Financial Performance of BHP, Santos, and Funtastic Limited: Cash Flow Analysis

This report analyzes the financial performance of BHP, Santos, and Funtastic Limited in terms of cash flows. It discusses the income statement and cash flow statement for each company, compares the cash flow from operations to net profit after tax, and examines the firms' ability to pay capital expenses and dividends. The report provides insights into the cash flow management and financial health of these companies.

CORPORATE
ACCOUNTING

ABSTRACT
The report abstracts about discussion on financial performance of three different
companies named as: BHP limited, Santos limited and Funtastic limited in terms of cash flows.
Under the report, various kinds of elements are interpreted for each of above mentioned
companies so that evaluation of performance can be done. In the end section of report, selection
of a company has been done for lending purpose in accordance of cash flow analysis.

Contents
ABSTRACT....................................................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
Part A...........................................................................................................................................4
Part B............................................................................................................................................5
CONCLUSION..............................................................................................................................24
REFERENCES..............................................................................................................................25

INTRODUCTION
In the field of finance, there are a range of accounting approaches and corporate
accounting is one of them. It can be characterized as a form of accounting which is associated
with process of preparing final accounts including cash flows, income statement etc. (Barker,
2019). The report is based on analyzing role and issues of cash flow statements for three separate
companies named as BHP limited, Santos limited and Funtastic limited. The report is categorized
into two parts: A and B. In the part A, review of information of cash flow and income statement
has been done. While in part B, examination of consolidated cash flows has been performed in
relation to BHP limited.
MAIN BODY
Part A
Review of information of income statement and cash flow.
In the aspect of financial statements, there are mainly three types of statements such as income
statement, balance sheet and cash flow statement. All these statements play a key role and
contains a detailed information about different aspects. Underneath, a detailed understanding of
these financial statements has been done in such manner:
Income statement- It can be understood as a form of statement which includes information about
income and expenses during a particular time period (Güleç and Bektaş, 2019). This statement
includes such information:
 Sales revenue- In the income statement, information about total sales revenue is included
that is measured in accordance of number of units sold and price per unit (Zhao, 2020).
 Cost of sales- The total of expenses which occurred in process of manufacturing and
selling a product is included in this statement that is named as cost of goods sold.
 Operating income and expenses- As well as, income statement contains information
about income generated from operations along with expenses occurred in process of
generating income.

 Interest expenses- if a firm had loan and pays interest annually than amount of interest
paid is mentioned under income statement.
 Tax- The sum of tax amount which is paid by a company is also included in this
statement.
 Net profit- In this statement, information regarding to earned net profit is mentioned at
the end of table.
Cash flow- This is defined as a type of statement which consists detailed information regarding
to cash receipts and payments activities (NGUYEN and NGUYEN, 2020). It is prepared by help
of three activities such as operational, financial and investing. It includes such information:
 Cash receipts- In this statement, information about cash receipts value and activities is
included. Along with it provides cash receipts information from three different activities
including operational, financial and investing.
 Cash payments- Along with cash receipts, it consists information regards to cash payment
activities from three different activities.
 Net cash flow- The amount of net cash flow which is generated from three different
activities is also mentioned in this statement.
Importance of both cash flow and income statement for investors.
For investors, it is essential to have complete information about financial aspect of a company so
that they can take decisions accordingly. Basically, investors rely on various kinds of financial
statements in order to get useful information.
Role of income statement for investors:
The investors want detailed information about company’s profitability and expenses during an
accounting cycle (Paolone, 2020). This can be come possible only because of prepared income
statement of a company. As by help of this statement, investors can know about profit earned by
company as well as this information can be used to measure value of earnings per share. It
addition to this, income statement is also useful for investors to provide information related to

number of expenses and activities for these. On the basis of this useful information, investors
take important decision for making further investment in companies’ security and shares.
Role of cash flow statement for investors:
The cash flow statement is useful for investors to provide information about past years’ cash
flow that is used for making projection of upcoming cash flows (ANIL, LAKHSMI and
SCHOLAR, 2019). In addition to this, cash flow statement enables investors to know about those
activities which are leading as higher expenses. On the grounds of this information, investors
determine about whether they should make investment or not.
Part B
1. Examination of cash flow of each company.
(a) Major source and uses of cash of each firm.
BHP limited: On the basis of below mentioned (Appendix 1), this can be find out that
company has different kinds of sources and uses of cash which is explained below in
such manner:

Santos limited-

Funtastic limited:

(b) Trend in cash flow of each firm from operating activity.
BHP limited: 2017 (Data in $
million)
2018 (Data in $
million)
2019 (Data in $
million)
Cash flow from
operating activity
16804 18461 17871

2017 (Data in $ million) 2018 (Data in $ million) 2019 (Data in $ million)
15500
16000
16500
17000
17500
18000
18500
16804
18461
17871
Cash flow from operating activity
OF BHP LTD.
Trend- the above chart is indicating that there is cash inflow in all three years 2017, 2018
and 2019. Though, value of cash inflow is fluctuating such as in year 2017, it was of
$16804 million which raised till $17561 million. But in year 2019, it decreased and
became of $17397 million. The rationale behind this is that there are more number of
operational activities that are resulting as higher cash receipts as compared to cash
payments.
Santos limited: 2017 (Data in $
million)
2018 (Data in $
million)
2019 (Data in $
million)
Cash flow from
operating activity
1248 1578 2046

2017 (Data in $ million) 2018 (Data in $ million) 2019 (Data in $ million)
0
500
1000
1500
2000
2500
1248
1578
2046
Cash flow from operating activity
OF SANTOS LTD.
Trend- The above mentioned chart is indicating that there is significant growth in
company’s net cash inflow in all three years. Such as in year 2017, cash inflow was of
$1248 million that raised and became of $1578 and $2046 million for year 2018, 2019
respectively. This good performance of company is indicating that they are able to
manage their operations in an effective manner which is leading as positive cash flows.
Funtastic limited: 2017 (Data in $
million)
2018 (Data in $
million)
2019 (Data in $
million)
Cash outflow from
operating activity
-2750 -10182 -8030
2017 (Data in $ million) 2018 (Data in $ million) 2019 (Data in $ million)
-12000
-10000
-8000
-6000
-4000
-2000
0
Cash outflow from operating
activity of funtastic ltd.

Trend- The above mentioned chart is showing that this company is not able to produce
cash inflow from operating activities. Such as in year 2017, there was cash outflow was
of $-2750 that raised in next year and became of $-10182. Though, in year 2019 value of
cash outflow reduced by a little margin till $-8030 million. The rationale behind this poor
performance is lack of control over operational expenses and ineffective management of
cash.
(c) Comparison of cash flow from operations and net profit after tax.
BHP limited: 2017 (Data in $
million)
2018 (Data in $
million)
2019 (Data in $
million)
Net profit after tax 6222 7744 9520
Cash flow from
operations
16804 18461 17871
2017 (Data in $ million) 2018 (Data in $ million) 2019 (Data in $ million)
0
5000
10000
15000
20000
25000
30000
6222 7744 9520
16804
18461 17871
Diff erence between net profi t after
tax and cash fl ow from operations
Net profit after tax Cash flow from operations
Analysis- the above mentioned chart is indicating that there is significant difference
between cash flow from operations and net profit after tax. In each year value of cash

flow from operation is far away as compared to net profit after tax. The rationale behind
difference between net income and cash flow is because of time gap of documented sales
and actual payments. There can be similar outcome of both cash flow and net income
only if invoiced customers make payment on time. In the case of above company, there is
difference due to delay in payment by customers.
(d) Are firms have enough cash flow to pay all capital expenses.
BHP limited: In the context of this company, it can be find out that they generated cash
inflow in all three years with a good amount. Their cash inflow was as for three years:
$16804, $17561 and $17397 million respectively. While there is less amount of capital
expenses which shows that company has enough cash flows.
Santos limited: The cash flow from operating activities has been raised year by year of
this company. As it was of $1248, $1578 and $2046 million which is progressing and
more than capital expenditures.
Funtastic limited: In the aspect of above company, it can be find out that there is negative
cash flow in all three years from operating activities. This is an indication of poor
performance as well as firm does not have enough cash flow to make payment of capital
expenditures.
(e) Did the cash flow from operations cover the dividend payment made by the firm (if any)?
BHP limited: 2017 (Data in $
million)
2018 (Data in $
million)
2019 (Data in $
million)
Dividend paid 2921 5220 11395
Cash flow from
operations
16804 18461 17871

2017 (Data in $ million)
2018 (Data in $ million)
2019 (Data in $ million)
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2921
5220
11395
16804
18461
17871
BHP LIMITED
Dividend paid Cash flow from operations
Analysis- This chart states that company had enough cash flow from operations in each
year in order to make payment of dividend.
Santos limited: 2017 (Data in $
million)
2018 (Data in $
million)
2019 (Data in $
million)
Dividend paid 0 73 251
Cash flow from
operations
1248 1578 2046

2017 (Data in $ million)
2018 (Data in $ million)
2019 (Data in $ million)
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
0
73
251
1248
1578
2046
Santos limited
Dividend paid Cash flow from operations
Analysis- This company also has enough amount of cash flow from operations in order to
make payment of dividend. Though, they didn’t make any payment of dividend in year
2017 while in next two years they paid keeping higher cash flow in reserve.
Funtastic limited- This company made no payment of dividend due to negative cash flow
from operations in all three years.
(f) How firm invested excess cash flow.
BHP limited:
2017- The company had cash inflow from operations of $16804 which has been invested
in capital expenditure of $5607 million. Breakdown of this capital expenditure has been
done below in such manner:
Item Amount ($ million)
Purchases fixed assets 4252
Investigation expense 968

Net investment and funding of equity
accounted investments
234
Other investment 153
Total 5607
Purchases fixed
assets Investigation
expense Net investment
and funding of
equity accounted
investments
Other investment
0
500
1000
1500
2000
2500
3000
3500
4000
4500
4252
968
234 153
Capital expenditure by BHP limited ($
million) in year 2017
2018: The company had cash inflow from operations of $18461 which has been invested
in capital expenditure of $5994 million. Breakdown of this capital expenditure has been
done below in such manner:
Item Amount ($ million)
Purchases fixed assets 4979
Investigation expense 874
Other investment 141
Total 5994

Purchases fixed assets Investigation expense Other investment
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
4979
874
141
Capital expenditure by BHP limited
($ million) in year 2018
2019: This company’s cash flow from operations has been invested in below mentioned
capital expenditures:
Item Amount ($ million)
Purchases fixed assets 6250
Investigation expense 873
Other investment 289
Net investment and funding of equity
accounted investments
630
Total 8042

Purchases fixed
assets Investigation
expense Other investment Net investment
and funding of
equity accounted
investments
0
1000
2000
3000
4000
5000
6000
7000 6250
873 289 630
Capital expenditure by BHP limited
($ million) in year 2019
Santos limited:
2017- The uses of cash inflow of $1248 million has been done in below mentioned
capital expenditure:
Item Amount ($ million)
Investigation of assets 146
Oil and gas assets 483
Other fixed assets 5
Acquisition of oil and gas assets 49
Borrowing costs 6
Total 689

Investigation of
assets
Oil and gas assets
Other fixed
assets
Acquisition of oil and gas
assets Borrowing costs
Capital expenditure by Santos limited ($
million) in year 2017
2018: This company invested their cash flow in below mentioned capital expenditures:
Item Amount ($ million)
Investigation of assets 66
Oil and gas assets 490
Other fixed assets 10
Acquisition of oil and gas assets 10
Acquisition of subsidiary 1933
Costs associated with acquisition 10
Borrowing costs 6
Total 2525

Investigation of assets
Oil and gas assets
Other fixed assets
Acquisition of oil
and gas assets
Acquisition of
subsidiary
Costs associated with
acquisitionBorrowing costs
Capital expenditure by Santos limited
($ million) in year 2018
2019: This company invested cash flow from operations in such expenditures:
Item Amount ($ million)
Investigation of assets 222
Oil and gas assets 619
Other fixed assets 18
Acquisition of assets 18
Acquisition of subsidiary 177
Costs associated with acquisition 5
Borrowing costs 15
Total 1074

Investigation of
assets
Oil and gas assets
Other fixed
assets
Acquisition of
assets
Acquisition of
subsidiary
Costs associated with
acquisitionBorrowing costs
Capital expenditure by Santos limited
($ million) in year 2019
Funtastic limited: This company had no positive cash flow in order to make capital
expenditures. Though, they did purchase of plant and equipment from loan in each of
three years.
(g) Uses of working capital as a source or uses of cash.
BHP limited used working capital as a source or uses of cash. Herein, below explanation
has been done in such manner:
Cash source
2017 2018 2019
Trade and other
receivables
315 0 0
Trade and other
payables
337 719 406
Inventories 0 0 298
Cash uses
Inventories 679 182 0

Trade and other
receivables
662 211
(h) The items which affected cash flow of each firm.
There are a range of items which have been affected to cash flow of each firm in such
manner:
BHP limited-
 Higher capital expenses- this company made huge capital expenses which resulted
in negative cash flow from investing activities.
 Higher payment of debts- This company did payment of more loans and interests
which became cause of negative cash flow from financing activities.
 Operating activities- The company had more number of activities which are
producing higher cash receipts due to which there is cash inflow from operating
activities.
Santos limited:
 Positive operating activities- in all three years, company generated more number
of cash receipts which resulted in cash inflow.
 Investment- Company made higher purchase of fixed assets which become cause
of cash outflow.
 Debts- This company took higher amount of loan and in repayment they paid
huge amount of cash which resulted as negative cash flow from financing
activities.
Funtastic limited:
 Higher payment of operating activities- This company paid a number of expenses
due to higher operations that resulted in cash outflow in each year.
 Acquiring of fixed assets- Company acquired fixed assets even they faced
negative cash flow from operating activities. As a consequence, there was cash
outflow from investing activities.

 Interest on loans- Company gained higher amount of interest from different loans
which they offered and due to which there was cash inflow from financing
activities.
(i) Trend in capital expenses of each firm.
BHP limited 2017 ($ Million) 2018 ($ Million) 2019 ($ Million)
Capital expenses 5607 5994 8042
2 01 7 ( $ Mi l l i on) 2 01 8 ( $ Mi l l i on) 2 01 9 ( $ Mi l l i on)
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
Capital expenses MADE BY BHP
LIMITED
Trend- This chart is indicating that company increased the value of expenses year by
year. This is so because they produced higher cash flow from operations in these years.
Santos limited 2017 ($ Million) 2018 ($ Million) 2019 ($ Million)
Capital expenses 689 2525 1074

2017 ($ Million) 2018 ($ Million) 2019 ($ Million)
689
2525
1074
Capital expenses made by santos
limited
Trend- The above mentioned chart is showing that company fluctuated volume of capital
expenditures in three years. The higher expense was made in year 2018 of $2525 million
while lowest expense was in year 2017 of $689 million.
Funtastic limited 2017 ($ Million) 2018 ($ Million) 2019 ($ Million)
Capital expenses 1428 426 152
2017 ($ Million) 2018 ($ Million) 2019 ($ Million)
1428
426
152
Capital expenses made by funtasti c
limited

Trend- This company’s capital expenditure diagram is showing decreased trend in
volume of expense. It is so because of negative cash flows in all three years from
operational activities.
(j) Trend in dividend.
BHP limited 2017 (Data in $
million)
2018 (Data in $
million)
2019 (Data in $
million)
Dividend paid 2921 5220 11395
2017 (Data in $ million) 2018 (Data in $ million) 2019 (Data in $ million)
2921
5220
11395
Dividend paid by bhp limited
Trend- This chart is indicating that company paid dividend to shareholders in progressive
manner. They paid higher dividend of $11395 million in year 2019 as in this year cash
inflow was higher from continuous operations.
Santos limited 2017 (Data in $
million)
2018 (Data in $
million)
2019 (Data in $
million)
Dividend paid 0 73 251

2017 (Data in $ million) 2018 (Data in $ million) 2019 (Data in $ million)
0
73
251
Dividend paid by santos limited
Trend- This company did not make payment of dividend in year 2017 while in next two
years, paid dividend was of $73 and $251 million respectively. It is so because of higher
cash flow in last two years.
(k) Trend in net borrowings.
BHP limited 2017 (Data in $
million)
2018 (Data in $
million)
2019 (Data in $
million)
Net borrowings 7156 4406 2764
2017 (Data in $ million) 2018 (Data in $ million) 2019 (Data in $ million)
7156
4406
2764
Net borrowings of bhp limited

Trend- The above mentioned chart is showing that dependency of net borrowing of this
company has been reduced year by year. Lowest borrowing was of $2764 million in year
2019.
Santos limited 2017 (Data in $
million)
2018 (Data in $
million)
2019 (Data in $
million)
Net borrowings 783 1193 592
2017 (Data in $ million) 2018 (Data in $ million) 2019 (Data in $ million)
783
1193
592
Net borrowings of santos limited
Trend- This chart is showing that higher borrowings was of in year 2018 of $1193
million while lower borrowing was of $592 million in last year 2019.
Funtastic limited 2017 (Data in $
million)
2018 (Data in $
million)
2019 (Data in $
million)
Net borrowings 3647 2630 5666

2017 (Data in $ million) 2018 (Data in $ million) 2019 (Data in $ million)
3647
2630
5666
Net borrowings by funtasti c limited
Trend- This chart is showing that higher borrowings was of in year 2019 of $5666
million while lower borrowing was of $2630 million in last year 2018.
(l) Trend in working capital accounts.
BHP limited 2017 (Data in $
million)
2018 (Data in $
million)
2019 (Data in $
million)
Working capital 16804 17561 17397
Trend: this table is showing about working capital trend of BHP limited. It shows that
company’s working capital value has been raised year by year. Like in year 2017, it was
of 16804 million which raised in next two years. Company managed their working capital
in an effective manner.
1. Financial strength of each company.
On the basis of above mentioned discussion about cash position of each company, this
can be find out that each one has certain strengths and weaknesses. It depends on
companies that how well they will deal with weakness and utilize their strengths. Below
strengths of above mentioned three companies discussed in such manner:
(a) BHP Limited:

 The key plus point of this company is that they generated huge amount of cash
inflow from operating activities in all three years. It became possible because
of effective management of operational income and expenses.
 The company used excess of cash inflow from operating operations in an
appropriate way to purchase different kinds of fixed assets.
 Along with this company’s dependency on borrowings is too narrow which
states the efficiency.
(b) Santos limited:
 The strength of this company is that their cash flow from operating activities
increased in a progressive manner. It shows that company improved their
performance of operations.
 Company paid the dividend only when there is scope of cash inflow, they did
not bear any loss to pay the dividend.
 As well as in year 2018, company generated net cash inflow from all three
activities which shows that they covered cash outflow of financing and
investing activities at the end of year.
(c) Funtastic limited:
 In year 2018, company generated cash inflow from overall activities. This
shows that they focused on all three activities equally.
 Company produced positive cash inflow from financing activities which
shows that they managed their debt and shares in all three years appropriately.
 This company purchased their assets wisely by using a small amount of loan
without facing any loss.
2. Selection of a company for lending purpose.
If I would be given chance to select one company for lending purpose than I will select
Funtastic limited. The rationale behind this is that among three companies, this is the only

one whose cash flow from financing activities is positive. It indicates that this company
will be able to payback debt amount in an effective manner.
CONCLUSION
On the basis of above project report, this can be concluded that cash flow statement is
one of the key statement in order to measure efficiency of cash management. It is important for
companies to manage cash inflow from all three activities so that overall cash flow can be
enhanced. Under report three different companies have been discussed in which BHP limited is
better in terms of operational activities. While Funtastic limited is able to manage their cash flow
from financial activities. On the other hands, performance of Santos limited is average in all
three activities.

REFERENCES
Books and journal:
Barker, R., 2019. Corporate natural capital accounting. Oxford Review of Economic
Policy, 35(1), pp.68-87.
Zhao, J., 2020. Accounting for the corporate cash increase. European Economic Review, 123,
p.103393.
NGUYEN, D.D. and NGUYEN, A.H., 2020. The impact of cash flow statement on lending
decision of commercial banks: evidence from Vietnam. The Journal of Asian Finance,
Economics, and Business, 7(6), pp.85-93.
Güleç, Ö.F. and Bektaş, T., 2019. Cash Flow Ratio Analysis: The Case Of Turkey.
Paolone, F., 2020. Concluding Remarks: The Importance of Cash Flow Statement.
In Accounting, Cash Flow and Value Relevance (pp. 69-81). Springer, Cham.
ANIL, M., LAKHSMI, Y.K.N. and SCHOLAR, P., 2019. Cash management. Complexity
International, 23(2).
Online:
Annual report of BHP limited for year 2017. [online] available through:<
https://www.bhp.com/-/media/documents/investors/annual-reports/2017/
bhpannualreport2017.pdf>
Annual report of BHP limited for year 2018. [online] available through:<
https://www.bhp.com/-/media/documents/investors/annual-reports/2018/
bhpannualreport2018.pdf>
Annual report of BHP limited for year 2019. [online] available through:<
https://www.bhp.com/-/media/documents/investors/annual-reports/2019/
bhpannualreport2019.pdf>
Annual report of Santos limited for year 2017. [online] available through:<
https://www.santos.com/wp-content/uploads/2020/02/2017-annual-report.pdf>
Annual report of Santos limited for year 2018. [online] available through:<
https://www.santos.com/wp-content/uploads/2020/02/2018-annual-report.pdf>
Annual report of Santos limited for year 2019. [online] available through:<
https://www.santos.com/wp-content/uploads/2020/02/2019-annual-report.pdf>
Annual report of Funtastic limited for year 2017. [online] available through:<
https://www.annualreports.com/HostedData/AnnualReportArchive/f/ASX_FUN_2017.pd
f>
Annual report of Funtastic limited for year 2018 & 2019. [online] available through:<
https://www.annualreports.com/HostedData/AnnualReports/PDF/ASX_FUN_2019.pdf>