CSL Limited’s Accounting And Financial Performance Essay Example

Introduction

In this research paper, the financial performance of CSL Limited is examined for the years 2020 and 2021. The research will look into the various ratios used in analyzing financial situations of businesses like the debt ratios, current ratios, return on equity ratios, profit margin ratios, dividends per share, and earnings per share ratios. It will then apply the findings from this analysis to determine if CSL Limited is performing well. A data collection method was used from the company’s annual financial statements for both years to understand the company’s financial history better.

Company Overview

CSL is a world leader in biotechnology, developing and delivering revolutionary medicines that save lives, safeguard public health, and enable people living with life-threatening medical diseases to live complete lives. The company’s core operations are to conduct research, manufacture, develop, and sell biotherapies for the treatment and prevention of uncommon and dangerous medical diseases (CSL Limited, 2021). CSL’s product lines include blood plasma derivatives, vaccines, venom, and cell culture reagents utilized in various medical and genetic research and industrial applications (CSL Limited, 2020). CSL Behring and SCL Seqirus are the two primary subsidiaries of the biopharmaceutical holding corporation.

Financial Ratio Analysis

To examine the company’s colossal presence in the biotherapies sector, chosen statistics from the CSL Limited financial statements for the previous two years are examined. This financial analysis will be conducted using a commonly utilized financial ratios analysis approach in the accounting profession.

Financial ratio analysis of CSL Limited.
Table 1: Financial ratio analysis of CSL Limited.

Interpretation

Profit Margin Ratio

The CSL Limited maintained almost a constant profit margin ratio in the two years. Profit margin indicates how profitable a company is to assets. It gives investors an idea of how effective the company is in converting the money it invests into net income for investors. The high-profit margin recorded by the company in the two years is a clear indication that CSL can earn more money with a smaller investment.

Return on Equity Ratio

Return on equity (ROE) measures how effectively a business uses equity to produce income. While observing the ROE ratio margin for CSL Limited, the company faces a consecutive decline recording a ratio of 32.21% and 28.34% in 2020 and 2021, respectively. The decrease results from faster equity growth than the cash flow between the two years. To an investor, it means that more and more potentially usable cash is tied up in the property and that the return on that cash is declining.

Earnings Per Share

Earnings per share (EPS) indicates the financial health of a company. A closer examination of the CSL EPS ratio reveals a significant increase from 4.63 in 2020 to 5.22 in 2021. The growth is considered favorable. The increase in EPS is due to its earnings and implies that CSL is more profitable.

Dividends Per Share

The company recorded a slight drop of 0.03 in its dividends per share (DPS). A good DPS is beneficial to income investors who want their investments to provide a steady stream of funds through dividend payments. A company with a growing DPS over several years is an attractive investment for these investors. However, it is worth noting that a low DPS does not inherently raise red flags regarding an investment. It might simply indicate that the firm is reinvesting profits in research or other areas that would encourage growth instead of returning money to shareholders through dividends.

Cash Flow

The cash ratios for CSL Limited within the two years are impressive since it recorded values of more than one, which are also almost constant. It implies that CSL has more cash and cash equivalents than current liabilities. Hence it can cover all short-term debt and still have some cash remaining. However, while that sounds responsible, a higher cash ratio does not necessarily reflect a company’s strong performance, especially if it is significantly greater than the industry norm (Rao, 2021). High ratios could signify that CSL Limited is ineffective in utilizing cash. Instead of investing in profitable projects, it is letting money stagnate in a bank account.

Analysis of Financial Position of CSL Limited

Current ratio

Current ratio analysis is used to determine the liquidity of a business. It is used to determine a business’s capacity to repay short-term debt or debt that matures within a year and that a company can pay off its current obligations by converting assets to cash.

ItemYear 2021 2020
Current Ratio 2.83 3.01
Table 2: Current ratio analysis.

The current ratio compares the total existing assets to total current liabilities. From the figures above, it a be ascertained that CSL’s current ratio dropped over the year, recording a current ratio of 2.83 and 3.01 in 2021 and 2020, respectively. Although the 3.01 current ratio recorded in 2020 by CSL indicates that the company could cover its current liabilities three times, it is not using its existing assets efficiently. On the other hand, a current ratio of 2.83, as recorded in 2021, is beneficial for CSL company since it implies that the company has substantially more assets to take care of its short-term liability and that it now runs in steady financial solvency.

Debt Ratio

The debt ratio is a metric that illustrates how much leverage a firm employs to finance its operations by relying on debt rather than really owned capital. It is one of many tools investors use to gauge how much leverage a company uses to improve its capital or assets to gain more profits.

Debt ratio analysis.
Table 3: Debt ratio analysis.

CSL Limited experienced a slight increase in its debt ratio from 33.22% to 42% in 2020 and 2021. As opposed to 2020, the high debt ratio recorded in 2021 implies that most CSL Limited assets came from borrowed capital. This might result from them believing that in exchange for taking more risks, they could generate more income and be more profitable in the long run (Rao, 2021). Ideally, the company should not incur too many debts unwittingly as the consequences could be detrimental.

The results of 2020 imply that CSL used fewer debts which could probably result from them adopting a more conservative approach. Not only that, but investors are also relatively more attracted to this type of business since the risks are more manageable. Alternatively, potential lending institutions are also more inclined to prolong their credit; hence the CSL has a higher chance of meeting their payment duty on time.

Analysis of Sustainability

CSL’s strategic vision is to provide a sustainable future to its employees, societies, patients, and donors by stirring innovative science and values-driven culture. CSL’s Sustainability Strategy revolves around ten major areas with focus areas spread across three main pillars that will see the company reduce ecological effects across their sites in the medium to long term. Moreover, the strategy aims to fortify their commitments and public image with donors, patients, and community members and raise awareness and participation in sustainable practices among their workforce (CSL Limited, 2021). The three main strategic pillars include environment, social, and sustainable workforce.

CSL’s sustainable strategy is pivoted around various objectives. They include reducing ecological effects across the company sites, fortifying their commitments and public image with donors, patients, and community members, and raising awareness and participation in sustainable practices. Besides, the company is keen to ensure diversity, equity, and inclusion of both the community and employees and sustainability promotion towards an end-to-end working experience (CSL Limited, 2020). The above names values support and are in tandem with some of the United Nations Sustainable Development Goals: Gender equality, reduced inequalities, and sustainable cities and communities.

CSL has been investigating the possible application of Augmented Reality (AR) across various business operations as part of its continuing digital transformation. In the midst of pandemic-related travel restrictions, novel use of AR was immediately implemented at the company’s Quality Control location in Amsterdam. The Quality Control team members in the United Kingdom could visually visit the Amsterdam laboratory to teach colleagues and impart expertise using AR technology. The usage of these AR headsets at the Amsterdam Quality Control laboratory continues to address business problems. As pandemic-related limitations loosen, this technology allows business partners and suppliers to operate more freely while also lowering CSL’s carbon impact (CSL Limited, 2021). The company’s approach to ecological and climate change is to incorporate sustainable strategies into business decisions, cut carbon emissions, minimize end-to-end waste production, and reduce carbon emissions and waste throughout our supply chain.

Focusing on the healthcare, well-being, and society of plasma donors and improving societal health via access to medications are essential components of the company’s social’ pillar, which will enhance patient and public health efficiency. Concerning the ‘environment,’ CSL recognize that sustainable resource management and optimal use are vital to long-term growth and their ability to deliver an efficient and steady supply of commodities. They establish a safe and pleasant work environment that celebrates and encourages diversity and allows workers to contribute directly to the health and well-being of our communities for their sustainable workforce.

Boards and management should prioritize environmental and social performance. A solid environmental and social program may improve access to large sums of money, promote the corporate brand, and encourage long-term sustainability that helps both firms and investors. Environmental and social investors are value-driven investors that prioritize the long term above the short term and are more concerned with building long-term value than flipping stocks. Millennials are enthusiastic about the companies for which they work because they share their beliefs. Employees devoted to the company and felt valued produce intangible goodwill, promoting the firm’s brand and raising total workforce productivity.

Risk Factor Analysis

CSL operates in the fast-paced, ever-changing research, technology, and healthcare world. They are vulnerable to the hazards associated with the global biotechnology business, including the plasma treatments industry. Patient safety and product quality are among the material concerns: product innovation and competitiveness, supply, capacity, operations, privacy and cybersecurity, and people and culture.

Product quality is ensured via production and supply to limit these risks and their negative consequences. The company implements and follows a wide variety of globally recognized standards, including outstanding production and laboratory practice. Independent regulatory authorities inspect them regularly to ensure that these conditions are satisfied. Nonetheless, CSL regularly assesses its current and potential product pipelines against market demand and its competitive landscape. Finally, CSL constantly assesses its cybersecurity threats by creating rigorous and independently certified security precautions for its information technology systems.

Recommendation

The profit margins of the two companies are a good indicator that investors should continue. A profit margin ratio of at least 28 percent, as opposed to CSL’s 25.67 percent in 2021, means that costs are effectively controlled, and revenues are growing faster than operating costs.

A current ratio of approximately 1.5 is typically deemed healthy and should sustain the share price. They should invest since it implies that the firm will have enough cash to satisfy its responsibilities while also wisely utilizing its resources.

Compared to the 42.00 percent debt ratio in 2021, a 55.00 percent debt ratio would be pretty high, implying that the company may be taking on a significant level of risk. It might mean that the company is in jeopardy if its creditors suddenly demand repayment of their debts. It is not worthwhile to invest.

For any organization, a cash flow ratio of one is pretty excellent. It means that the firm has more cash and cash equivalents than current obligations, implying that it can service all short-term debt while still having some cash leftover, and thus investing should continue.

Conclusion

A review of the leverage ratios reveals that the firm employs equity financing to cover its obligations, which is advantageous because the company saves on interest charges that would otherwise be incurred if it utilized loans and other borrowing instruments. CSL is a world leader in biotechnology, generating a revenue of $10,310 in the financial year ended June 2021, which was an increase from the year 2020, in which the revenue was 9150.8. This is a sign of a well-performing and financially sound company. It is easier for the company to invest in state-of-the-art machinery and expand into other new markets with such revenues. A comparison against blue-chip shares of the ASX in terms of debt ratio shows that CSL’s current debt ratio (42.00%) is pretty manageable compared to 55% of the blue-chip shares. This is one of the reasons why potential investors should consider investing in CSL.

References

CSL Limited (2021), CSL Limited Annual Report, accessed 29 April 2022, retrieved from The Wall Street Journal database.

CSL Limited (2020), CSL Limited Annual Report, accessed 29 April 2022, retrieved from The Wall Street Journal database.

Rao, P.M., 2021. Financial statement analysis and reporting. PHI Learning Pvt. Ltd.

Appendix

Consolidated Statement of Comprehensive income.
Figure 1: Consolidated Statement of Comprehensive income.

Consolidated Balance sheet.
Figure 2: Consolidated Balance sheet.

Cash flow

Consolidated Statement of Cash Flows.
Figure 3: Consolidated Statement of Cash Flows.

Architecture Of The Taj Mahal And The Qaaba

Throughout history, architecture has served as a symbol of culture, reflecting civilizations’ beliefs, successes, and eventual demise. From colossal monuments to the dwellings and structures that make up a city’s core, one may discover a lot about the people who lived there centuries before the modern-day. Historians are learning about the influence of architecture on humans in fundamentally new ways by researching the building envelope of the past in conjunction with modern-day studies on cognition and the environment. Architecture not only has a tremendous influence on society, but it may also significantly affect its residents on a more intimate level. Everything from the arrangement of the place to the material choices may have an impact on the well-being, mood, and quality of life of individuals. For example, employees who work in well-designed workplaces take less sick time, are more focused, and offer more to their firm overall (Lowe). However, architecture might play an even more significant role in monuments devoted to spiritual activities. As such, the Taj Mahal and the Qaaba are widely celebrated spaces of Middle Eastern culture expressed by spatial art.

The Taj Mahal and the Qaaba were built in different cultural contexts in diverse world regions. Namely, the Taj Mahal was constructed in memory of Mymtaz Mahal, the third wife of Mughal emperor Shah Jahan, being a part of contemporary Persian architecture (“Taj Mahal”). It is a massive mausoleum complex that was built in 1632 in Agra, India (“Taj Mahal,” par. 1). The temple represents Mumtaz Mahal’s elegance and grace depicted metaphorically, while its practical purpose is confounded with the site of burial. In turn, the Qaaba, commonly known as the Kaaba, is a cubic-shaped structure in Mecca, Saudi Arabia. In Islamic tradition, this structure is regarded as the holiest spot. The exact date and names of the monument’s constructors are not known, but it is roughly before the 7th age when Arabic tribes yet praised their regional gods (O’Connor). Thus, the regions and motifs of the architectors vary, as well as the time of the monuments’ construction.

The primarily religious, cultural, and social values of the cultures that erected each structure have similarities and differences. The Mughal Empire governed most of India and Pakistan at the age of the Taj Mahal building. It reinforced Islam in South Asia and disseminated both Muslim (especially Persian) cultural life and the faith. The Mughals were Muslims that controlled a Hindu-majority kingdom. On the other hand, the empire was a uniquely Indian historical experience. Mughal culture combined Perso-Islamic and local Indian components to form a distinct yet diverse totality. When Qaaba was constructed, Arabia was populated by countless tribal entities, which have constantly been divided or confederated; its history is a tapestry of various factions. A natural system has evolved that involves transitioning from tribal chaos to centralized governance, especially present after Islam’s emergence. Thus, both places had Islamic traditions and values, although they differed culturally since Mughal Empire was a synthesis of Indian and Persian societies while Mecca is an Arabic region.

The details of the monuments described earlier deserve particular attention. In the Taj Mahal, the terrace structure is encircled by four minarets that catch the podium’s four corners. The use of white marble in the building of all components – minarets, the tomb structure, and the platform – contributes to the notion of organizational coherence (“Taj Mahal”). Aside from plant themes and sophisticated engravings on the tiles, the building elements are enhanced with calligraphy featuring Koranic texts. The aesthetic of the decorations is likewise maintained in the way the outdoor parts are ornamented (“Taj Mahal”). As for Qaaba, the building’s four sides are composed of black granite. White silk is used to make the roof; the golden drapes and black silk adorn the structure (O’Connor). The four corners allude to the four doors of the school, the quadrant, and the geographical points. The inside is built of marble with calligraphy and limestone ground. The upper half of the green cloth-encased walls has gold-embroidered Koranic texts (O’Connor). Thus, both structures present magnificent and complex architectural designs embodying the religious and cultural ideas of the people who erected them.

The two projects have similarities and differences that were partially mentioned before. As such, both contain important connections with Islam, which is expressed in the inscriptions of the buildings. Moreover, the constructions retain a similar geometric basis of the quadrant, which is a significant element of Middle Eastern architecture. However, the Taj Mahal’s decoration and the choice of materials are more complex due to the fact that it was built much later than Qaaba. Finally, the buildings have different purposes and employ diverse elements of the cultures of their constructors.

The Taj Mahal is regarded as one of the most prominent religious and cultural centers in the world since it contains not only the symbolism of passion, elegance, and longevity but also spiritual importance. The grandeur of architectural features fully validates this statement. Similarly, the Kaaba is regarded as one of Islam’s pillars and a spiritual emblem of identification for all Muslims. With their rich historical legacy, these edifices contribute significantly to the picture of current Islamic culture.

Works Cited

Lowe, Derek. “Architecture and Productivity: Four Theses.” AAAS, 2018.

O’Connor, Tom. “What Is the Kaaba? A Brief History of the Holiest Muslim Site Ahead of Hajj 2017.” Newsweek, 2017.

“Taj Mahal.” History, 2019.

Massive Rise And Fall Of Lumber Market Prices

The negative change in market conditions last year was influenced by several events. The main problem is that the raw material market has been subjected to a rush of demand. The latter has mainly appeared in countries such as the U.S. and China, as well as in Australia. The reason for this can be attributed to the disruption in raw material supply chains due to the spread of coronavirus infection, leading to a pent-up surge in demand from consumers for raw materials (Flynn Jay, 2022). In addition, the cost of raw materials for finishing materials rose in the post-covid period in the absence of a significant number of offers from manufacturers. In turn, sellers increased prices in order to maximize profits. The period described is the events of late October 2020 through all of 2021.

In early 2022, lumber prices in countries such as China and the U.S. were boosted by an increase in consumer demand. According to experts, price stabilization should be expected by the beginning of the construction period. The price increase had a positive effect on the timber business, making it highly profitable. With the extra profits, the plants were able to upgrade their equipment and buy new machines. Most likely, the price level in the international market this year will not be lower than in 2021, but the rate of price growth will be low (Flynn Jay, 2022). Until the pre-coronavirus supply chains are restored, no price drop should be expected. During the first six months of 2022, prices for lumber products and round timber will fall due to the growth of production by wood processing companies (Flynn Jay, 2022). A downward trend has already emerged in November-December 2021.

Work Cited

Flynn Jay, Erin. “Why Lumber Prices Are Sky High—Again.” The Bluebeam Blog, Web.

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