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HA1022 Assignment on Principals of Financial Markets

   

Added on  2020-04-07

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HA1022 Principals of Financial Markets1
HA1022 Assignment on Principals of Financial Markets_1
Executive SummaryIn this report top down and bottom up analysis has been conducted of mining industry ofAustralia. In order to conduct the top down analysis all the macro factors have been consideredwhile, for bottom up analysis two mining companies in Australia have been evaluated for theirperformance purpose. After that, common conclusion has been drawn for industry as whole.2
HA1022 Assignment on Principals of Financial Markets_2
ContentsIntroduction......................................................................................................................................4Top-Down Analysis.........................................................................................................................4Australian Economic Environment Analysis...............................................................................5Bottom-Up Analysis of the chosen Companies in the same industry (BHP Billiton and Rio Tinto).......................................................................................................................................................10Profitability analysis..................................................................................................................16Liquidity Analysis......................................................................................................................17Capital Structure Analysis.........................................................................................................18Market performance...................................................................................................................19Conclusion and Recommendation.................................................................................................19References......................................................................................................................................203
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IntroductionThe fundamental analysis of stocks is highly important for investors in order to determinetheir intrinsic value for making investment decisions. This report has been undertaken forcarrying fundamental analysis of an industry in Australia through selecting two ASX listedcompanies operating in the same industrial sector. The fundamental analysis of the industry isaimed to identify its total worth through examining the micro and macro-economic factorsimpacting its growth and development. The fundamental analysis is carried out through carryingtop-down and bottom-up analysis that identifies the factors influencing the directional changes inthe stock value of a company. In this context, the present report has carried out fundamentalanalysis of the mining industry in Australia through analyzing the economic factors impactingthe stock valuation of two major companies operating within the industry, that are, Rio Tinto andBHP Billiton. Top-Down AnalysisThe investors for making their investment decisions need to analyze the micro-economicfactors impacting the industry rather than only emphasizing only on the companiesperformances. The top-down analysis, in this context, help the investors need to examine themicro-economic trends of the market that influences the performance of industry. The analysisbegins with examining the overall macro-economic factors and then predicting the returnsgenerated from the industry. The economical analysis is followed by the selection of particularindustry and then choosing the individual companies for investment purposes. Analysis beginswith examining the overall economic factors and then predicting the returns generated from theindustry. The economical analysis is followed by the selection of particular industry and then4
HA1022 Assignment on Principals of Financial Markets_4

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