Executive summary The report consists of three major parts, which are firstly divided into providing background information of ROI Tint and its biggest competitors BP and Vale in the mining industry. A SOOT-analysis takes into consideration the external factors of the market as well as the internal factors which may have an impact on the financial statements of ROI Tint. Secondly, the main purpose of this paper is to compare ROI Tint’s financial ratios to its biggest competitor BP. Investors may consider them as good predictors of failures or advantages in the business and may predict if a many can survive in the future.
The results illustrated in this paper, show that there are some differences between the two companies in running their business. In particular with regard to debt-utilization, profitability, asset-utilization and liquidity between the years 2011 and 2013. Despite the external influences, ROI Tint is still in a good position against its competitors, but they should seek for better methods to generate higher profits and revenues. Finally, after analyzing all the indicators of ROI Tint and it competitor BP, recommendations for investors are provided whether to invest the company or not.
Price earnings ratio 16 7. Summary table for ratios and comments 17 8. Recommendation 17 9. Conclusion 18 Appendix: 18 References:20 1. Introduction The mining industry is an important sector of the Australian economy. They recover around $121 billion every year to the Australian economy. $138 are generated annually through export which covers more than 50% of total goods and services (Mining Australia 2013). It also employs around 180,000 people directly and a further 600,000 in assisting industries across the country. Existing companies in the mining industry have a good position in this business sector.
Essentially five organizations are generating enough money to part finance half of the national budget. The biggest market leaders are BP Billion, ROI Tint, Woodside petroleum, Newsiest and Strata (CFML National 2013). To make the right investment decisions, it is necessary to know about the company’s financial situation and the growth possibilities such as the capability of a company to pay its duties, the assessment of the company’s success. In total, financial ratios provide indicators to investors whether to invest in a company or not.
The following ratios can help to generate appropriate data to make an assumption if it is a good decision to invest in ROI Tint Ltd. ROI Tint (ART) is a multinational mining company which combines ROI Tint -ELSE, -PL, – NYSE and -Ltd. (listed in Australian Security exchange). The headquarter is located in the I-J (ROI Tint 2014). The business contains researching, mining and improving mineral assets. Although ROI Tint is widespread all over the world, it is mainly represented by Australia and the United Kingdom.
ROI Tint aligns its strategy to sustainability which works along the stages of investigation, throughout their resource productivity, until the finishing and rebuilding stage. The management separates the organization from other competitive companies, through significant rises in profits. Most of the main operations are held at low costs, long-term and reliable due to the high-quality of the resources. This created not only value to the shareholders but also to the stakeholders, through new technological innovations and different acquisition policies (ROI Tint Annual Report 2013).
ROI Tint’s strongest competitors are BP Billion Ltd. And Vale. Together with ROI Tint they hold 65 per cent of the entire iron ore section (Mining Australia 2013). BP Billion Restricted (BP) has the most diversified portfolio of high quality resources in the entire world. All companies have in common the generation and dissemination of minerals and their products, but BP is the only company which focuses also strongly on petroleum. Therefore BP has a competitive advantage against rising costs, which have in total a negative effect on the companies’ earnings (BP Annual report 2013).
Contrastingly Vale is the second biggest mining company on the planet, likewise Vale represents to be the world’s largest producer iron mineral and -pellets. Logistic ramekins such as railroads, airports and harbors in Brazil are another big operating factor. Also several Joint-ventures gives the company the opportunity to invest in steel and energy sections. Vale also operates in different countries than ROI Tint and BP do that gives them another competitive advantage. (Vale Annual Report 2013). 3.
SOOT-Analysts of ROI Tint Due to recent announcements in the mining industry and changes throughout the globe, a SOOT-Analysis provides ROI Tint with supporting information and data of which problems can arise and how the position of the company can be strengthen. 1. Foreign exchange rate risk ROI Tint is operating around the entire world mainly in Asia, Africa and North America, hence earnings and cash flows are affected by many currencies. Operating expenses are impacted by the local currencies of those nations where the company’s mines and plants are placed.
Additionally by those currencies in which the expenses of foreign gear and administration are established (ROI Tint 2013). Therefore the company has to provide its financial statements and positions in a uniform currency, in this case in United States dollars. However this contains many risks in the foreign exchange rate, accrued from variances of foreign currencies in connection to the US dollar. A reduction of the US dollar will influence the recorded results of the organization and may likewise influence the estimation of the company’s assets and liabilities.