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Principles of Financial Markets | Report

Added on - 23 Feb 2020

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Principles of Financial Markets1Principles of Financial Markets
Principles of Financial Markets2Executive SummaryThis report provides the information related to top down analysis and bottom up analysis of twocompanies operating in mining industry of Australia i.e. Rio Tinto and BHP Billiton. The topdown analysis includes economic, fundamental, industry and company analysis. It is found outthat the GDP of the country comprises of 8.5% of the total GDP by the mining industry in theyear 2013. The companies make investment in research and development activities to bringinnovation in business practices. The findings of bottom up approach indicate that the financialperformance and position of Rio Tinto is better than BHP Billiton.
Principles of Financial Markets3ContentsIntroduction.................................................................................................................................................4Top-down Analysis.....................................................................................................................................5Fundamental Analysis.............................................................................................................................5Economic Analysis...................................................................................................................................5Industry Analysis.....................................................................................................................................6Company Analysis...................................................................................................................................7Bottom-up Analysis.....................................................................................................................................8Rio Tinto.................................................................................................................................................8BHP Billiton..........................................................................................................................................11Summary and Recommendations..............................................................................................................12References.................................................................................................................................................14
Principles of Financial Markets4IntroductionThe top down analysis and bottom up analysis is carried out for two companies operating inmining industry of Australia namely Rio-Tinto and BHP Billiton. The top down analysis helps inunderstanding the impact of changes in the economic factors on the current economic growth ofAustralia that also affects the industry performance. Besides this, the bottom up analysis helps inunderstanding the financial situation of the companies selected for the analysis (Robinson, et al.,2015). Mining industry is considered as the primary industry which contributes significantlytowards the economy of Australia. The mining industry deals in the exploration, processing andextraction of the resources such as gold, lead, iron ore, bauxite, copper and zinc. Rio Tinto is acompany that deals in mining and metals and was established in the year 1962 (Rio Tinto, 2016).It mainly deals in mining, exploration and processing of mineral resources such as aluminum,iron ore, energy and minerals and copper and diamonds. The different segments of the companyare located in 10 countries including Australia. The main aim of the business is to deliversuperior value to its shareholders. The company emphasizes on integrity, excellence, safety,respect and teamwork (Rio Tinto, 2016).BHP Billiton was established in the year 1885 with its headquarters in Australia. The companydeals in exploration and mining of different minerals and oil and gas products such asmetallurgical coal, iron ore, uranium, and copper. The company has dual listed companystructure with two parent companies namely BHP Billiton Plc and BHP Billiton Ltd and operatesas a single economic entity. Besides this, the company has provided employment toapproximately 65000 employees (BHP Billiton, 2016).
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