CSL Limited Financial Statement Analysis (Case Study Sample)

CSL Limited Financial Statement Analysis
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Executive Summary
In the past, firms conducted their economic and financial analysis of internal and external business environments so that they could present a clear picture of the market and financial performance in respect to their objectives and different players within the entire industry. The data is essential to investors that ought to put their funds within market capitalization for public firms. Investors acquiring financial and economic evaluation at specific periods is useful since it aids them in making suitable investment choices. Moreover, based on creation of business importance and economic analysis of firms in Australia, this paper will provide a financial analysis of CSL Ltd since its one of the leading pharmaceutical companies listed in the Australian Security Exchange (CSL:ASX).
Based on the whole paper’s interpretation, it is evident that the pharmaceutical industry within Australia is competitive including almost 300 business that are competing for the market. The sector assistance within the government is minimal including heavy policy levels. Furthermore, the firm has presented targets to present advancements within protein therapeutic and plasma platforms hence providing direct feedback for various stakeholders and investors. Consequently, the whole firm just took the whole market by surprise by announcing recently a profit advancement which would strictly yield a whole year profitable margin of about 18%-20%.
Contents TOC \o "1-3" \h \z \u Executive Summary PAGEREF _Toc92529366 \h 2Introduction PAGEREF _Toc92529367 \h 4Key performance indicators PAGEREF _Toc92529368 \h 4Financial Statement Analysis PAGEREF _Toc92529369 \h 4Analysis of Financing activities PAGEREF _Toc92529370 \h 5Net cash and cash equivalents Trend PAGEREF _Toc92529371 \h 6Financial Ratios Analysis PAGEREF _Toc92529372 \h 7Current Ratio PAGEREF _Toc92529373 \h 7Inventory Turnover PAGEREF _Toc92529374 \h 7Receivables Turnover PAGEREF _Toc92529375 \h 8Asset Turnover PAGEREF _Toc92529376 \h 8Debt to Equity PAGEREF _Toc92529377 \h 8Interest Coverage PAGEREF _Toc92529378 \h 8Net Profit Margin PAGEREF _Toc92529379 \h 8ROA & ROE (Du Pont Model) PAGEREF _Toc92529380 \h 9Interpretation and Insight PAGEREF _Toc92529381 \h 9Causes of change PAGEREF _Toc92529382 \h 9Ethical performance PAGEREF _Toc92529383 \h 9CSL Ltd strengths, weaknesses and opportunities PAGEREF _Toc92529384 \h 10Conclusion and Recommendation PAGEREF _Toc92529385 \h 11Reference PAGEREF _Toc92529386 \h 12Appendix PAGEREF _Toc92529387 \h 13Ratio Analysis PAGEREF _Toc92529388 \h 13
Introduction
For the upcoming years, new vaccines and biological drugs, the need for dietary supplements is anticipated to be driving the Australian pharmaceutical industry. Although, based on the life cycle stage the whole industry now declining. Vaccine created by CSL Ltd for treating HINI virus had been vastly been utilized by the Australian government following its quarantine and prevention drives. From the total 21 million vaccines that had been ordered by the whole government, approximately 8 million had been produced locally and being supplied by the CSL Ltd (CSL Limited, 2020). The main objective of this paper is looking into CSL Limited key performance indicators and presenting the company’s financial performance including an insight on how the company has been performance based on different ratios presented in the paper.
Key performance indicators
Financial Statement Analysis
Depicting in table 1 shown below, the gross profit for CSL Ltd tend to increase in a faint manner by 78% over 2019 from $2852.70 million whereas in 2020 was 2874.70. The values have considerably increased to about $3596 during 2021, which is 25% more compared to the previous year’s values (CSL Limited, 2021).
Table SEQ Table \* ARABIC 1: Financial Statement Analysis
Financial Statement Analysis

(In millions $)

2021

2020

2019

Gross Profit

3596.00

2874.70

2852.70

Income From Operations

1246.60

1178.60

1363.60

Net Income

1689.80

1555.90

1714.00

On the other hand, the income acquired from operations seemed to be down by 13.58% during 2020 following a figure of about $1178.60 during 2020 unlike compared to $1363.60 during 2019. In 2021 the same increased by almost 5.78% which was $1246 million (DIIS, Govt. of Australia 2021). Similarly, the net income declined at a rate of 9.28% during 2020 hence being $1714 million during 2019 and in 2021 it rose by 8.61% to almost $1689.80 million.
Analysis of Financing activities
Typically, negative cashflow or rather outflow acquired from financing events is often reflected through more repayment of borrowings by various firms. Different companies might raise financing through increasing its equity share capital or rather through borrowing money from various external creditors. But long-term debts tend to be a perfect source of financing, whereas short-term borrowings are typically a burden for different companies since they must always pay the owner. Therefore, a firm should ensure that it has evaluated the need for financing after it has decided on the financing source. For instance, when CSL Ltd intends to investment money in a R&D project for creation of therapeutic equipment or drugs, the perfect sources of financing will hence be a long-term loan (Dorsman, Simpson & Westerman, 2012). The table below depicts a number of finance sources CSL Ltd employs for raising capital and also repaying the borrowings:
Table SEQ Table \* ARABIC 2 Financing activities analysis
Financing Activities

(In millions $)

2021

2020

2019

Dividend paid

12.70

17.40

34.70

Proceeds from borrowings

-601.40

-579.00

-535.40

Repayment of borrowings

1381.40

1564.30

494.20

Payment for shares brought back

-581.30

-716.90

-3.00

Net Cash Outflow From Financing Activities

-103.50

-362.40

-828.10

Despite the net cash outflow during 2019 was shown to be greater of $828.10 million unlike compared to consecutive years, the major source of these values emanates from minimal borrowings acquired from different creditors and increased buyback of shares. Moreover, the firm has additionally paid a portion of its whole borrowings. The cash flows acquired during 2020 and 2021 financing activities reflect a positivity trend for the company borrowings, hence adding to a 2000% during 2019 and 2020 whereas 188% in 2020 and 2021. Nevertheless, CSL Ltd has sought after 200% increased borrowings from every creditor during 2016 unlike compared to 2019 and based on a relative level of borrowings during 2021.
Net cash and cash equivalents Trend
The last section of cash flow statement shows accurate financial status of the firm. The net increase and decrease in cash and cash equivalent of the non-current assets of the firm reveals the effectiveness or rather inefficiency of the firm and how it has managed cash during a specific fiscal year. The more the increase, the more the company’s efficacy of generating more cash from its activities (Tyler, Godwin, & Alderman, 2018). The table portrayed below shows that CSL Ltd during 2020 encountered a break-even that neared a $6.10 million of cash and cash equivalent unlike compared to $122.20 million during 2019 or $280.20 million of 2021 as shown in the table below:
Net cash and cash equivalent trends

(In millions $)

2021

2020

2019

Net cash flow from operating activities

1246.60

1178.60

1363.60

Net cash flow from investing activities

-862.90

-810.10

-410.50

Net cash outflow from financing activities

-103.50

-362.40

-828.10

Cash and cash equivalent at the beginning of the year

555.30

555.50

606.30

Exchange rate variations on foreign cash and cash equivalent balances

-7.50

-6.30

-173.00

Cash and cash equivalents at the end of the financial year

843.00

555.30

555.50

Net increase in cash and cash equivalents

280.20

6.10

122.20

Based on the present financial reports, ...