strategic finance issues
Financial Review objective:
This analysis will financially compare Santos Limited’s financial performance for the year ending 31st December 2013 with the previous year’s results, by way of ratio analysis. It will also benchmark the latest result with that of Woodside Petroleum for the same period using the same ratio analysis of the 2013 financial statements of each company. A copy of these ratio analysis are attached to this report as appendix 1, which contains a through time comparison for the last two years for Santos Limited and the across time comparison with Woodside Petroleum for the most recent year. As Bazely and Hancock (2013 p.358) depict there are certain factors relevant to selecting an appropriate benchmark. Woodside Petroleum has been selected as the benchmarking company as Woodside also operates in oil and gas production, focusing operations within the Australasian area. While Woodside’s operations are larger than that of Santos, the relative size of these companies is comparable and both follow the accounting policies required by the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting standards board. Both companies are listed on the Australian Stock Exchange (ASX) which provides comparative data for the ratios analyzed and presented in Appendix 1 with the following tables;
Table 1 - Profitability ratios
Table 2 - Efficiency ratios
Table 3 - Short-term solvency ratios
Table 4 - Long-term solvency ratios and
Table 5 - Market-based ratios
A copy of Santos Limited’s 2013, 2012 and Woodside petroleum ‘s 2013 Annual reports are attached to this report as Appendix 2, Appendix 3 and Appendix 4 respectively, for reference to the findings and suggestions outlined in this review. One limitation of the comparison is that Santos Limited reports their financial data in Australian (AUS) dollars, while Woodside Petroleum report their financial data in American (US) dollars.
This analysis will financially compare Santos Limited’s financial performance for the year ending 31st December 2013 with the previous year’s results, by way of ratio analysis. It will also benchmark the latest result with that of Woodside Petroleum for the same period using the same ratio analysis of the 2013 financial statements of each company. A copy of these ratio analysis are attached to this report as appendix 1, which contains a through time comparison for the last two years for Santos Limited and the across time comparison with Woodside Petroleum for the most recent year. As Bazely and Hancock (2013 p.358) depict there are certain factors relevant to selecting an appropriate benchmark. Woodside Petroleum has been selected as the benchmarking company as Woodside also operates in oil and gas production, focusing operations within the Australasian area. While Woodside’s operations are larger than that of Santos, the relative size of these companies is comparable and both follow the accounting policies required by the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting standards board. Both companies are listed on the Australian Stock Exchange (ASX) which provides comparative data for the ratios analyzed and presented in Appendix 1 with the following tables;
Table 1 - Profitability ratios
Table 2 - Efficiency ratios
Table 3 - Short-term solvency ratios
Table 4 - Long-term solvency ratios and
Table 5 - Market-based ratios
A copy of Santos Limited’s 2013, 2012 and Woodside petroleum ‘s 2013 Annual reports are attached to this report as Appendix 2, Appendix 3 and Appendix 4 respectively, for reference to the findings and suggestions outlined in this review. One limitation of the comparison is that Santos Limited reports their financial data in Australian (AUS) dollars, while Woodside Petroleum report their financial data in American (US) dollars.