The conclusion will be description and reasons for the company chosen to invest.
In this paper I have chosen Prudential and BHP Billiton as two multinationals from FTSE 100 firms. I have chosen these companies because they are very reputable in their industries and I want to use investment analysis to compare and to make an investment decision based on this analysis.
Prudential is an international financial services group providing retail financial products and services including insurance, fund management and banking products. The company primarily operates in the UK. It is headquartered in London, the UK. Prudential is a holding company. Through its subsidiaries, Co. is engaged in the provision of financial services in the U.K., the U.S. and Asia. Co. operates through five brand names: Prudential, M&G, Egg plc, Jackson National Life and Prudential Corporation Asia. Prudential is a life and pensions providers provider in the United Kingdom. The group recorded revenues of 41,125 million during the fiscal year ended December 2005, an increase of 21.3% over 2004. The net profit was 760 million in fiscal year 2005, an increase of 47.3% over 2004. (Prudential, 2006)
BHP Billiton is the world's largest resources group primarily engaged in mineral exploration and production. The group's primary focus areas include carbon steel raw materials, energy coal, nickel, copper concentrate, petroleum and diamonds. It operates globally with more than 100 operating bases in 25 countries. BHP Billiton is a 'dual listed company' comprising BHP Billiton Limited and BHP Billiton Plc. The two entities continue to exist as separate companies, but operate as a combined group known as BHP Billiton. (Billiton, 2006)
The global headquarters of the combined BHP Billiton Group are located in Melbourne, Australia. The group employs about 37,000 people. (Billiton, 2006) The group recorded revenues of $32,153 million during the fiscal year ended June 2006, an increase of 20.3% over 2005. The operating profit of the group was $14,671 million during fiscal year 2006, an increase of 58.2% over 2005. The net profit was $10,534 million in fiscal year 2006, an increase of 58.9% over 2005. (Billiton, 2006)
Assumptions and Analysis Method
In my perspective to do investment analysis on the assumption that the past will not be predictive and the market can over or under value shares as markets are weak in efficiency and in my view I don't belief in technical analysis because share prices cannot be predictive at least in the short-run and I don't believe efficient market hypothesis that market will incorporate all information on a timely basis because of asymmetric information and there fore I don't believe in Efficient market hypothesis.
Therefore, I apply fundamental analysis of these companies in determining in comparing capital structure and in the analysis of determining which is a better buy given the specific factors and financial viability and strength of these companies and risk profile to make an investment decision.
Methodology of Analysis of Fundamental Analysis
The fundamental analysis uses the financial and other information to determine a firms strength in operational and