Dr. Feng wants to invest in the Australian mining sector. The following list of companies has been provided to you in order to evaluate whether these companies appear to be in financial difficulties and which company is the best investment option. Please provide a brief summary about the financial status of each of the companies and provide a recommendation for the investment choice. Justify your recommendations. 1). BHP Group Ltd Current ratio in 6/2016 = 1.44 times (or 1.44:1) Current ratio in 6/2017 = 1.85 times (or 1.85:1) Current ratio in 6/2018 = 2.51 times (or 2.51:1) Current ratio in 6/2019 = 1.89 times (or 1.89:1) Current ratio in 6/2020 = 1.45 times (or 1.45:1) ROCE in 6/2016 = 21.2% ROCE in 6/2017 = 26.7% ROCE in 6/2018 = 40.4% ROCE in 6/2019 = 42.1% ROCE in 6/2020 = 37.6% Z-score in 2018 = 2.69 Z-score in 2019 = 2.77 Z-score in 2020 =2.39 2). Rio Tinto Ltd Current ratio in 12/2016 = 1.61 times (or 1.61:1) Current ratio in 12/2017 = 1.71 times (or 1.71:1) Current ratio in 12/2018 = 1.98 times (or 1.98:1) Current ratio in 12/2019 = 1.56 times (or 1.56:1) Current ratio in 12/2020 = 1.80 times (or 1.80:1) ROCE in 12/2016 = 14.8% ROCE in 12/2017 = 23.9% ROCE in 12/2018 = 27.2% ROCE in 12/2019 = 32.3% ROCE in 12/2020 = 32.4% Z-score in 2018 = 1.76 Z-score in 2019 = 1.91 Z-score in 2020 = 1.98 3). Fortescue Metals Group Ltd Current ratio in 6/2016 = 1.48 times (or 1.48:1) Current ratio in 6/2017 = 1.18 times (or 1.18:1) Current ratio in 6/2018 = 1.33 times (or 1.33:1) Current ratio in 6/2019 = 1.37 times (or 1.37:1) Current ratio in 6/2020 = 2.25 times (or 2.25:1) ROCE in 6/2016 = 18.9% ROCE in 6/2017 = 40.6% ROCE in 6/2018 = 22.8% ROCE in 6/2019 = 62.9% ROCE in 6/2020 = 80.5% Z-score in 2018 = 2.16 Z-score in 2019 = 3.32 Z-score in 2020 = 4.15
Dr. Feng wants to invest in the Australian mining sector. The following list of companies has been provided to you in order to evaluate whether these companies appear to be in financial difficulties and which company is the best investment option. Please provide a brief summary about the financial status of each of the companies and provide a recommendation for the investment choice. Justify your recommendations.
1). BHP Group Ltd
Current ratio in 6/2016 = 1.44 times (or 1.44:1)
Current ratio in 6/2017 = 1.85 times (or 1.85:1)
Current ratio in 6/2018 = 2.51 times (or 2.51:1)
Current ratio in 6/2019 = 1.89 times (or 1.89:1)
Current ratio in 6/2020 = 1.45 times (or 1.45:1)
ROCE in 6/2016 = 21.2%
ROCE in 6/2017 = 26.7%
ROCE in 6/2018 = 40.4%
ROCE in 6/2019 = 42.1%
ROCE in 6/2020 = 37.6%
Z-score in 2018 = 2.69
Z-score in 2019 = 2.77
Z-score in 2020 =2.39
2). Rio Tinto Ltd
Current ratio in 12/2016 = 1.61 times (or 1.61:1)
Current ratio in 12/2017 = 1.71 times (or 1.71:1)
Current ratio in 12/2018 = 1.98 times (or 1.98:1)
Current ratio in 12/2019 = 1.56 times (or 1.56:1)
Current ratio in 12/2020 = 1.80 times (or 1.80:1)
ROCE in 12/2016 = 14.8%
ROCE in 12/2017 = 23.9%
ROCE in 12/2018 = 27.2%
ROCE in 12/2019 = 32.3%
ROCE in 12/2020 = 32.4%
Z-score in 2018 = 1.76
Z-score in 2019 = 1.91
Z-score in 2020 = 1.98
3). Fortescue Metals Group Ltd
Current ratio in 6/2016 = 1.48 times (or 1.48:1)
Current ratio in 6/2017 = 1.18 times (or 1.18:1)
Current ratio in 6/2018 = 1.33 times (or 1.33:1)
Current ratio in 6/2019 = 1.37 times (or 1.37:1)
Current ratio in 6/2020 = 2.25 times (or 2.25:1)
ROCE in 6/2016 = 18.9%
ROCE in 6/2017 = 40.6%
ROCE in 6/2018 = 22.8%
ROCE in 6/2019 = 62.9%
ROCE in 6/2020 = 80.5%
Z-score in 2018 = 2.16
Z-score in 2019 = 3.32
Z-score in 2020 = 4.15
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