Comprehensive Financial Analysis Report: BHP Billiton (2017-2018)

This report presents a financial analysis of BHP Billiton, examining its performance from 2017 to 2018. It evaluates key financial metrics such as profitability ratios (net income, gross profit), liquidity ratios (current and quick ratios), and cash management. The analysis highlights trends in revenue, operating costs, and net income, noting the impact of economic crises like fluctuating currency and recession. The report also includes market analysis, competitor analysis (Rio Tinto, Vale, Alcoa), and the company's market size in Australia. It concludes with recommendations for strategic improvements, focusing on cost reduction and strengthening shareholder relations. The report references BHP Billiton's annual reports, CSI Market, IBIS World, and other sources to support its findings.

Executive Summary
In this report, the discussion is made on the financial analysis of the organisation. For this, BHP Billiton has been taken into consideration to
evaluate the financial position of an organisation. BHP Billiton is a mining company of metals and petroleum dual-listed company. The
financial ratio’s has been evaluated to analyse the financial position of the company. The operating cost of the organisation is affected due to
economic crises such as fluctuating currency, and recession period. As per the market analysis, the company allocation amount is decreases
due to falling down the profit. The company has to build the strong relation with
shareholders to improve the performances.
2017 2018
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
Return on
Equity
Return on
Assets
Profit Margin
Gross Profit
Margin
Liquidity Ratio
Liquidity Ratio is the financial ratio that depicts the current asset of an organisation in order to meet the obligations. It is observed that the
ability of the company to pay all the obligations is increases as the current asset amount is large as compare to the current liabilities. It has
been evaluated that the current asset of the company is 21056 in the year 2017 and it is increases to 35130 in the year 2018 respectively
(BHP Billiton, 2018).
2017 2018
0
1
2
3
Current
Ratio
Quick Ratio
Cash Management
Cash flow ratio of the organisation indicates the inflow and outflow of cash in the organisation. According to ratio evaluation, the amount of
operating activities is evaluated in the year 2017 it is 16804 and in the year 2018, it is 18461(BHP Billiton, 2018). The ratio of cash return
equity reflects that the amount of return to owners on their equity. The company cash return ratio depicts that the company has the capacity
to pay’s the owner’s equity from 7.49 to 8.23 in the year 2017 to 2018 respectively.
Net cash provided by operating
activities 16804 18461
Operating cash flow 16804 18461
Profitability Ratio
Profitability Ratio is the financial metrics which helps to
measure the ability of an organisation to generate revenue,
assets and shareholders’ equity. As per the above evaluation,
it has been seen that the organisation amount of net income is
increases from the year 2017 to 2018 with the amount of
21269 and 26434 respectively (BHP Billiton, 2018). The net
sales of the organisation are increases but the net income of
the company is decreases due to high cost consuming on the
different activities.
2017-06 2018-06
Revenue 38285 43638
Gross profit 21269 26434
Net income 5890 3705
Net income available to common shareholders 5890 3705
Liquidity Ratio
Current Ratio
1.85 2.51
Quick Ratio
1.50 1.36

2017
2018
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Dividend
Pay Out
Earning
Per share
(Source: IBIS World, 2019)
Market Analysis
Market analysis reflects the size in the market in terms
of shares price. Earnings per share and dividend pay-
out are the ratio which is evaluated to measure the
company performance in the market. The ratio of
earning per share is decreases that mean allocated
profit amount is distributed to each outstanding share
and its common stock.
Non-Financial Information
Competitor analysis
There are many companies compete the BHP
Billiton providing the similar services such as Rio
Tinto, Vale, Alcoa and many others. Rio Tinto is
the main competitors who compete the company
in terms of revenue and customer preferences.
Market Size
Australia has a large supply of mineral,
hydrocarbon and non-mineral reserves. The
export and import of minerals earn 78% of
revenue in the year 2018-19. The annual growth
of the market is 2.4% and it is expected that the
market will grow with the high rate.
Economic Crises
 In the recent financial crises
of recession, the oil prices
were fall down due to
which the company suffer
with the loss. But after the
recovery of crises in the
year 2009, the demand oil is
increases. But due to
fluctuation in the prices of
petroleum, the demands of
consumers are affected.
Conclusion
At the end, it is concluded that the organisation has to implement some changes and strategies. It has
been seen that the company financial performance is decreases due to which the allocation amount of
profit to shareholders are also falls down. The company has to reduce the expenses so that the profit
amount is increases and it distributes the effective amount of profit. The company has to build the
strong relation with its shareholders and also promise them to give the high profit amount.

References
BHP Billiton. (2018). Annual Report 2018. Retrieved from:
https://www.bhp.com/-/media/documents/investors/annual-reports/2018/
bhpannualreport2018.pdf?la=en
CSI Market. (2018). Bhp Group Ltd's Comment on Sales, Marketing and Customers.
Retrieved from: https://csimarket.com/stocks/markets_glance.php?code=BHP
Dunn, M. (2009) Recession fears as economy hits lowest level since 2009 global financial
crisis. Retrieved from: https://finance.nine.com.au/personal-finance/australian-
recession-2019-economy-slowed-to-weakest-level-since-2009-global-financial-
crisis/9282fe6c-b394-40d2-ab83-39add2e099d5
IBIS World. (2019). Mining - Australia Market Research Report. Retrieved from:
https://www.ibisworld.com.au/industry-trends/market-research-reports/mining/
mining.html
Owler. (2018). BHP's Competitors, Revenue, Number of Employees, Funding and
Acquisitions. Retrieved from: https://www.owler.com/company/bhpbillitonplc