Facts:

An accountant is responsible for providing high level financial advice to their clients. The mining boom in Western Australia gave accountants the opportunity to assist within this lucrative industry specifically for corporations that mine and produce iron ore. Iron ore mining in Western Australia has accounted for a large proportion of the total value of the state’s resource production within recent years, specifically from the Chinese market, and has therefore been vital for the state’s economy.

Three large iron ore companies within Australia include:

Rio Tinto

ASX code: RIO

Website: https://www.riotinto.com/australia9559.aspx?utm_source=adwords&utm_medium=search&utm_campaign=brand_2019

BHP

ASX code: BHP

Website: https://www.bhp.com/

Fortescue Metals Group

ASX Code: FMG

Website: https://www.fmgl.com.au/

You have just formed a small firm of Accounting Partners (4 partners). You have been approached by Lewis Investments who are looking to invest $100 million in an Australian listed iron ore producer and you have short listed the following 3 companies as potential investments: Rio, BHP and Fortescue.

Utilise the company websites, annual reports, relevant media information, financial information from www.reuters.com, your text book and any other relevant sources to prepare a referenced report to substantiate your recommendation.

The report must include the following with each section (underlined) starting on a new page: 

Report Introduction and purpose

For each of the three companies:

1. Business descriptions

Describe the businesses.

2. Relevant and recent media commentary

Find relevant newspaper or other media references and list cited facts as to why this information is important in the context of the report requirements.

3. Ratio comparison and brief reasoning:

Using Reuters (www.reuters.com) choose the two best ratios to represent:

a. Profitability

b. Efficiency

c. Liquidity

d. Gearing

Get the ratios for the last 3 years (year ending 2016, 2017, 2018) and comment briefly as to why these are the best ratios for the category. Use the following format:

4. Additional ratios

Calculate additional ratios that are relevant and are not listed in the Reuter’s website.

Discuss why you have included these other ratios.

5. Analysis

Analyse the trend and discuss the ratios in the context of the report requirements.

6. Final recommendation

Format: Adherence to instructions, adequate referencing and sources