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.
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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.
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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.
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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.
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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.
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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.
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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.
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11. VISION STATEMENT PSO
• To excel in delivering value to
customers as an innovative and
dynamic energy company that
gets to the future first.
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12. VISION STATEMENT of SHELL
• To be the Top Performing
and Most Admired Refinery
in Asia.
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13. WHAT IS RATIO ANALYSIS
• A tool used by individuals to conduct a
quantitative analysis of information in a
company's financial statements.
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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
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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.
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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
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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)
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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)
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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
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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)
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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
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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
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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
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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)
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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
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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
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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)
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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
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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
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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)
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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)
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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
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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
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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.
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54. • Market / Book Ratio = Market Price per Share
/ Book Value per Share
PSO Shell
388.85 / 100
=3.88
= 253.63 / 100
= 2.5363
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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. 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)
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