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Financial Analysis for Bradken Ltd

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Submitted By cchiu
Words 3677
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Introduction

Bradken Limited (BKN) manufactures and supplies consumable and capital products for the mining, construction, rail transit, energy and general industrial markets on a global basis. This report aims to provide a general analysis of BKN’s current and past financial performance through the use of ratio analysis, including DuPont analysis, on its liquidity, solvency, operational activity, profitability, and cash flows. Specific attention will be focused on the analysis of BKN’s fixed assets, leases and pension and its impact on the performance. The report will conclude by identifying current expectations on future performance based upon on the aforementioned analysis of its current and past performance.

All reported figures in the following analysis are stated in $’000.

Liquidity Analysis

BKN’s liquidity position improved overall from 2010 to 2011 and then subsequently weakened in 2012. There is a favourable change in Current, Quick, Cash, Current assets to total assets and Defensive interval ratios are 42.32%, 77.70%, 112.84%, 24.32% and 99.52% respectively from 2010 to 2011. However, the liquidity position deteriorated in 2012, as evidenced by an unfavourable percentage change of 13.40%, 35.85%, 42.88%, 14.19% and 19.68% respectively for the above ratios.

The primary reason for improvement in liquidity in 2011 compared to 2010 is the incremental increase in Cash and cash equivalents ($88,911 or 139.87%), Receivable ($116,140 or 81.59%) in current assets and the reduction of borrowing ($9,023 or 37.51%) in current liabilities. These unfavourable changes in liquidity measures from 2011 to 2012 are mainly due to the 33.18% and 14.54% decrease in BKN’s cash & cash equivalents and receivables respectively. The fall in current receivable is largely a result of the decrease in other receivables of $46,540 (80.63%) that arose from unusual operating

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