Financial Statement Analysis Case Case 1: BHP Billiton BHP Billiton (GBR) is the world’s largest diversified natural resources company. The company extracts and processes minerals, oil, and gas from its production operations located primarily in Australia, the Americas, and southern Africa. BHP Billiton sells its products globally, with sales and marketing taking place through its principal hubs of The Hague and Singapore. Presented below are some basic facts for BHP Billiton.

Instructions

(a) What are some of the reasons that management purchases its own shares?

(b) Explain how earnings per share might be affected by treasury share transactions.

(c) Calculate the ratio of debt to assets for 2012 and 2013, and discuss the implications of the change.
Case 2: Jinpain International Ltd.
The following note related to equity was reported in Jinpain International’s (CHN) annual report.
On February 1, the Board of Directors declared a 2-for-1 share split, distributed on February 25 to shareholders of record on February 10. Accordingly, all numbers of common (ordinary) shares, except unissued shares and treasury shares, and all per share data have been restated to reflect this share split.
Instructions

(a) What is the significance of the date of record and the date of distribution?

(b) Why might Jinpain have declared a 2-for-1 for share split?

(c) What impact does Jinpain’s share split have on (1) total equity, (2) total par value, (3) outstanding shares, and (4) book value per share?

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Billiton (in thousands) Sales Net earnings Total assets Total liabilities Share capital Reserves 2013 $ 65,986 11,075 138,109 2012 $ 72,226 15,532 129,273 66,074 62,188 2,255 2,255 1,970 1,912 Retained earnings 66,979 62,236 Treasury shares (540) (533) Number of shares outstanding (millions) 5,322 5,323