Investment Analysis- BHP Billiton

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Table of Contents

1. Company Overview.. 3
2. Corporate Governance Analysis of BHP Billiton. 3
3. Economic Analysis. 6
4. Industry Analysis. 9

3.1 SWOT Analysis of a Company in Oil and Gas Industry. 10

3.2 PESTLE Analysis of Oil and Gas industry. 12

3.3 Porter’s 5 Forces Model in Oil and Gas Industry. 14

5. Risk and Return. 15

External Risk. 15

Exchange Rate Risk. 16

Business Risks. 16

Financial Risk. 16

Required Rate of Return. 17

Weighted Average Cost of Capital 17

6. The Capital Structure Choices of BHP Billiton. 18
7. Dividend Policy. 19
8. Ratio Analysis of BHP Billiton PLC. 22

Profitability Ratios. 22

Dupont Analysis. 23

Liquidity Ratios. 24

Efficiency Ratios. 24

Leverage Ratios. 25

Market Value Ratios. 26

Summarized Findings from Ratios. 27

Stock Valuation. 27

Dividend Discount Model 28

Discounted Cash Flow Approach. 29

Market Multiples Approach. 31

Conclusion and Recommendation. 32

References. 33

Investment Analysis

1.    Company Overview

Investment Analysis:BHP Billiton is an Anglo-Australian multinational company with its headquarters located jointly in Melbourne, Australia and London, United Kingdom. Investment Analysis It is one of the world’s leading firms which is primarily engaged in the production of commodities and minerals such as coal, iron ore, copper, uranium, aluminum, manganese, oil and gas. BHP Billiton extracts and process minerals and commodities from its various operational production sites which are…