Analysis of BHP Billiton and Qantas Annual Reports

The report analyzes the annual performance of BHP Billiton and Qantas, comparing their growth, profitability, and liquidity. It provides insights into the method of analyzing an annual report and highlights areas that should be considered for a comprehensive evaluation. The analysis determines that BHP has better liquidity while Qantas has favorable profitability.

ANNUAL REPORT ANALYSIS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Comparing the key aspects of allocated company’s report.........................................................1
4. Reflecting the learning experience..........................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Qantas Airways is one of the largest airline industry in Australia which have been engaged
in operating various flights on several routes in the world. It has been based in Sydney as a
headquarter and having the greater market share which have developed the identity in the
market. It has acquired the 65% of market share in Australian domestic capital market. It has an
average of 14.9% of passenger to travel inside and outside the national boundaries. In this
present report there will be discussion base on annual performance of Qantas airline and BHP
with respect to the 5 years of its annual performance. There will be discussion based on
industrial strategy, financial governance, policies and planning for growth.
MAIN BODY
Comparing the key aspects of allocated company’s report
To analyse the policies and framework of the organisation in respect with taking into
consideration of various operational aspects on which determination of various plans and polices.
Industry and strategy analysis:
Qantas Airways
It has been planned by the Qantas Airways and JetStar with respect to make adequate
operational analysis and development of various plans which will be appropriate and adequate in
meeting the operational targets. Therefore, the motive is for enhancing the profitability,
corporate performance, low cost flights, higher consumer satisfaction as well as improvement in
the market share.
On the contrary with the liquidity of the organisation on which Qantas Airways have
aimed at improving the returns, culture and emphasise productivity and safety for better growth
creating value in the market (Gilg and et.al., 2017). It has been associated with the operational
strategies which will be adequate in meeting the targets of this aviation industry in upcoming
period.
BHP Billiton:
In analysing the operational activities and performance performed by BHP on which
company have set various targets and made strategies which are meant to be helpful in operating
activities. This organisation has been engaged in doing operations for mining and constructing
activity which will be adequate in making appropriate analysis over the data base (Arnold and
et.al., 2017). It has been planned and strategies have been developed by the professionals of this
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organisation is for operating at a large level, brining long life to the business operations,
implication of lower costs, as well as upstream the assets diversification. The targets have been
set by the professionals in this organisation which are aimed at attaining the higher market share
as well as improving the safe productive efforts in the operational performance. Thus, the quality
of work practices will be attentive in terms of leading the organisation for attaining the adequate
success in the life.
Accounting analysis:
There has been ascertainment of various accounting policies that have been based on
considering the accounting standards which will be adequate in making proper records of the
data base. There are various elements which are required to be considered such as inventory
valuation, bad debt analysis, research and development, good will valuation as well as analysing
the depreciation for the period (Kim and et.al., 2017). It is comprised of considering various
accounting standard which have been followed by Qantas Airways and BHP Billiton for
developing appropriate reports to disclose among stakeholders. However, there are various
regulations which are to be considered by these organisations such as:
Inventory valuation: In mining industry such as BHP Billiton there are mainly
inve4ntories are relevant with the machineries, equipment and gadgets which have been used for
the operational activities. Along with this, the fuel to operate such devices will be considered in
the substitute assets that also have budgets and cost control strategies (Geyer, Jambeck and Law,
2017). Moreover, valuation will be based on the analysing the costs associates with the assets
and requirement of firm in meeting the goals at the right time.
Along with this, as per considering the inventories which are being associated in the
aviation industries such as Qantas have been based on airline operations. It involves fuel
consumption, petroleum reserves, repair and maintenance of crafts etc. which are required to be
valued properly. It helps the accounting professionals in decision making and planning for the
future strategies.
Fair value measurement information under IFRS: As per IFRS 13 it is required that all
the assets and transactional activities which are being held in the business which are to be
measured on its fair value. Therefore, there are various assets, liabilities and expenses which are
being measured on the fair value basis which is appropriate in presenting a reliable disclosure
among external as well as internal stakeholders. In relation with aviation industry there are
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various assets and expenses which are required to be valued and analysed by the professionals
such as crafts prices, cost of petroleum products etc.
Moreover, in relation with mining industry BHP on which it can be said that, the
organisation is attentive towards disclosing the financial details and analysis over the fair value
of assets in the firm.
Depreciation Policy: In analysing the depreciation over fixed assets in the organisation
on which there have been use cost of such assets, residual value as well as useful life of the
product which will be helpful in drafting the appropriate analysis over the data base (Lim,
Chalmers and Hanlon, 2018). However, in analysing the annual report of BHP where building is
being depreciated for 25 to 50 years, land was not depreciated, plant and equipment were being
measured on straight line methods which will be from 3 to 30 years of analysis. Along with this,
as per analysing the annual report of Qantas Airways where the depreciation has been charges on
assets such as property, plant and equipment.
Bad debt provision: There has been no provision is base for the bad debts as it does not
comply with the outstanding balance. However along with this there will be recording of the
transaction which is known as provision for doubtful debts which are to be recorded in
receivables of the organisation.
Research and development: Spending funds in increasing the operational level by
making innovative efforts in attaining business goals as well as development of various
operations which will lead firm in making qualitative efforts for attaining fruitful positions. In
mining industries such as BHP there will be requirement of making adequate analysis over new
techniques and technologies which are to be implicated by professionals in terms of enhancing
quality of operations to be performed by them (Hamilton and et.al., 2017). Similarly, in aviation
industry such as Qantas Airways there will be requirement of adequate practices and techniques
which will be helpful in bringing the luxurious experiences among the consumers.
Financial policies:
In relation with considering the financial performance of these industries on which
internal and external stakeholder of the organisation will analyse the profitability, liquidity and
efficiency that will be measured on the basis of historical performance (Grover and et.al., 2017).
Thus, they analyse the outcomes and make investment decisions as well as future planning for
improving quality of services. However, it is the best techniques which brings the clear details
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regarding the past performance of the organisation as well as financial performance for analysing
the issues. To compare the performance of BHP and Qantas there will be consideration of
various ratios which are to be examined here such as:
Particulars
BHP Billiton
2018
Qantas
Airways 2018
Profitability
Net Margin % 8.49 5.89
Asset Turnover (Average) 0.38 0.93
Return on Assets % 3.24 5.46
Financial Leverage (Average) 2.01 4.71
Return on Equity % 6.57 26.16
Return on Invested Capital % 4.79 12.98
Interest Coverage 15.34 7.05
Liquidity/Financial Health
Current Ratio 2.51 0.49
Quick Ratio 1.36 0.41
Financial Leverage 2.01 4.71
Debt/Equity 0.43 1.1
Efficiency
Days Sales Outstanding 24.81 17.28
Days Inventory 78.89 18.76
Payables Period 122.29 116.59
Cash Conversion Cycle -18.59 -80.55
Receivables Turnover 14.71 21.13
Inventory Turnover 4.63 19.45
Fixed Assets Turnover 0.59 1.32
Asset Turnover 0.38 0.93
Interpretation:
On the basis of above mentioned comparative analysis there had been ascertainment of
various ratios on the basis of the current year performance of Qantas and BHP. However, in
analyzing the differences among them there are several measurements which are to be
considered to have concrete outcomes and justification of the data base. It can be analyzed such
as:
Profitability ratio:
To analyze the profitability of the organization which will be adequate and helpful in
bringing the appropriate ascertainment of the profits retained by firm in a period. Thus, the
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operating gains generated by the organization in a certain period on which they will make
payment to the investors as well as make investment in the future operational activities.
Therefore, analyzing the profitability of the organization will be adequate in terms of
determining the efficiency of firm in generating higher profits (Jemal and et.al., 2017). The net
profit margin of BHP Billiton for the year 2018 was 8.49 while Qantas has 5.89 as NP margin.
Thus, in this case BHP Billiton have better control over operating expenses instead of Qantas.
In accordance with asset turnover ratio of BHP 0.38 and Qantas has 0.93. as per return on
assets BHP has 3.24%while Qantas has 5.46% of the return in this year over its assets. In this
Qantas is more capable of making returns over its assets. In analyzing the return made by these
organizations over equity generated in a particular period on which BHP has 6.57% in 2018
while Qantas is making comparatively higher returns over the equity for the period such as
26.16%. Thus, in this manner it can be said that the profitability of BHP is better than Qantas but
Qantas is making higher returns over the generated profits in this year.
Liquidity/ Financial Health:
In terms of analyzing the solvency of the organization on which there have been
consideration of assets and liabilities to examine the ratio. Thus, it presents information
regarding the ability of firm in meeting its debts on the right time as well as presenting the
adequate analysis over the data base (Qantas Airways Ltd, 2018). Moreover, there are various
analysis which will help in analyzing the liquidity of the firms in 2018. The current ratio of BHP
in 2018 was 2.51 while Qantas has 0.49 on which it can be said that the short-term solvency of
BHP is better than Qantas.
Similarly, Quick ratio of BHP for 2018 was 1.36 while Qantas for 0.41 on which BHP is
better. Along with this, in analyzing the long-term solvency of these firms on which Financial
leverage ratio have been ascertained by them on which BHP has 2.01 while Qantas has 4.71.
Moreover, the debt/equity ratio of BHP has been determined which represents the outcomes as
0.43 while Qantas as 1.1. By ascertain all ratios of liquidity on which it can be said that BHP is
better in meeting the debts at the right time.
Efficiency:
Days sales outstanding on which BHP has 24.81 and Qantas has 17.28 same as days
inventory has been analyzed as BHP for 78.89 and Qantas as 18.76. however, in respect with
this BHP is more efficient in receiving the payments.
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On the other side, as per considering the level of payable made by them in 2018 as BHP
has 122.29 as payable period while Qantas as 116.59 respectively. Again, the payment period for
the creditors on which BHP has appropriate paying capacity than Qantas (BHP Group Ltd,
2018). In relation with receivable turnover BHP has 14.71 while Qantas has 21.13, Inventory
Turnover for the period on which BHP has it around 4.63 while Qantas has 19.45. Moreover,
here turnover wise Qantas have better outcomes which will be adequate in presenting the
outcomes and making appropriate analysis over the data base.
Environmental and social practices:
In respect with analysing the environmental and social practices of these industries on
which they have been representing the adequate analysis over the responsibilities in the market.
Thus, Mining industry BHP have responsivities towards preventing the environment with the
pollution made by Mining activities performed in the scenario. There are large number of
workforce which are making qualitative efforts for the industry in mining operations. The aim is
for developing events for the potential cause and fatality by eight percent. However, it
determined the roles and responsibilities of the professionals towards the environment.
On the other side there are various elements which are stated in an annual report such as
CSR reports and integrated reports (Gilg and et.al., 2017). Thus, in accordance with such
analysis on which it can be said that there will be proper reporting and planning for the
operational analysis which will be helpful to have better consumer control over the market. In
relation with aviation industry on which Qantas is to be concerned regarding the air pollution and
the fuel consumed by the crafts. Thus, theses affect the capital backup as well as costs implicated
in the firm to have better operational administration and analysis over the data base.
Corporate governance:
In relation with analysing the corporate governance of the firm on which the firm have
brought various rights and responsibilities among the professionals which makes efforts in
governing the operational activities of the firm. Qantas as well as BHP have comparatively
higher costs implied in the operating activities. Thus, on which it is necessary that, there must be
better control ovre costs implied for overhead expenses such as labour charges costs for fuel etc.
4. Reflecting the learning experience
I have learnt through this report that there will be appropriate examination of annual report
outcomes of both the industries BHP and Qantas. Thus, this evaluation has been based on
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considering the outcomes as per the past performance and historical data of these organisation. I
have learnt the method and the areas which are to be considered while analysing an annual report
which will be adequate and helpful in meeting the targets at the right time.
CONCLUSION
On the basis of above report, it can be concluded that there has been analysis over the annual
performance of BHP Billiton and Qantas with respect to the growth and profitability of theses
industries. It determines that, BHP has comparatively better liquidity while Qantas have
favourable profitability.
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REFERENCES
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Analysis Criteria. Nephron. 137(Suppl. 1). pp.333-338.
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College of Cardiology transcatheter valve therapy registry. Journal of the American
College of Cardiology. 69(10). pp.1215-1230.
Hamilton, A. J. and et.al., 2017. UK Renal Registry 19th Annual Report: Chapter 4 Demography
of the UK Paediatric Renal Replacement Therapy Population in
2015. Nephron. 137(Suppl. 1). pp.103-116.
Jemal, A. and et.al., 2017. Annual report to the nation on the status of cancer, 1975–2014,
featuring survival. JNCI: Journal of the National Cancer Institute. 109(9). p.djx030.
Kim, W. R. and et.al., 2017. OPTN/SRTR 2015 annual data report: liver. American Journal of
Transplantation. 17. pp.174-251.
Lim, E. K., Chalmers, K. and Hanlon, D., 2018. The influence of business strategy on annual
report readability. Journal of Accounting and Public Policy. 37(1). pp.65-81.
Online
BHP Group Ltd. 2018. [Online]. Available through :<
http://financials.morningstar.com/ratios/r.html?t=BHPLF>.
Qantas Airways Ltd. 2018. [Online]. Available through :<
https://financials.morningstar.com/ratios/r.html?t=QUBSF>.
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