Financial Analysis of BHP Billiton and Caltex Limited

Running Head: FINANCE 0
Finance

FINANCE FOR MASTERS 1
Table of Contents
Introduction................................................................................................................................2
Operation and comparative advantages.....................................................................................2
BHP Billiton...........................................................................................................................2
Caltex Limited........................................................................................................................3
Calculation of the performance ratios........................................................................................3
Profitability ratios...................................................................................................................3
Net profit margin....................................................................................................................5
Return on Assets.....................................................................................................................5
Return on Equity.....................................................................................................................6
Capital structure (leverage) ratios..........................................................................................6
Debt to Equity Ratio...............................................................................................................7
Interest Coverage Ratio..........................................................................................................8
Liquidity ratios.......................................................................................................................8
Current Ratio..........................................................................................................................9
Quick ratio..............................................................................................................................9
Share prices movements...........................................................................................................10
BHP Billiton.........................................................................................................................10
Caltex limited.......................................................................................................................11
Factors affecting the share price..............................................................................................12
BHP Billiton.........................................................................................................................12

FINANCE FOR MASTERS 2
Caltex Limited......................................................................................................................12
Beta values...............................................................................................................................13
Dividend policies.....................................................................................................................13
Recommendation letter............................................................................................................14
Conclusion................................................................................................................................15
References................................................................................................................................16

FINANCE FOR MASTERS 3
Introduction
There are the certain requirements which are to be followed by the management in order to
report the financial statements in front of the investors and the shareholders. The analysis of
the financial statements is beneficial if it is compared either in the form of year to year
comparison or in the form of comparison with the other company operating in the same
industry. In order to take the decision of the investment this report presents a proper analysis
of the ratios of the past three years, the market performance, the price movements have been
disclosed and the dividend policy have been recorded equally. The two companies that are
chosen for this purpose are the BHP Billiton and the Caltex limited (Vogel, 2014).
Operation and comparative advantages
BHP Billiton
An Australian Multinational Company named BHP Billion which is registered under
Corporation Act 2001, which is called as an Anglo-Australian multinational corporation
where the basic role of the company is to acquire the natural resources. The headquarters of
the company is situated in Melbourne which deals in mining and in petroleum products of the
company. The company was founded in the year 1885, where the BHP Billion became the
largest mining company in the world on the basis of its market capitalisation. The company is
listed in the Australian stock exchange, London Stock Exchange as per the name mentioned
by the company such as BHP. The basic function of the company is to deal in the ore,
mining, smelting and refining nickel. The company has been involving in over 650
corporations which functions in the mining and development of natural resources of more
than 100 countries in the world. Moreover, the company has a wide and different range of
asserts which helps in mining and smelting of nickel. As per the financial report of the