Rin Tinto Group: Annual Report

Rio Tinto is a global and diversified miner and is divided into five product groups (Rio Tinto, 2012). And according to Rio Tinto (2012), they are the aluminium product group, the copper product group, the diamonds & minerals product group, the energy product group as well as the iron ore product group. According to the chairman of the company, Rio Tinto has got a good grade in 2011, despite the lasting economic crisis and fluctuation of the world (Rio Tinto, 2012). Moreover, from the chief executive’s statement, it can be found that the company has set up a clear objective that aims to control cost and increase productivity. The following article analyses some financial and non-financial issues to decide whether or not to invest the company.

Here is a table about the financial situation of Rio Tinto.
Figure 1: Key Financial Data of Rio Tinto (2010-2011) Year
Item
| 2010 / US$ million | 2011 / US$ million | Net profit before tax | 20,491 | 13,214 | Net profit after tax | 15,098 | 6,765 | Total comprehensive income | 16,492 | 4,365 | Sales | 59,214 | 65,622 | Total assets | 112,773 | 119,545 | Current assets | 21,459 | 21,898 | Current liabilities | -12,876 | -14,966 | Cash flow from operating activities | 23,530 | 27,388 | Net cash flow from operating activities | 18,277 | 20,030 |
(Sources: <http://www.riotinto.com/annualreport2011/pdf/rio_tinto_2011_annual_report.pdf >)

The table above includes many financial data which can be used to analyze the financial situation of the miner. Firstly, net profit before tax compared to sales and total assets changed respectively from 34.6% to 20.1% and 18.2% to 11.1% from 2010 to 2011, those ratios all decreased sharply and mean that the net profit margin and return on total assets all fell substantially. As a result, total comprehensive income that consists of net income and other items bypassing the net income rather than net profit is more suitable for investors to take into account