Ratio Analysis and Share Price Movements of BHP Billiton

HC2091: Finance for Business
1

Introduction
In this report the will be consideration of the macro environment and for that the there will be
evaluation which will be made in the context of the financial position. There will be various
aspects which will be considered in this and for the proper analyzation, there will be a ratio
analysis which will be performed. By the help of this, it will be possible to make the decisions in
relation to the various aspects such as the investment will be made accordingly. In order to
understand the movements which took place in the share price will be understood appropriately
with the help of graphs. There will be the use of the constant dividend growth model in order to
ascertain the stock price of the company in the current period. All of this will be performed for
BHP Billiton and after the evaluation, there will be certain recommendations which will be
provided by which it will be possible to make the improvements in the current system so that
growth can be attained.
2

Contents
Introduction.................................................................................................................................................2
Overview of the Company...........................................................................................................................4
Calculation and interpretation of ratio.........................................................................................................5
Liquidity ratios........................................................................................................................................5
Financial Leverage Ratio.........................................................................................................................6
Efficiency Ratios.....................................................................................................................................6
Profitability Ratios...................................................................................................................................8
Market Value Ratios................................................................................................................................8
Graphs representing the Share price movements.......................................................................................10
Valuation of shares....................................................................................................................................12
Conclusion.................................................................................................................................................14
Recommendations.....................................................................................................................................15
References.................................................................................................................................................16
3

Overview of the Company
BHP Billiton is the company which is having its headquarters in Australia and is considered as
one of the largest company dealing in mining and resources. It is operating in various parts of the
world and there are around 100000 employees to whom employment is provided by it. The
company was incorporated in 1885 and dealing in various products. In this copper, iron ore,
uranium and coal are involved and there are various segments which are prepared in accordance
with that (Bell, 2017). The main task of the petroleum segment is the development, production,
and exploration of the gas and oil. The mining of silver, copper, zinc, and lead is made in the
copper segment. The mining in relation to the iron ore is made in the iron ore segment. The main
extraction of minerals is made by the company in the operations which have been situated in
Australia. There is the logistic chain with the help of which distribution of the products is
managed. The operations are mainly carried in America and Australia (BHP Billiton Limited,
2017). The company has attained the success in the long run and is running in a very smooth
manner. There are several competitors in the market with which it is required to deal in the most
effective manner so that the benefits can be obtained from that.
4