financial ratio analysis of pso and spl (shell) ........tahir sami
TRANSCRIPT
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Financial Statement AnalysisOf
Pakistan State Oil Company Limited&
Shell Pakistan Limited
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Road Map
Aims & ObjectivesIntroduction
Data Collection Data Processing
Data Analysis Conclusion
Recommendations
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INTRODUCTION
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Introduction The Pakistani oil marketing sector mainly consist of
three companies namely Pakistan State OilCompany, Shell Pakistan and Caltex Pakistan.
The giant oil marketing companies Pakistan StateOil and Shell Pakistan, I am trying to do in thisproject comparison of financial statements
analysis
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AIMS & OBJECTIVES
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Aims and Objectives
1.Determine the significantfinancial strength
1. PSO2. SPL
3. Financialposition
2. Determine theperformance
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DATA COLLECTION
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Data Collection
Annual Reports of Pakistan State Oil Company Limited.
Annual Reports of Shell Pakistan Limited.
Article from New Papers
Websites
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DATA PROCESSING
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Data Processing
Financial statement analysis has been don for three recent
years 2008, 2007 & 2006.
All data bring together like recommendation of instructors.
All annual reports financial statements develop in M.S
Excel.
All analysis has been done in M.S Excel with graphical
Charts. All theory work has been done in M.S Word.
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DATA ANALYSIS
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Balance SheetsBalance Sheets PSO SPL
ASSETS 2008 2007 2006 2008 2007 2006
Rs (000) Rs (000)
Non-Current Assets 11231328 12224042 12133849 9444650 9498295 7900045
Current Assets 115878692 62513273 58034675 30220209 19713632 20392354
Total Net Assets 127110020 74737315 70168524 39664859 29211927 28292399
EQUITY AND LIABILITIES
Equity 30965054 20939217 20813059 13611638 9460771 10156746
Non-Current Liabilities 2408746 2412371 2298887 2745410 139041 157643
Current Liabilities 93736220 51385727 47056578 23307811 19612115 17978010
Total Equity and Liabilities 127110020 74737315 70168524 39664859 29211927 28292399
Data analysis
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Profit and Loss Account PSO SPL
2008 2007 2006 2008 2007 2006
Rs (000) Rs (000)
Sales 495278533 349706326 298250039 139844689 115045434 117262519
Cost of products sold (465254907) (337446896) (281042813) (124694471) (108664932) (107301071)
Gross Profit 30023626 12259430 17207226 15150218 6380502 9961448
Operating Expenses (9283021) (6012814) (7337342) (6975312) (5461240) (5125509)
Profit after operating expenses 20740605 6246616 9869884 8174906 919262 4835939
Other Income 313860 424238 442791
Other operating income 1396527 1278932 950850 306453 215322 158681
Profit from operations 22450992 7949786 11263525 8481359 1134584 4994620
Finance costs (1367898) (1158112) (884153) (970267) (878098) (398009)
Share of profit of association net of tax 294318 330306 1038939 212248 122250 43573
profit before taxation 21377412 7121980 11418311 7723340 378736 4640184
Taxation (7323617) (2432182) (3893610) (2586246) 327923 (1493060)
Profit for the year 14053795 4689798 7524701 5137094 706659 3147124
Profit & Loss Account
Data analysis
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Liquidity Ratio Analysis
1.2 1.3 1.2
1.0
1.2
1.1
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
2008 2007 2006
Years
Current Assets Ratio
PSO SPL
0.57
0.52
0.640.58
0.63
0.58
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
2008 2007 2006
Years
Acid test Ratio
PSO SPL
Data analysis
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Leverage Ratio Analysis
Data analysis
Time Interest Earned( Earning before income tax /
interest exp)
Years 2008 2007 2006
PSO 98.09 53.97 94.58
SPL 49.11 2.88 60.23
Debt Ratio(Total Liabilities / Total Assets)
Years 2008 2007 2006
PSO 0.76 0.72 0.70
SPL 0.66 0.68 0.64
Debt / Equity Ratio( Debt / Total Equity)
Years 2008 2007 2006
PSO 3.10 2.57 2.37
SPL 1.91 2.09 1.79
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Data analysis
ProfitabilityRatio Analysis
Net Profit Margin(Net Profit / Net Sales)*100
Years 2008 2007 2006
PSO 2.84% 1.34% 2.52%
SPL 3.67% 0.61% 2.68%
Return on Assets(Net Income / Total Assets)*100 Years 2008 2007 2006
PSO 11.06% 6.28% 10.72%
SPL 12.95% 2.42% 11.12%
Operating Income Margin(Operating Income / Sales)*100 Years 2008 2007 2006
PSO 4.53% 2.27% 3.78%
SPL 6.06% 0.99% 4.26%
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ActivityRatio Analysis
Data analysis
Average collectionperiod
( 365 Days / Account Receivable
Turnover)
Years 2008 2007 2006
PSO Days = 21 12 12
SPL Days = 11 12 14
Average paymentperiod
(365 Days / Account Payable
Turnover)
Years 2008 2007 2006
PSO Days = 64 45 48
SPL Days = 48 40 41
Average age ofinventory
(365days / Inventory Turnover)
Years 2008 2007 2006
PSO Days = 19 14 10
SPL Days = 13 16 11
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Data analysis
Market Ratio Analysis
Years 2008 2007 2006
PSO 81.94 27.34 43.87
SPL 93.76 12.90 57.44
Years 2008 2007 2006PSO 5.1 14.3 7
SPL 8.5 31.0 8.4
Years 2008 2007 2006
PSO Rs.23.5 Rs.21 Rs.34
SPL Rs.50 Rs.16 Rs.30
Dividend per share
Earning per Share(Net Income /No of Shares)
Price/Earning Ratio
(Market Price Per Share/Earning Per Share)
Years 2008 2007 2006
PSO 28.68% 76.80% 77.50%
SPL 53.33% 124.05% 52.23%
Dividend Payout(Dividend Per Share/
Earning Per Share)*100
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Data analysis
Cash flow Ratio AnalysisYears 2008 2007 2006
PSO 0.37 0.41 0.21
SPL 17.50 3.36 34.24
Operating cash flow / Total debt Years 2008 2007 2006PSO 0.04 0.07 0.03
SPL 0.04 0.01 0.05
Operating cash flow per shareYears 2008 2007 2006
PSO 0.24 0.22 0.10SPL 0.02 0.00 0.02
Operating cash flow /cash dividendsYears 2008 2007 2006
PSO 0.01 0.01 0.00
SPL 0.0003 0.0001 0.0005
Operating cash flow / current maturity
of long term debt and current notes
payables
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Balance Sheets PSO Vertical Analysis
ASSETS 2008 2007 2006 2008 2007 2006
Rs (000) % % %
Non-Current Assets 11231328 12224042 12133849 8.84 16.36 17.29
Current Assets 115878692 62513273 58034675 91.16 83.64 82.71
Total Net Assets 127110020 74737315 70168524 100.00 100.00 100.00
EQUITY AND LIABILITIES
Equity 30965054 20939217 20813059 24.36 28.02 29.66
Non-Current Liabilities 2408746 2412371 2298887 1.90 3.23 3.28
Current Liabilities 93736220 51385727 47056578 73.74 68.76 67.06
Total Equity and Liabilities 127110020 74737315 70168524 100.00 100.00 100.00
PSO Balance Sheet Vertical Analysis
Data analysis
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Data analysis
SPL Balance Sheet Vertical AnalysisBalance Sheets SPL Vertical Analysis
ASSETS 2008 2007 2006 2008 2007 2006
Rs (000) % % %
Non-Current Assets 9444650 9498295 7900045 23.81 32.52 27.92
Current Assets 30220209 19713632 20392354 76.19 67.48 72.08
Total Net Assets 39664859 29211927 28292399 100.00 100.00 100.00
EQUITY AND LIABILITIES
Equity 13611638 9460771 10156746 34.32 32.39 35.90
Non-Current Liabilities 2745410 139041 157643 6.92 0.48 0.56
Current Liabilities 23307811 19612115 17978010 58.76 67.14 63.54
Total Equity and Liabilities 39664859 29211927 28292399 100.00 100.00 100.00
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Data analysis
PSO Profit & Loss Account
Vertical AnalysisProfit and Loss Account PSO Vertical Analysis
2008 2007 2006 2008 2007 2006
Rs (000) % % %
Sales 583213959 411057592 352514873 100.00 100.00 100.00
Net Sales 495278533 349706326 298250039 84.92 85.07 84.61
Cost of products sold (465254907) (337446896) (281042813) (79.77) (82.09) (79.73)
Gross Profit 30023626 12259430 17207226 5.15 2.98 4.88
Operating Expenses (9283021) (6012814) (7337342) (1.59) (1.46) (2.08)
Profit after operating expenses 20740605 6246616 9869884 3.56 1.52 2.80
Other Income 313860 424238 442791 0.05 0.10 0.13
Other operating income 1396527 1278932 950850 0.24 0.31 0.27
Profit from operations 22450992 7949786 11263525 3.85 1.93 3.20
Finance costs (1367898) (1158112) (884153) (0.23) (0.28) (0.25)
Share of profit of association net of tax 294318 330306 1038939 0.05 0.08 0.29
profit before taxation 21377412 7121980 11418311 3.67 1.73 3.24
Taxation (7323617) (2432182) (3893610) (1.26) (0.59) (1.10)
Profit for the year 14053795 4689798 7524701 2.41 1.14 2.13
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SPL Profit & Loss Account
Vertical Analysis
Data analysis
Profit and Loss Account SPL Vertical Analysis
2008 2007 2006 2008 2007 2006
Rs (000) % % %
Sales 157626491 130129844 132840460 100.00 100.00 100.00
Net Sales 139844689 115045434 117262519 88.72 88.41 88.27
Cost of products sold (124694471) (108664932) (107301071) (79.11) (83.51) (80.77)
Gross Profit 15150218 6380502 9961448 9.61 4.90 7.50
Operating Expenses (6975312) (5461240) (5125509) (4.43) (4.20) (3.86)
Profit after operating expenses 8174906 919262 4835939 5.19 0.71 3.64
Other Income 0 0 0 0.00 0.00 0.00
Other operating income 306453 215322 158681 0.19 0.17 0.12
Profit from operations 8481359 1134584 4994620 5.38 0.87 3.76
Finance costs (970267) (878098) (398009) (0.62) (0.67) (0.30)
Share of profit of association net of tax 212248 122250 43573 0.13 0.09 0.03
profit before taxation 7723340 378736 4640184 4.90 0.29 3.49
Taxation (2586246) 327923 (1493060) (1.64) 0.25 (1.12)
Profit for the year 5137094 706659 3147124 3.26 0.54 2.37
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PSO Balance sheet Horizontal Analysis
Data analysis
Balance Sheets PSO Horizontal Analysis Changes
ASSETS 2008 2007 2006 2008 2007 2006 2008 2007
Rs (000) % % % % %
Non-Current Assets 11231328 12224042 12133849 92.56 100.74 100 (7.44) 0.74
Current Assets 115878692 62513273 58034675 199.67 107.72 100 99.7 7.72
Total Net Assets 127110020 74737315 70168524 181.15 106.51 100 81.1 6.51
EQUITY AND LIABILITIES
Equity 30965054 20939217 20813059 148.78 100.61 100 48.8 0.61
Non-Current Liabilities 2408746 2412371 2298887 104.78 104.94 100 4.78 4.94
Current Liabilities 93736220 51385727 47056578 199.20 109.20 100 99.2 9.2
Total Equity and Liabilities 127110020 74737315 70168524 181.15 106.51 100 81.1 6.51
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Data analysis
SPL Balance sheet Horizontal Analysis
Balance Sheets SPL Horizontal Analysis Changes
ASSETS 2008 2007 2006 2008 2007 2006 2008 2007
Rs (000) % % % % %
Non-Current Assets 9444650 9498295 7900045 119.55 120.23 100 19.6 20.2
Current Assets 30220209 19713632 20392354 148.19 96.67 100 48.2 (3.33)
Total Net Assets 39664859 29211927 28292399 140.20 103.25 100 40.2 3.25
EQUITY AND LIABILITIESEquity 13611638 9460771 10156746 134.02 93.15 100 34 (6.85)
Non-Current Liabilities 2745410 139041 157643 1741.54 88.20 100 1642 (11.8)
Current Liabilities 23307811 19612115 17978010 129.65 109.09 100 29.6 9.09
Total Equity and Liabilities 39664859 29211927 28292399 140.20 103.25 100 40.2 3.25
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Data analysis
Profit and Loss Account PSO Horizontal Analysis Changes in %
2008 2007 2006 2008 2007 2006 2008 2007
Rs (000) % % % % %
Sales 583213959 411057592 352514873 165.44 116.607 100.00 48.84 16.61
Net Sales 495278533 349706326 298250039 166.06 117.253 100.00 48.81 17.25
Cost of products sold -465254907 -337446896 -281042813 165.55 120.070 100.00 45.48 20.07
Gross Profit 30023626 12259430 17207226 174.48 71.246 100.00 103.24 (28.75)
Operating Expenses -9283021 -6012814 -7337342 126.52 81.948 100.00 44.57 (18.05)
Profit after operating expenses 20740605 6246616 9869884 210.14 63.290 100.00 146.85 (36.71)
Other Income 313860 424238 442791 70.88 95.810 100.00 (24.93) (4.19)
Other operating income 1396527 1278932 950850 146.87 134.504 100.00 12.37 34.50
Profit from operations 22450992 7949786 11263525 199.32 70.580 100.00 128.74 (29.42)
Finance costs -1367898 -1158112 -884153 154.71 130.985 100.00 23.73 30.99
Share of profit of association net of tax 294318 330306 1038939 28.33 31.793 100.00 (3.46) (68.21)
profit before taxation 21377412 7121980 11418311 187.22 62.373 100.00 124.85 (37.63)
Taxation -7323617 -2432182 -3893610 188.09 62.466 100.00 125.63 (37.53)
Profit for the year 14053795 4689798 7524701 186.77 62.325 100.00 124.44 (37.67)
PSO Profit & Loss Account
Horizontal Analysis
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Data analysis
SPL Profit & Loss Account
Horizontal AnalysisProfit and Loss Account SPL Horizontal Analysis Changes in %
2008 2007 2006 2008 2007 2006 2008 2007
Rs (000) % % % % %
Sales 157626491 130129844 132840460 118.66 97.96 100.00 18.66 (2.04)
Net Sales 139844689 115045434 117262519 119.26 98.11 100.00 19.26 (1.89)
Cost of products sold (124694471) (108664932) (107301071) 116.21 101.27 100.00 16.21 1.27
Gross Profit 15150218 6380502 9961448 152.09 64.05 100.00 52.09 (35.95)
Operating Expenses (6975312) (5461240) (5125509) 136.09 106.55 100.00 36.09 6.55
Profit after operating expenses 8174906 919262 4835939 169.04 19.01 100.00 69.04 (80.99)
Other Income 0 0 0
Other operating income 306453 215322 158681 193.13 135.69 100.00 93.13 35.69
Profit from operations 8481359 1134584 4994620 169.81 22.72 100.00 69.81 (77.28)
Finance costs (970267) (878098) (398009) 243.78 220.62 100.00 143.78 120.62
Share of profit of association net of tax 212248 122250 43573 487.11 280.56 100.00 387.11 180.56
profit before taxation 7723340 378736 4640184 166.44 8.16 100.00 66.44 (91.84)
Taxation (2586246) 327923 (1493060) 173.22 (21.96) 100.00 73.22 (121.96)
Profit for the year 5137094 706659 3147124 163.23 22.45 100.00 63.23 (77.55)
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CONCLUSIONS
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Conclusions
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
R
atio
Years
Current Ratios
PSO 1.24 1.22 1.23
SPL 1.30 1.01 1.13
2008 2007 2006
Both companies not able to maintain the normal limit of current ratio
which means their current liabilities are more than the current assets.
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0
5
10
Year
Gross Profit Margin
PSO 5.15 2.98 4.88
SPL 9.61 4.90 7.50
2008 2007 2006
Conclusions
Gross profit margin showing that SPL have a good and very attractive
cost of goods sold and PSO not have good gross profit margin
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0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
Percentag
eofchanges
Years
Net Profit Margin
PSO 2.84 1.34 2.52
SPL 3.67 0.61 2.68
2008 2007 2006
Conclusions
In the Net profit margin SPL have the advantage over the PSO, because of
their all expenses are in control and budgeted and thats why their Net profit
margin is very effective.
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0
20
40
60
80
100
Rs
Years
Earning Per Share
PSO 81.94 27.34 43.87
SPL 93.76 12.90 57.44
2008 2007 2006
Conclusions
Earning per share in 2008 Shell leading with Rs.93.76 per share in year 2007
PSO leading Rs.27.34 per share and in 2006 SPL Rs.57.44 per share
profitability its means SPL profitability level is good.
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RECOMMENDATIONS
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Recommendations
Both companies current ratio not showing the normal limits
their Current assets should be twice the current liabilities.
PSO cost of production is higher than the SPL. Its means thatPSO not producing products effectively or efficiently PSO
have to reduce their Production cost.
Both companies not able to maintain the normal limit of acidtest ratio because is less then 1 which means their current
liabilities are more than the current assets. Current assets
should be equal to current liabilities.
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THANK YOU