HI5020 Corporate Accounting: Financial Analysis Report

This report provides a detailed financial analysis of three ASX-listed companies: BHP Billiton, Bluescope Steel Ltd, and Boral Ltd, all operating in the materials industry. The analysis encompasses the examination of the companies' financial statements, including balance sheets, cash flow statements, and comprehensive income statements. The report investigates equity and liability structures, calculating and interpreting debt-to-equity ratios to assess financial leverage. It further delves into the cash flow statements, comparing operating, investing, and financing activities. Additionally, the report addresses the accounting for corporate income tax, providing a comprehensive overview of the financial performance and position of the selected companies, based on their latest financial reports. This report is a student contribution published on Desklib, a platform offering AI-based study tools.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student
Name of the University
Authors Note
Course ID

1CORPORATE ACCOUNTING
Executive Summary:
The current report is based on the assessment of fiscal position of the three ASX listed
businesses that are having the commercial operations in the similar industry. To perform the
analysis, the companies selected here are BHP Billiton, Bluescope Steel Ltd and Boral Ltd.
All the three corporations are from the materials industry that are listed under the ASX 100.
The report would consider the latest financial reports of the three corporations which would
also include the examination of the sections such as cash flow statement, balance sheet and
comprehensive income statement and corporate income tax.

2CORPORATE ACCOUNTING
Table of Contents
Equity and Liability....................................................................................................................5
Answer to Requirement [i].....................................................................................................5
Answer to Requirement [ii]:...................................................................................................6
Answer to Requirement [iii]...................................................................................................7
Cash Flows Statement................................................................................................................8
Answer to Requirement [iv]...................................................................................................8
Answer to Requirement [v]....................................................................................................9
Answer to Requirement [vi]:................................................................................................12
Other Comprehensive Income Statement.................................................................................13
Answer to Requirement [vii]:...............................................................................................13
Answer to Requirement [viii]...............................................................................................13
Answer to Requirement [ix]:................................................................................................14
Answer to Requirement [x]..................................................................................................14
Accounting for Corporate Income Tax....................................................................................15
Answer to Requirement [xi].................................................................................................15
Answer to Requirement [xii]................................................................................................15
Answer to Requirement [xiii]:.............................................................................................16
Answer to Requirement [xiv]...............................................................................................16
Answer to Requirement [xv]................................................................................................17
Answer to Requirement [xvi]...............................................................................................17

3CORPORATE ACCOUNTING
Answer to Requirement [xvii]..............................................................................................17
References:...............................................................................................................................19

4CORPORATE ACCOUNTING
Introduction:
The present report is based on the assessment of financial position of the three ASX
listed companies that are having the business operations in the same industry. For the purpose
of this report, the companies selected here are BHP Billiton, Bluescope Steel Ltd and Boral
Ltd (BHP 2019). All the three companies are from the materials industry listed under the
ASX 100. The report would take into the account the latest financial reports of the three
companies which would also comprise the analysis of the sections such as cash flow
statement, balance sheet and comprehensive income statement and corporate income tax.
BHP Billiton is founded in 1985, is a trading entity in metals and mining having its
headquarter in Melbourne, Australia. BHP Billiton is ranked as ranked as one of the biggest
company in respect of the market capitalization and it is also regarded as the third largest
company of Melbourne’s in terms of revenue generated. BHP merged with Billiton to be
known as the BHP Billiton.
Boral Ltd is the international company that manufactures and supplies the building
and construction materials (Boral 2019). The company is founded in Australia and has its
extensive business operations in US and Asia. The company has around 16,000 employees
that are working across the world in an estimated 700 operating sites. The company has its
headquarter located in Sydney and three operational divisions namely Boral Australia, Boral
North America and Boral USG.
Bluescope Steel Ltd is one of the steel producing company in Australia that has also
has its operations in New Zealand, Pacific Islands, North America and Asia. Bluescope Steel
Ltd demerged from the BHP Billiton and renamed the company as Bluescope Steel in 2003
(Bluescope.com 2019). The company employees approximately 16,000 employees and has its

5CORPORATE ACCOUNTING
headquarter in Melbourne. The major products of the company include the slab, hot rolled
coil, steel plate, galvanised steel and automotive steel.
Equity and Liability
Answer to Requirement [i]
As evident from the financial reports of the three companies each companies has
certain items listed under the heads of Equity in balance sheet.
As evident from the annual report of the BHP Billiton the items listed under the heads
of equity includes the share capital of BHP Billiton Ltd, BHP Billiton Plc, Treasury Shares,
Reserves and Retained Earnings (BHP 2019). Gauging into the annual report of BHP Billiton
the share capital for both the BHP Billiton Ltd and BHP Billiton Plc remained static at $1,186
and $1,057million all through the period of 2016 to 2018. While the reserves for BHP
Billiton represented a declining trend. As evident the reserves for BHP Billiton declined from
$2538 in 2016 to 2290 in 2018. The primary reason for the decline in the reserves is due to
the decline in hedge reserves and share premium reserves. While the retained earnings for
BHP Billiton represented a rising trend as in 2016 the retained earnings stood $49,542 while
in 2018 it increasingly stood at $51,064 mainly because of rise in profits for the company.
For Bluescope Steel Ltd, the three items under the heads of equity include the
contributed equity, reserves and retained earnings. The contributed equity represented a
marginal decline as in 2016 the contributed equity stood $4,668.1 while in 2018 it stood
$4,554.4 (Bluescope.com 2019). The reserve on the other hand stood $224.9 in 2016 while in
2018 it increasingly stood 272.8. The rise in reserve is because of gain in hedging reserve,
foreign exchange translation reserve and share-based payments reserve and non-distributable
profit reserve.

6CORPORATE ACCOUNTING
In context of Boral Ltd, under the heads of Equity the items included the Issued
capital, retained earnings and reserves (Boral 2019). A rise in share capital is witnessed from
2018-18 because Boral has raised more equity shares for its capital requirements.
Simultaneously, the reserves have declined from 2016 to 2017 while in 2018 the reserves
increased to stand at $155.8 million.
Answer to Requirement [ii]:
According to the financial statements of BHP Billiton the company has reported
certain transactions under both the current and non-current liabilities. The current liabilities
include the trade payables, current tax payable, interest bearing liabilities etc while the non-
current liabilities include the trade and other payables, interest bearing liabilities, deferred tax
liabilities and provision (Henderson et al. 2015). A reducing trend is witnessed in the non-
current liabilities for the BHP Billiton since the non-current liabilities in 2016 stood $46,452
while in 2018 it stood $37,334.
As per the annual reports of Bluescope Steel Ltd the items listed under the current
liabilities includes the trade and other payables, borrowings, current tax liabilities, provisions,
derivative financial instrument and deferred income. The current liabilities for the company
stood $2,284 while in 2018 it subsequently increased to $2,608 mainly due to the increased in
trade and other payables and short term provisions.
According to the annual reports of Boral Ltd, the items listed under the current
liabilities stands trade creditors, borrowings, financial liabilities, current tax liabilities,
provisions and liabilities held for the purpose of sales. In 2017 the current liabilities for Boral
ltd increased to $14733.1 from the figures reported in 2016 while in 2018 it fell down to
stand at $995.2. For Boral Ltd, the main items for the non-current liabilities includes the
loans and borrowings, provisions, financial liabilities, employee benefits and other liabilities

7CORPORATE ACCOUNTING
(Warren and Jones 2018). A rise in the non-current liabilities is witnessed in 2016 to 2018 for
Boral.
Answer to Requirement [iii]
The debt to equity ratio is computed by dividing the total liabilities of the company
from its shareholder’s equity (Macve 2015). The ratio is useful in assessing the financial
leverage for the business.
Particulars 2016 ($m) 2017 ($m) 2018 ($m) 2016 ($m) 2017 ($m) 2018 ($m) 2016 ($m) 2017 ($m) 2018 ($m)
Total Liabilities 58882 54280 51323 2294.2 3940.1 3779.5 4163.3 4036.7 4043.4
Total Equity 60071 62726 60670 3506.3 5440.5 5730.8 4985.3 5538.7 6887.6
Debt to Equity Ratio [Total Liabilitis/Total Equity] 0.98 0.87 0.85 0.65 0.72 0.66 0.84 0.73 0.59
BHP Billiton Boral Ltd Bluescope Steel Ltd
2016 2017 2018
0.00
0.20
0.40
0.60
0.80
1.00
1.20
0.98
0.87 0.85
0.65 0.72 0.66
0.84
0.73
0.59
Debt to Equity Ratio
BHP Billiton Boral Ltd Bluescope Steel Ltd
Table 1: Debt to Equity Ratio
(Source: As Created by Author)
As evident from the above stated computed table and figures all the three companies
are using higher section of debt capital beside using their equity capital as the sources of
finance (Dutta and Patatoukas 2016). Out of the three companies it is noticed that Boral Ltd
and BHP Billiton is using higher amount of Debt while the debt to equity ratio for Blusescope
Steel Ltd somewhat stood lower than these two companies. Among the three companies BHP

8CORPORATE ACCOUNTING
Billiton has the highest amount of liabilities whereas Boral Ltd liabilities stood second.
Furthermore, the equity for BHP Billiton stood highest which is followed by the Boral Ltd
and Bluescope Steel Ltd.
Cash Flows Statement
Answer to Requirement [iv]
As per the cash flow statement of BHP Billiton, the central items that forms the part
of the statement is the cash flow from operating activities which includes the profit before
taxation, adjustment for depreciation and amortisation expenses (Weygandt, Kimmel and
Kieso 2015). This also includes the receipts from interest, interest payment and net tax
income tax paid. The net operating cash flows from the company from 2016-18 represented a
rising trend. The cash flow from investing activities included the purchase of property, plant
and equipment, exploration expenses that is included in the operating cash flows. The cash
flow from financing activities in 2016-17 declined while in 2017-18 it increased to stand at
$5,921 million. The items under the net cash flow from financing activities included proceeds
from interest bearing loans, settlement of debt and repayments relating to interest payments.
The cash flow from this activity from the year 2016-18 represented an increase as in 2018 it
amounted to $10,851.
In context of the Bluescope Steel Ltd the main items under the cash flow from
operating activities included the receipts from the customers and payments made to the
suppliers. From the year 2016 to 2018 represented an increasing trend with the cash flow
standing $1,132.4. The net cash from investing activities mainly included the payments for
purchase of subsidiaries, business assets and payments for the purchase of property, plant and
equipment (Trotman and Carson 2018). The cash flow from investing activities in 2016 to
2017 declined while in 2018 it further declined to stand at $380.4 million. Finally, under the

9CORPORATE ACCOUNTING
financing activities the net cash amount of cash flow in 2016 stood $367.9 while in 2017-18
the net cash flow from financing activities increased to stand at $581.5 million.
In context of the Boral ltd the main items of the cash flow from operations included
the receipts received from the customers and interest and payments for the suppliers and
employees, borrowing and acquisition costs (Campbell, Khan and Pierce 2018). The cash
flow from operations in 2016-17 declined while the cash flow from operations declined in
2018. The main items under cash used for investment activities included the purchase of
property, plant and equipment, intangibles and controlled entities, proceeds from the sales of
non-current assets and sale of control entities as well as repayment of loans. The items stated
under the cash flow from financial activities included the payment of dividend, capital
raising, proceeds obtained from the repayment of borrowings. There was a high increase in
cash flow is witnessed in 2017 while in 2018 it declined to stand at $398.2.
Answer to Requirement [v]
BHP Billiton
Particulars 2016 ($m) 2017 ($m) 2018 ($m)
Net Cash from Operating Activities 10625 16804 18461
Net Cash Used in Investing Activities -7245 -4161 -5921
Net Cash Used in Financing Activities 284 -9133 -10891
BHP Billiton

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2016 ($m) 2017 ($m) 2018 ($m)
-15000
-10000
-5000
0
5000
10000
15000
20000
25000
10625
16804 18461
-7245
-4161 -5921
284
-9133 -10891
BHPBilliton
Net Cash from Operating Activities Net Cash Used in Investing Activities
Net Cash Used in Financing Activities
Table 2: Comparison of Heads to Cash Flows of BHP Billiton
(Source: As Created by Author)
As evident from the above stated analysis the net cash flow from the operational
activities for represented a rising trend. The cash flow from investing activities included the
purchase of property, plant and equipment, exploration expenses that is included in the
operating cash flows. Following that the there is an increase in the purchase of property plant
and equipment (Narayanaswamy 2017). The business has used higher amount of cash for the
payment of its dividend to its shareholders and non-controlling interest.
Bluescope Steel Ltd:
Particulars 2016 ($m) 2017 ($m) 2018 ($m)
Net Cash from Operating Activities 952 1132.4 1140.7
Net Cash Used in Investing Activities -1289.5 -408.3 -380.4
Net Cash Used in Financing Activities 367.9 -508.7 -581.5
BlueScope Steel Ltd

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2016 ($m) 2017 ($m) 2018 ($m)
-1500
-1000
-500
0
500
1000
1500
952 1132.4 1140.7
-1289.5
-408.3 -380.4
367.9
-508.7 -581.5
Bluescope Steel ltd
Net Cash from Operating Activities Net Cash Used in Investing Activities
Net Cash Used in Financing Activities
Table 3: Comparison of Heads to Cash Flows of Bluescope Steel Ltd
(Source: As created by Authors)
As evident from the above stated tabular computation, the net cash flow from the
operational activities for Bluescope Steel Ltd declined in 2017-18. The higher amount of has
been incurred by the company for the repayments of borrowing (Chan et al. 2016). Beside
this, an increase in investment in the form of purchase of property plant and equipment is
reported in the cash flow statement. Additionally, a decrease in the cash flow from the
financing activities is mainly due to the repayment of borrowings and buy back of shares.
Boral Ltd:
Particulars 2016 ($m) 2017 ($m) 2018 ($m)
Net Cash from Operating Activities 477.5 413.3 578
Net Cash Used in Investing Activities -259.5 -3731.3 -344.6
Net Cash Used in Financing Activities -273.4 3107 -398.2
Boral Limited