Corporate Accounting Report: Financial Analysis of Rio Tinto Ltd

This report provides a financial analysis of Rio Tinto Ltd, a major player in the mining and metal industry. It begins with an introduction that outlines the assessment's objectives, which include evaluating Rio Tinto's financial statements, comparing its performance to the previous year, and examining its accounting practices. The report then delves into Rio Tinto's core business, detailing its mining and extraction activities, and discusses its position within the competitive mining industry, including its main competitors like Vale and BHP Billiton. The financial structure of Rio Tinto, focusing on its reliance on equity financing, is also examined. The report analyzes Rio Tinto's financial performance, highlighting revenue and profit trends, and concludes that the company's management focuses on profitability and growth. The report uses data from the company's 2018 annual report to support its analysis.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
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Table of Contents
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Introduction
The main purpose of the assessment is to evaluate the financial statement of Rio Tinto ltd
which is one of the leading businesses engaged in mining businesses. The assessment would be
dealing with day to day businesses operations which is undertaken by the management of the
company. The assessment would be making comparisons with previous year performance of the
business and also would be checking for any changes in the accounting policies and practices of
the business. In addition to this, the carrying value of property, plant and equipment would be
identified in the report.
The company which is selected for this assessment is Rio Tinto Ltd which is an Anglo-
Australian company and the company has main operations in the mining and extraction sector in
Australia. The company is also regarded as one of the leading metal businesses operating in
Australia. The headquarters of the company is situated in Melbourne and the company is listed in
both Australian Stock Exchanges and London Stock Exchanges.
Discussion
Core Business of Rio Tinto Ltd
As per the annual report of the company for the year 2018 and also from reviewing the
overview of the business, it can be said that the core business of company is engaged in mining
and metal business. Some of the important mineral based products which is offered by the
business are uranium, iron ore, aluminium, copper, coal and diamonds. The core activities of the
business are associated with mining and extraction of such minerals. The company also conducts
secondary activities such as refining activities which includes for products like bauxite and iron
ores.

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Competitor and Industry Conditions
The business of Rio Tinto belongs to the mining and metal industry as the primary
activities of the business is engaged in extraction and acquisition of minerals. The business
environment in the country is quite favorable as the business of Rio Tinto ltd is thriving in the
market. The Australian mining industry in overall has set a new record in 2018 in terms of
production and sales revenue. The Australian mining industry exported resources significantly
which included minerals, metals and petroleum and the same generated $248 billion in revenue
for the years. This shows that the market is highly favourable for business. This shows that there
is widespread opportunity to pursue growth in the market.
As per the industry status of Mining business, all looks favorable which is the main
reason that the level of competition in the market is intense. The main competitors of Rio Tinto
Ltd which can be identified are Vale, BHP Billiton ltd, Glencore. Vale is considered to be the
closest rival of Rio Tinto ltd in terms of production and revenue generating capabilities. Vale is
also considered to be the largest producer of iron ore in the world. In the same BHP Billiton has
a strong financial backlog and has widespread operations in the market.
Financial Structure of Rio Tinto Ltd
The annual report of the company for the year 2018 shows that the management of the
company is more dependent on the use of equity sources for the purpose of financing the
activities of the business. The annual report of the business also shows that the business has a
US$ 27,025 million which is also more than the debt capital which is used by the business and
the same can also be used for the purpose of financing the activities of the business. The
company also has a significant amount of debt capital which is included in the capital structure
mix of the business and the same is shown to be $ 12,847 million. In an overall estimation, it can

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be said that the management of the company mainly relies on internal sources of finance for the
purpose of financing the activities of the business.
The management of the company is relying more of internal source of finances which is
evident from the financial statement of the business. The management of the company uses
retained earnings and equity capital mainly for meeting the financial obligations of the business.
The application of more equity-based capital in the capital structure of the may also be a sign
that the management if the company is trying to reduce the overall risks which the business
might face if the management of the company decides to use debt capital in the capital mix of the
business.
Financial Performance of Rio Tinto Ltd
The annual reports of the Rio Tinto ltd for the year 2018 is shown to be effectively
prepared considering all relevant accounting standards and principles applicable to the business.
The sales revenue which is generated by the business has sli8ghtly increased in comparison to
previous year which also shows that the profits of the business has also increased. This shows
that the management of the company is trying to reduce the costs of the business with a view or
enhance the profits which is generated by the business during the period. The sales revenue of
the business for the year 2018 is shown to be US$ 40,522 million and the same was US$ 40,030
million which is shown in 2017. This shows that the management of the company is focusing on
profitability of the business as it is clearly evident from the financial statements of the business.
The increase in operating profits of the business is a sign that the operational efficiency of the
business is appropriate and the operating profit of the business and the overall net profit which is
generated by the business also shows a significant increase which is a positive factor for the
business. The increase in the profitability of the business also suggest that the management of the

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company is focusing on growth and is also focusing on increasing the sales revenue and profits
of the business. The net profit of the business is shown to be US 13,925 million during the period
which shows significant growth in the business in comparison to previous year.