management Assignment-
This Assignment is designed to give you an opportunity:
• apply financial statement analysis, management accounting concepts and finance frameworks to changing global and economic conditions and to help assess the impact on organisational systems;
• apply and use financial statement analysis, with other evidence, to provide solutions to real world problems.
SEQ 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 SEQ Investment Co has approached you to provide a financial analysis of Santos Ltd.
You access the Santos 2014 Annual Report from the following website: https://www.santos.com/media/2172/2014_annual_report.pdf
You are required to provide a written report to the accountant of SEQ Investment Company. Your advice should address the following:
1. A brief explanation as to the objective/s in measuring organisational performance.
2. Using the information contained in the financial statements of Santos Ltd, calculate the following ratios for the years 2014 and 2013:
• 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.
• Market Based - Price Earnings; Dividend Yield
3. Comment on trends revealed by the ratios calculated in (2) 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 (4) below.
4. 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.
5. Comment on the limitations of relying purely on financial ratios in evaluating organisational performance. Include in your comment the benefits of including non- financial performance indicators to assess the performance of Santos Ltd.