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Assignment on Finance for Business

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Added on  2020-05-16

Assignment on Finance for Business

   Added on 2020-05-16

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Running head: FINANCE FOR BUSINESS - MASTERSFinance for business – MastersName of the studentName of the universityAuthor note
Assignment on Finance for Business_1
FINANCE FOR BUSINESS – MASTERS 1Table of Contents1.Company description.................................................................................................22.Ownership structure...................................................................................................23.Key ratios...................................................................................................................34.Information from ASX website..................................................................................45.Recent announcement................................................................................................76.Stock field..................................................................................................................77.WACC (weighted average cost of capital).................................................................88.Optimal debt structure................................................................................................99.Dividend policy..........................................................................................................910.Recommendation..................................................................................................10Reference.........................................................................................................................11
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FINANCE FOR BUSINESS – MASTERS 21.Company descriptionRio Tinto Plc is the largest mining and metal company that was incorporated on 30thMarch 1962. The main business of the company is to find and processing the miningand mineral resources. Various segments of the company include Aluminium, iron ore,diamonds, copper minerals, energy and other operations. The company carries out itsactivities all over the world and are widely represented in North America and Australia.Further, the company is strongly responded towards the increasing demand of thecommunity under which it carries out its business for responding towards climaticchance and sustainability. It made the sustainable commitment to the sustainabledevelopment that includes social wellbeing, environmental stewardship, governancesystem and global transition (Rio Tinto 2018). 2.Ownership structurei)Substantial shareholders More than 20% holding – HSBC Custody Nominees (Australia) Limited holds121,820,095 shares that is 28.72%Greater than 5% of shares – J.P. Morgan Nominees Australia Limited hold71,864,782 shares that is 16.94%, Citicorp Nominees Pty Ltd holds 24,176,758shares that is 5.70% and National Nominees Limited holds 21,941,431 sharesthat is 5.17%. ii)Name of key persons Chairman – Jan du PlessisBoard members – other key personnel included in the board of the company are- Chris Lynch – Financial officerRobert Brown – Non-executive directorMegan Clark – Non-executive directorDavid Constable – Non-executive DirectorAnn Godbehere – Non-executive DirectorSam Laidlaw – Non-executive director
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FINANCE FOR BUSINESS – MASTERS 3Anne Lauvergeon – Non-executive directorHon. Paul Tellier – Non-executive directorMichael L’Estrange AO – Non-executive directorSimon Thompson – Non-executive directorJohn Verley – Non-executive directorSimon Henry - Non-executive directorCEO – Jean Sebastien JacquesAny of the above mentioned key personnel does not hold substantial shares inthe company. 3.Key ratiosi.Return on assets (ROA) = (NPAT / Total Assets)Return on Equity (ROE) = (Net profit after tax / Ordinary equity) Debt ratio = Total liabilities / Total assetsRatioFormula2016201520142013Return on assetsNAPT / Total asset0.054-0.019-0.0600.010Return on equityNPAT / Ordinary equity0.104-0.416-0.1190.020Debt ratio Total liab / Total assets0.4880.5180.4940.518EBIT/TA * NPAT/EBIT * TA/OE = NPAT/OEEBIT/TA * NPAT/EBIT * TA/OE = 6343/89,263 * 4776/6343 * 89,263/45,730 =0.104NPAT/OE = 4776 / 45,730 = 0.104 Hence, EBIT/TA * NPAT/EBIT * TA/OE = NPAT/OE (Proved)ii.Phenomenon of TA / OE variableThis ratio is expressed in percentage form and is calculated through dividing thetotal assets of the company by the shareholder’s equity (Brigham and Ehrhardt 2013). It
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