Bhp Billiton - Rio Tinto

In: Business and Management

Submitted By anishq20
Words 2721
Pages 11
EXECUTIVE SUMMARY

The report aim’s to examine the annual reports of Australia’s two largest mining companies BHP Billiton and Rio Tinto and analyse their cash flow statements. The analysis requires evaluating the cash flow performance of these companies during the global financial crisis 2007- 2009.The global financial crises were originated in US because of the bloom/bubble in the housing prices. During global financial crisis many financial institutions failed to recoup their money from lenders and finally ended up declaring bankruptcy.

The purpose of the cash flow statements is to provide information about the changes to an entity’s cash and cash equivalents over certain period of time. The cash flow from operating activities of the both companies shows both positive and negative signs as the companies were going through recession. Whereas both companies used external and equity source financing and thus made an efficient cost effective decisions from which BHP Billiton benefited the most.

Finally it’s concluded that the both companies were successful in overcoming global financial crisis and alternative strategies affecting the profitability of the companies were presented.

Introduction

Last three years has faced the worst global financial crisis after the great depression of 1929-1933. The origin of global financial crisis was mainly in US starting from mid 2000’s and taking the whole world into account by the end of 2007. The main reason of the crisis was unsecured lending and then the failure of recovering it back. The purpose of this report is analysis the working capital and liquidity problems faced by two giant mining companies i.e. BHP Billiton and Rio Tinto of Australia.
Background

BHP Billiton is Australia’s largest Iron Ore producer with all the modern facilities located in Western Australia. It exports its products to…...

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