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BHP Billiton Ltd  (NYSE:BHP) Financial Strength: 6 (As of Dec. 2016)

BHP Billiton Ltd has the Financial Strength Rank of 6.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.

BHP Billiton Ltd's Interest Coverage for the quarter that ended in Dec. 2016 was 11.99. BHP Billiton Ltd's debt to revenue ratio for the quarter that ended in Dec. 2016 was 1.81. As of today, BHP Billiton Ltd's Altman Z-Score is 2.43.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

BHP Billiton Ltd Annual Data

Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Jun17
Financial Strength Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.00 0.00 0.00 0.00 0.00

BHP Billiton Ltd Semi-Annual Data

Dec07 Jun08 Dec08 Jun09 Dec09 Jun10 Dec10 Jun11 Dec11 Jun12 Dec12 Jun13 Dec13 Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 Jun17
Financial Strength Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.00 0.00 0.00 0.00 0.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

BHP Billiton Ltd's Interest Expense for the months ended in Dec. 2016 was $-505 Mil. Its Operating Income for the months ended in Dec. 2016 was $6,057 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Dec. 2016 was $30,670 Mil.

BHP Billiton Ltd's Interest Coverage for the quarter that ended in Dec. 2016 is

Interest Coverage=-1*Operating Income (Q: Dec. 2016 )/Interest Expense (Q: Dec. 2016 )
=-1*6057/-505
=11.99

The higher the ratio, the stronger the company's financial strength is.

2. Debt to revenue ratio. The lower, the better.

BHP Billiton Ltd's Debt to Revenue Ratio for the quarter that ended in Dec. 2016 is

Debt to Revenue Ratio=Total Debt (Q: Dec. 2016 ) / Revenue (Q: Dec. 2016 )
=(Current Portion of Long-Term Debt + Long-Term Debt & Capital Lease Obligation) / Revenue
=(3374 + 30670) / 18796
=1.81

3. Altman Z-Score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.

BHP Billiton Ltd has a Z-score of 2.43, indicating it is in Grey Zones. This implies that BHP Billiton Ltd is in some kind of financial stress. If it is below 1.81, the company may faces bankrupcy risk.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

BHP Billiton Ltd has the Financial Strength Rank of 6.


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