Financial Analysis Report: BHP Billiton's Performance 2017 and 2018

This report provides a comprehensive financial analysis of BHP Billiton, examining its performance in 2017 and 2018. The analysis includes a detailed assessment of profitability, utilizing metrics such as gross profit margin, operating profit margin, and net profit margin, comparing the results for both years. It further investigates asset management efficiency through total asset turnover, fixed asset turnover, and inventory turnover ratios. The debt and safety analysis covers current ratio, quick ratio, and cash turnover, providing insights into the company's liquidity and solvency. Finally, the report assesses cash flow through debt-equity ratio, operating cash flow ratio, and return on equity, offering a holistic view of BHP Billiton's financial health. The conclusion highlights key findings, identifies areas of strength, and points out inefficiencies, such as the cash turnover ratio. References from reputable financial sources support the analysis.

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NAME:
TITLE: BHP Billton Financial Analysis

Introduction
• This presentation analyzes the financial position of BHP Billton in
terms of profitability, asset management, debt and safety, as well as
cash flow. The analysis is beneficial to external stakeholders on
determining the company’s financial performance. This includes the
management ability to use company’s resources to achieve high
returns on investment.

BHP Profitability Analysis
BHP Profitability analysis for year ended
30 June 2018
Gross profit margin = Revenue- Cost of goods sold/
Revenue
Gross profit margin = (43,638,000-28,036,000)/
43,638,000 =0.36 or 36%
Operating profit margin =Operating Earnings/
Revenue
Operating profit margin = 15,996,000/43,638,000
Operating profit margin = 0.37 or 37%
Net profit margin = Net profit/ Total revenue
Net profit margin = (4,823,000/43,638,000) = 0.11
or 11%
BHP Profitability analysis for year ended
30 June 2018
Gross profit margin = Revenue- Cost of goods sold/
Revenue
Gross profit margin =
(36,135,000-24,515,000)/36,135,000 = 0.32 or 32%
Operating profit margin =Operating Earnings/
Revenue
Operating profit margin = (12,554,000/36,135,000)
Operating profit margin = 0.35 0r 35%
Net profit margin = Net profit/ Total revenue
Net profit margin = (6,222,000/ 36,135,000) 100
=0.172 or 17.2%

BHP Profitability Analysis
Gross profit margin Operating profit margin Net profit margin
0%
5%
10%
15%
20%
25%
30%
35%
40%
36% 37%
11%
32%
35%
17%
BHP Profitability Analysis
2018 2017 Column1
Ratio
Percentage performance

Asset management analysis
Year ended 30th June 2018
Lets analyze BHP asset management
Total assets turnover = sales/total assets
Total assets turnover= 43,638,000/111,993,000
Total assets turnover ratio = 0.39
Fixed assets turnover = net sales /net fixed assets
Fixed assets turnover = 43,638,000/ 39526,000
Fixed assets turnover = 1.1
Inventory turnover ratio = Cost of goods sold/
Average inventory
Inventory turnover ratio = 28,036,000/((3,764,000+
3,673,000)/2)
Inventory turnover ratio = 0.75
Year ended 30th June 2017
Total assets turnover = sales/total assets
Total assets turnover= 36,135,000/117,006,000
Total assets turnover ratio = 0.31
Fixed assets turnover = net sales /net fixed assets
Fixed assets turnover = 36,135,000/ 39,529,000
Fixed assets turnover = 0.9
Inventory turnover ratio = Cost of goods sold/
Average inventory
Inventory turnover ratio =
(24,515,000/((3,673,000 +4,292 )/2)
Inventory turnover ratio = 0.61

Asset management analysis
Total asset turnover Fixed assset turn over Inventory turnover ratio
0
0.2
0.4
0.6
0.8
1
1.2
0.39
1.1
0.75
0.31
0.9
0.61
Asset management analysis chart
2018 2017
Assets turnover
Ratio

BHP debt safety analysis
Year ended 30th June 2018
Current ratio = current assets/ current
liabilities
Current ratio = 35,130,000/ 13,989,000 =
2.51
Quick ratio = Cash and cash
equivalents/current liabilities
Quick ratio = 15,871,000/13,989,000 = 1.14
Cash turnover = net sales/ net working
capital
Cash turnover = (43,638-28,036)
/(35,130,000-13,989,000) = 0.74
Year ended 30th June 2017
Current ratio = current assets/ current
liabilities
Current ratio = 21,056,000/ 11,366,000 = 1.85
Quick ratio = Cash and cash
equivalents/current liabilities
Quick ratio = 14,153,000/ 11,366,000 = 1.25
Cash turnover = net sales/ net working capital
Cash turnover = (36,135,000- 24,515,000)
/(21,056,000- 11,366,000) = 1.1

BHP debt safety analysis for the
year ended 2017 and 2018
Current ratio Quick ratio Cash turnover
0
0.5
1
1.5
2
2.5
3
2.51
1.14
0.74
1.85
1.25 1.1
BHP debt safety analysis
2018 2017
Debt and safety
Ratio

BHP cash flow analysis
Year ended 30th June 2018
Debt equity ratio = total liability/ shareholders
equity
Debt equity ratio = 51,323,000/ 55,592,000
Debt equity ratio = 0.92 or 92%
Operating cash flow ratio = cash flow from
operations/ current liabilities
Operating cash flow ratio = 15,996,000/ 13,989,000
Operating cash flow ratio = 1.14
Return on equity ratio = Net income/ shareholders
equity
Return on equity ratio = 4,726,000/ 55,592,000
Return on equity ratio = 0.09 0r 9%
Year ended 30th June 2017
Debt equity ratio = total liability/ shareholders
equity
Debt equity ratio = 54,280,000/ 57,258,000
Debt equity ratio = 0.95 or 95%
Operating cash flow ratio = cash flow from
operations/ current liabilities
Operating cash flow ratio = 12,554,000/ 11,366,000
Operating cash flow ratio = 1.10
Return on equity ratio = Net income/ shareholders
equity
Return on equity ratio = 6,173,000/ 57,258,000
Return on equity ratio = 0.11 0r 11%

HBP cash flow analysis for years
ended 2017 and 2018
Debt equity ratio Operating cash flow ratio Return on equity ratio
0
0.2
0.4
0.6
0.8
1
1.2
0.92
1.14
0.09
0.95
1.1
0.11
HBP cash flow analysis 2018
2018 2017
Cash flow analysis
Ratio

Conclusion
• The financial analysis conducted on BHP Billton shows that the
company is in geed financial health as there is no ratio that has gone
beyond the alarming point. However, the analysis has spotted some
inefficiencies such as cash turnover ratio which means that the
company is inefficiently utilizing its working capital. Also the net profit
margin has drastically reduced as compared to last year

Reference
• Andrew, M. (2018).
2018 Annual Reporting Suite. [online] BHP. Available at:
https://www.bhp.com/media-and-insights/reports-and-presentations/2018/09/2018-annual-
reporting-suite [Accessed 25 Sep. 2018].
• Bragg, S. and Bragg, S. (2018).
Financial leverage. [online] AccountingTools. Available at:
https://www.accountingtools.com/articles/2017/5/14/financial-leverage [Accessed 25 Sep. 2018].
• Corporate Finance Institute (2018).
Analysis of Financial Statements - Free Financial Analysis Guide.
[online] Corporate Finance Institute. Available at:
https://corporatefinanceinstitute.com/resources/knowledge/finance/analysis-of-financial-statements/
[Accessed 25 Sep. 2018].
• Corporate Finance Institute (2018).
Operating Cash Flow Ratio - Formula, Guide for Financial Analysts.
[online] Corporate Finance Institute. Available at:
https://corporatefinanceinstitute.com/resources/knowledge/finance/operating-cash-flow-ratio/
[Accessed 25 Sep. 2018].
• Staff, I. (2018).
Debt/Equity Ratio. [online] Investopedia. Available at:
https://www.investopedia.com/terms/d/debtequityratio.asp [Accessed 25 Sep. 2018].