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Analysis of Financial Statements : PDF

   

Added on  2021-02-21

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Company Analysis

Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY ..................................................................................................................................1Overview company.....................................................................................................................1Financial analysis........................................................................................................................4RECOMMENDATION..............................................................................................................8CONCLUSION................................................................................................................................8REFERENCES ...............................................................................................................................9APPENDEX...................................................................................................................................10

INTRODUCTIONIn modern era, the concept of company analysis is defined as the process that is beingimplemented by potential investors to measure the value of securities, gathering informationabout market value of company, product and services provided and overall profitability in arespective time frame (Company analysis, 2019). The quantitative side of company analysisincludes considering factors which are evaluated numerically like assets, liabilities, cash flow,income level and earning per share. The process of company analysis involves analysis offinancial statements, find competitors, identify the size of market, make comparison with otherdealing in same industry and make valid comparison. To better understand the concepts ofcompany analysis BHP Billiton have been selected which is listed on ASX. In this report, detail analysis of selected company including history, main product,income and gross profit, stock price movement and number of share form recent annual report.In addition report also provide the proforma financial statements for next 5 years, calculation ofProject Free Cash Flow with risk analysis and Terminal Value and discount them using discountrate, which is Weighted Average Cost of Capital (WACC).MAIN BODY Overview company BHP Billiton is an Anglo Australia multinational company which have its headquarter inMelbourne, Victoria, Australia that have the major function in mining, petroleum and metalextraction etc. In year 2017, company was ranked the worlds biggest mining company as per themarket share and is consider to be the 3rd largest Melbourne's company according to revenuegeneration (About BHP Billiton Limited, 2019). Background and HistoryBHP Billiton was founded in 2001 after the merger of BHP and Billiton Plc and thusbecome the largest company of Australia by revenue and capital invested in market (Czanderna,2012). The chairman of company is Ken MacKenzie and CEO is Andrew Mackenzie. The mainobjective of BHP Billiton is to provide a framework that support employee, customer, supplieror shareholder to learn and determine the manner of operation method of company in bothinternal and external environment so that it could remain respectful for both individual andregulations. 1

Other Important information.The main product offered by BHP Billiton are iron ore, petroleum, copper, coal, nickel,natural gas and uranium. The ownership and management structure are responsible andaccountable for making effective policies and procedures that are beneficial for raising the valuesof company (Backes‐Gellner and Veen, 2013). There are number of business that are providedby company at worldwide level such as mineral America is a manufacture of copper and Zincconcentrate, iron ore and thermal coal, mineral Australia produces nickel, iron ore, copper andcoal. With the number of product gross sales for BHP Billiton is increasing year by year such asin year in year 2016 it was US$30.9B, in 2017 it increase to US$38.3B and in 2018 it becomeUS$43.6B. Illustration 1: Sales revenueThe operating profit also risen from the previous year like in 2017 it was US$15836Mand in 2018 the amount of operating profit is US$17065M. Thus the net income was US$3705Min 2018 which increase to US$5890M in year 2017 which shows that BHP Billiton have paidmore income tax (Guimarães, Ribeiro and Renner, 2012.). 2

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