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PSO AND SHELL RATIO ANALYSIS

ITS ABOUT THE RATIO ANALYSIS OF SHELL AND PSO

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PSO AND SHELL RATIO ANALYSIS

  1. 1. 1
  2. 2. SAFIULLAH AWAN Group Members MUHAMMAD SULEMAN TARIQ OZAIR IJAZ KIYANI SALMAN AHMAD UMER TAHIR KHAN MUHAMMAD ZULQARNAIN SAHIBZADA USAMA SAEED 2
  3. 3. Ratio Analysis Of PSO & SHELL 3
  4. 4. Company Profile PAKISTAN STATE OIL{PSO}: Pakistan State Oil is a Karachi-based Pakistani state-owned multinational petroleum corporation involved in marketing and distribution of petroleum products. It has a network of 3,689 filling stations, out of which 3,500 outlets serve the retail sector and 189 outlets serve bulk customers. 4
  5. 5.  It controls a market share of over 60% of the total oil market with customer portfolio including dealers, government agencies, autonomous bodies, independent power projects and other corporate customers. It is involved in import, storage, distribution and marketing of a range of petroleum products including gasoline, diesel, fuel oil, jet fuel, LPG, CNG and petrochemicals. 5
  6. 6. It was founded on December 30, 1976, after Pakistan's government took over the management of Pakistan National Oil (PNO) and Dawood Petroleum Limited and renamed into POCL (Premier Oil Company Limited) under marketing of Petroleum Products. PSO is the first public company in Pakistan to pass the PKR 1 trillion revenue mark. 6
  7. 7. Its primary listing is on the Karachi Stock Exchange and it is a constituent of the KSE-30 Index. PSO has been named among the Forbes Global 2000 continuously over the years. Its revenues in 2014 stood at PKR 1,410 billion ($ 14 billion) and after-tax profit stood at PKR 21.8 billion ($ 210 million). The company's market capitalization is greater than PKR 100 billion. 7
  8. 8. COMPANY PROFILE SHELL PAKISTAN LIMITED: Shell Pakistan Limited (SPL) is a subsidiary of Royal Dutch Shell Plc and has been in South Asia for over 100 years. Shell’s flagship business in Pakistan is the downstream retail marketing company, Shell Pakistan Limited, which has interests in downstream businesses including retail, lubricants and aviation. 8
  9. 9. • Shell Pakistan has a primary listing on Karachi Stock Exchange. It is also listed on Lahore and Islamabad Stock Exchange. • SPL is the largest lubricant marketing company in Pakistan with over 20% share of the total lubricant market in the country. SPL’s lubricant business is the second most profitable within Shell’s Global Lubricant portfolio.[citation needed] The business is focused on sales of key Shell brands (Rimula, Helix & Advance) to high street traders and the transportation sector as well as heavy-duty brands to industrial customers and power sector customers. 9
  10. 10. The company is the largest international marketer of oil products with 850+ retail stations and 17% market share in white oil products, supplied by 7 depots across the country. Aviation is the second largest provider of jet fuels and is present at five airfields. From 2008 to 2010, Shell made a significant investment to implement Global SAP in Pakistan to upgrade its systems and processes for increased customer services. 10
  11. 11. VISION STATEMENT PSO • To excel in delivering value to customers as an innovative and dynamic energy company that gets to the future first. 11
  12. 12. VISION STATEMENT of SHELL • To be the Top Performing and Most Admired Refinery in Asia. 12
  13. 13. WHAT IS RATIO ANALYSIS • A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. 13
  14. 14. SIGINFICANCE OF RATIO ANALYSIS  Simplifies Accounting Figures  Measures Liquidity Position  Measures Long-term Solvency  Measures operational Efficiency  Measures Profitability  Facilities Inter-firm and Intra-firm comparisons  Trend Analysis 14
  15. 15. LIMITATIONS  Different companies operate in different industries each having different environmental conditions such as regulation, market structure, etc. Such factors are so significant that a comparison of two companies from different industries might be misleading.  Financial accounting information is affected by estimates and assumptions. Accounting standards allow different accounting policies, which impairs comparability and hence ratio analysis is less useful in such situations.  Ratio analysis explains relationships between past information while users are more concerned about current and future information. 15
  16. 16. 16
  17. 17. CURRENT RATIO The current ratio determines the company’s ability to pay back its short- term debts by using its short-term assets such as cash, inventories, and receivables. Current Ratio= Current Assets Current Liabilities 17
  18. 18. 0.85 1.08 0 0.2 0.4 0.6 0.8 1 1.2 PSO SHELL Current Ratio SHELL PSO PSO Shell Rs =313,514,125/288,346,263 1.08 Rs 27,724,683/ 32,642,090 =0.85 18
  19. 19. QUICK RATIO • It establishes relationship between liquid assets and current liabilities. Inventory is removed from Current assets. So it is a measure of firms ability to pay off short term obligations without relying on the sale of inventories. Quick Ratio= Current Assets – stock in trade*/Current Liabilities *(Inventory = Stock in trade) 19
  20. 20. PSO SHELL RS 313514125- 86297218/288346263 =227216907/288346263 = 0.78 RS 27,724,683- 13,086,285/32,642,090 = 0.45 0.45 0.78 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 PSO SHELL Quick Ratio SHELL PSO 20
  21. 21. RECEIVABLE ACTIVITIES • This ratio provides insight into the quality of the firm’s receivables and how successful firm is in its collection. • Receivable Activities = Net Revenue / Trade Debts • (Accounts Receivables = Trade Debts) • (Annual Sales = Net Revenue) 21
  22. 22. 19 7 0 2 4 6 8 10 12 14 16 18 20 PSO SHELL Receivable Activities SHELL PSO PSO Shell RS 1187639316/175386168 6.77 TIMES RS 250,784,741/13,086,285 19 TIMES 22
  23. 23. AVERAGE COLLECTION PERIOD (RECIEVEABLE TURNOVER IN DAYS ) • It is used to evaluate the firm’s ability to collect its credit sales in timely manner and the figure tells us the average numbers of days that receivables are outstanding before being collected. ACP =TRADE DEBT* Days in Year /NET REVENUE 23
  24. 24. 19 54 0 10 20 30 40 50 60 PSO SHELL Average Collection Period in days SHELL PSO PSO Shell RS 175386168X365/1187639316 =53.9 DAYS RS 13,086,285 X 365 / 250,784,741 24
  25. 25. ACCOUNTS PAYABLE TURNOVER IN DAYS • A short-term liquidity measure used to quantify the rate at which a company pays off its suppliers. Accounts payable turnover ratio is calculated by taking the total purchases made from suppliers and dividing it by the average accounts payable amount during the same period. • PAYABLE TURNOVER IN DAYS = ACCOUNTS PAYABLE * DAYS IN YEAR (CGS + STOCK IN TRADE) 25
  26. 26. 26 PSO Shell 194008480x365/{86297218+11508152 28} =194008480x365/1237112446 =57.2 Days 28,487,894 X 365 / 256,289,527 = 41 Days 41 57.2 0 10 20 30 40 50 60 70 PSO SHELL Average Payable Period In days SHELL PSO
  27. 27. Inventory Turnover in Days • Inventory turnover in days tells us how many days, on average, inventory will remain before it is turned into AR through sales. • Inventory Turnover in Days = (Stock in Trade * Days in Year) / CGS 27
  28. 28. 20 27 0 5 10 15 20 25 30 PSO SHELL Inventory Turn Over In Days SHELL PSO PSO Shell 86297218x365/1150815228 27.3 Days (13,086,285*365)/ 243,203242 20 Days 28
  29. 29. FIXED ASSET TURNOVER • Fixed asset turnover is financial ratio of net sales to fixed assets. The fixed asset turnover ratio measures how effectively the firm uses its plant and equipment to generate sales. Fixed Asset Turnover = NET REVENUE / Net Fixed Asset 29
  30. 30. 23 20.3 0 5 10 15 20 25 PSO SHELL Fixed Asset turnover SHELL PSO PSO Shell 1187639316/58636904 =20.3 TIMES Rs 250,784,741/ 10,954,082 23 TIMES 30
  31. 31. TOTAL ASSET TURNOVER • Total assets turnover ratio measures the turnover of all the firm’s assets. The amount of sales generated for every rupees worth of assets. Asset turnover measures a firm’s efficiency at using its assets in generating sales or revenues. • Total Asset Turnover = Net Revenue / Avg. Total Assets 31
  32. 32. 6.5 3.19 0 1 2 3 4 5 6 7 PSO SHELL Total Asset Turnover SHELL PSO PSO Shell 1187639316/372151029 3.19 TIMES 250,784,741/38,678,765 6.5 TIMES 32
  33. 33. NET PROFIT MARGIN ON SALES • It measures the profitability of sales after taking the account of all expenses and income taxes. It measures how much out of every rupee of sales a company actually keeps in earnings. • Net Profit Margin on Sales = Net Income / Net Revenue, = *Net Loss/Net Revenue • (*Shell was in loss in the year) 33
  34. 34. -0.43 1 -0.6 -0.4 -0.2 0 0.2 0.4 0.6 0.8 1 1.2 PSO SHELL Net Profit Margin on Sales SHELL PSO PSO SHELL RS 21818135/1187639316 =1 % RS (1,067,133) / 250,784,741 -0.43% 34
  35. 35. GROSS PROFIT MARGIN • Gross profit ratio tells us the profit of the firm relative to sales. It measures the efficiency of the firms operations, as well as an indication of how products are priced Gross Profit Ratio = Gross Profit / Net Revenue 35
  36. 36. 3.023 0 0.5 1 1.5 2 2.5 3 3.5 PSO SHELL Gross Profit Margin SHELL PSO 36 PSO SHELL RS 36824088/1187639316 =3% RS 7,581,499 / 250,784,741 =3.02 %
  37. 37. RETURN ON INVESTMENT or RETURN ON ASSET • Return on investment provides an idea of the overall return on investment earns by the firm. It is also called return on asset Return on Investment = Net Income or NPAT / Total Assets, Net Loss / Total Assets 37
  38. 38. -2.76 5 -4 -3 -2 -1 0 1 2 3 4 5 6 PSO SHELL Return on Asset SHELL PSO 38 PSO SHELL RS 21818135/372151029 =5% RS (-1,067,133) / 38,678,765 -2.76%
  39. 39. RETURN ON EQUITY • The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. • Return on Equity = (NPAT – Preferred Dividend) / Common Equity • (Common Equity=Share Capital+ Share Premium+ General Reserve) (*Net Loss in Shell) 39
  40. 40. 40 PSO SHELL =21818135/78621157 =2.77% = -1067133 – 330996 / 2780930 = -50.3 % -50.3 2.77 -60 -50 -40 -30 -20 -10 0 10 PSO SHELL Return on Equity SHELL PSO
  41. 41. DEBT TO EQUITY RATIO • It is used to measure the degree to which the assets of the business are financed by the debts and the shareholders' equity of a business. Or how much debt money is used to finance the assets of firm. Debt to Equity Ratio = Total Debt/ Shareholder’s Equity 41
  42. 42. 12 3.73 0 2 4 6 8 10 12 14 PSO SHELL Debt To Equity Ratio SHELL PSO 42 PSO SHELL Rs =293529872/78621157 = 3.73 Rs32,783,700/2780930 = 12
  43. 43. DEBT TO TOTALASSET RATIOS • Debt to total assets ratio shows the percentage of firm’s assets that is financed or supported by its creditors. Debt to Equity Ratio = Total Debt / TOTAL ASSETS 43
  44. 44. 8.5 7.8 0 1 2 3 4 5 6 7 8 9 PSO SHELL Debt to Total Asset Ratio SHELL PSO 44 PSO SHELL Rs 293529872/372151029x 100 = 7.88% Rs 32,783,700/38,678,765 = 8.5%
  45. 45. GEARING RATIO • It measure the degree to which a firm's activities are funded by owner's funds versus creditor's funds Debt Gearing Ratio = Long Term Debt / Total Capitalization (Total Capitalization= Long-term Debt + Share Holder’s Equity) 45
  46. 46. 4 6 0 1 2 3 4 5 6 7 PSO SHELL Gearing Ratio SHELL PSO 46 PSO Shell Rs 5183609/{5183609+78621157} =5183609/83804766 = 6% Rs 141,610/ Rs 2,992,540 ,= 4.73%
  47. 47. EARNING PER SHARE (EPS) • Earning per share is the ratio which is calculated to find out in how extend shareholders would get if company wants to share its net profit. It serves as an indicator of a company's profitability Earning Per Share Ratio = Net Income or NPAT / Number of Common Shares outstanding (No. of Shares Outstanding=Share Capital/Par Value per Share) (*Net Loss for Shell) 47
  48. 48. -100 803.06 -200 -100 0 100 200 300 400 500 600 700 800 900 PSO SHELL Earning Per Share SHELL PSO 48 PSO Shell Rs 21818135/{2716860/100} = 21818135/27168.6 =803 RS PER SHARE Rs(-1,067,133)/ Rs10701 = -100 RS PER SHARE
  49. 49. 49 PRICE PER EARNING RATIO • A valuation ratio of a company's current share price compared to its per-share earnings. • Price per Earning Ratio = Market Price per Share / EPS 49
  50. 50. 50 2.54 0.48 0 0.5 1 1.5 2 2.5 3 PSO SHELL Price Per Earning ratio SHELL PSO PSO Shell = 388.85 /803.06 = 0.4842 = 253.63/-100 = -2.54
  51. 51. BOOK VALUE PER SHARE • A measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly. Common Equity / No. of Common Shares Outstanding 51
  52. 52. 260 2893.8 0 500 1000 1500 2000 2500 3000 3500 PSO SHELL Book value per share SHELL PSO 52 PSO Shell 78621157/27168.6 = 2893.8 per share 2,780,930/10701 = 260 PER SHARE
  53. 53. MARKET BOOK RATIO • The market to book financial ratio, also called the price to book ratio, measures the market value of a company relative to its book or accounting values. The market value of the company is its value at any point in time as determined by the financial marketplace. The book value, or historical value, is almost always lower than the market value since some assets may be off-balance sheet items. 53
  54. 54. • Market / Book Ratio = Market Price per Share / Book Value per Share PSO Shell 388.85 / 100 =3.88 = 253.63 / 100 = 2.5363 54 2.54 3.88 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 PSO SHELL Market/Book Ratio SHELL PSO
  55. 55. INTEREST COVERAGE RATIO • The ratio serves as one measure of the firms ability to meet its interest payments and the bankruptcy Interest Coverage Ratio= Operating Profit/ Finance Costs (EBIT=Operating Profit, Interest Charges= Finance Costs) 55
  56. 56. 1.1 14.07 0 2 4 6 8 10 12 14 16 PSO SHELL Intrest Coverage Ratio SHELL PSO 56 PSO Shell 41971767/9544109 =14.07 RS 451,941/447109 =1.1 Times
  57. 57. 57
  58. 58. ANY QUESTION 58
  59. 59. 59
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ITS ABOUT THE RATIO ANALYSIS OF SHELL AND PSO

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