The gross profit margin ratio shows how much profit an organization is generating before subtracting selling, administrative and general expenses. The formula of the gross margin ratio is:

            The gross margin of Woodside is showing a decline in the 5 year period; however, the gross margin ratio still showing positive sign. Through Gross margin, it can be said that the corporation is generating a significant amount of profit. The drawback of gross margin is that it does not incorporate other major expenses which the net profit margin incorporates. The Woodside gross margin is showing a declining trend which means that it should look for its processes and cut the costs so that gross margin can be enhanced (Fridson and Alvarez).

Summary of Profitability Analysis of Woodside Petroleum

            If the profitability analysis of Woodside is summarized than it can be said that Woodside should improve its profitability condition. All the key profitability ratios such as ROE, ROA and Net profit margin, are showing a declining trend over the 5 year period. The corporation has the opportunity to improve its profit by utilizing the assets more efficiently. Woodside can minimize its costs and can increase revenue for further increasing the earnings of the corporation. For sustaining in the long run, it is highly important that the organization should improve its profits (SINHA).

Liquidity Analysis of Woodside Petroleum

            The liquidity ratios provide a brief overview of the liquidity condition of the organization. Through liquidity ratios, the organization's ability to pay the short term loans can be evaluated. The liquidity ratios explain how quickly the assets of the corporation can be converted into cash. Forgetting the detailed analysis, the liquidity ratios can be compared with competitors or similar corporations present in the industry. The key liquidity ratios which are used for evaluating the liquidity position of the corporation include current ratio, Quick ratio, Cash ratio and working capital ratio.

            The liquidity ratios provide a brief analysis of the current obligations of the organization. Whereas the solvency ratios provide a brief overview of the long term obligations of the organization. The following liquidity ratios are used to evaluate the liquidity position of Woodside Corporation:

Source: http://financials.morningstar.com/ratios/r.html?t=WPL®ion=aus&culture=en-US

Current Ratio of Woodside Petroleum

        The current ratio of the organization indicates how much cash the organization have to pay the short term obligations. Usually, the organization have taken short term loans for performing daily operations. If the current organization ratio is lower than it means that the corporation has not maintained enough cash for paying the loans. The formula for current ratio is:

            The current ratio of Woodside Corporation was 2.08 in the year 2014 which indicates that the organization have enough cash for paying short term loans. However in the following years the current ratio of the organization decline. However, in the year 2018, the current ratio again increased up to 2.31. Currently, the corporation’s liquidity condition is stable, and the corporation can pay its loans without any difficulty.  It is suggested to the organization that it should maintain consistency in maintaining cash. The investors who want to invest in the organization also analyze the liquidity position. The investors usually invest in such organizations who are able to pay their short term obligations efficiently. The organization reputation can experience decline if it does not pay its loan back on time (Fridson and Alvarez).

Quick Ratio of Woodside Petroleum

            The quick ratio also provides information about the liquidity position of the organization. However, the quick ratio evaluates the liquidity more critically than the current ratio.  The quick ratios provide information about the assets which are being converted into cash quickly. The quick ratio does not include inventory. The formula of the quick ratio is:

         The quick ratio of the Woodside Corporation was 1.93 in the year 2014. In the year 2014, the organization was in the position to pay its short term loans efficiently. However in the year 2015, 2016 and 2017 the quick ratio of the organization decline up to a lot of extents which indicates that in this period the corporation was not in the condition to effectively pay its short term obligations. However, in 2018, the corporation recovers its quick ratio. Currently, the corporation has enough liquidity assets for paying opts short term loans (Atrill).

Cash Ratio of Woodside Petroleum

            The cash ratio is another liquidity ratio that tells about the liquidity position of the organization. Cash ratio provides the information about the cash which the organization has kept for paying its short term loans. The cash ratio excludes all the current assets except Cash & Cash equivalent. The formula of cash ratio is mentioned as follows:

                The cash ratio of Woodside corporation is showing that the organization currently have enough cash from which it can pay its short term obligations. In the 5 year period, the cash ratio has experienced declined; however, the organization has successfully recovered its liquidity situation (Melville).

Working Capital Ratio of Woodside Petroleum

                The working capital ratio provides brief information about the financial performance of the organization. If the working capital ratio is low, then it means that there is a significant problem in the organization that needs to be addressed. The formula for working capital ratio is:

The working capital ratio of the Woodside organization is indicating that the organization needs to improve its working capital ratio (Needles and Powers).

References of Gross Margin of Woodside Petroleum

Atrill, Peter. Financial Management for Decision Makers . 7. Pearson Higher Ed, 2014.

Christoffersen, Peter. Elements of Financial Risk Management. Academic Press, 2011.

Erickson, K.H. Financial Risk Management: A Simple Introduction. K.H. Erickson, 2014.

Fridson, Martin S. and Fernando Alvarez. Financial Statement Analysis: A Practitioner's Guide. John Wiley & Sons, 2011.

Higgins. Analysis for Financial Management. Tata McGraw-Hill Education, 2007.

Melville, Alan. International Financial Reporting: A Practical Guide . 6. Pearson Higher Ed, 2017.

Needles, Belverd E. and Marian Powers. Financial Accounting . Cengage Learning, 2010.

Pandey, I.M. Financial Management. Vikas Publishing House, 2015.

Robinson, Thomas R., et al. International Financial Statement Analysis, Third Edition (CFA Institute Investment Series) . 3. John Wiley & Sons, 2015.

SINHA, GOKUL. FINANCIAL STATEMENT ANALYSIS . PHI Learning Pvt. Ltd, 2012.