Financial Ratio Analysis of PSO and SPL (Shell) ........TAHIR SAMI

8/14/2019 Financial Ratio Analysis of PSO and SPL (Shell) ........TAHIR SAMI

1/35

Financial Statement AnalysisOf

Pakistan State Oil Company Limited&

Shell Pakistan Limited


2/35

Road Map

Aims & ObjectivesIntroduction

Data Collection Data Processing

Data Analysis Conclusion

Recommendations


3/35

INTRODUCTION


4/35

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


5/35

AIMS & OBJECTIVES


6/35

Aims and Objectives

1.Determine the significantfinancial strength

1. PSO2. SPL

3. Financialposition

2. Determine theperformance


7/35

DATA COLLECTION


8/35

Data Collection

Annual Reports of Pakistan State Oil Company Limited.

Annual Reports of Shell Pakistan Limited.

Article from New Papers

Websites


9/35

DATA PROCESSING


10/35

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.


11/35

DATA ANALYSIS


12/35

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


13/35

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


14/35

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


15/35

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


16/35

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%


17/35

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


18/35

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


19/35

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


20/35

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 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


21/35

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 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


22/35

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


23/35

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


24/35

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 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


25/35

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


26/35

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


27/35

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)


28/35

CONCLUSIONS


29/35

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.


30/35

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


31/35

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.


32/35

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.


33/35

RECOMMENDATIONS


34/35

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.


35/35

THANK YOU

Documents

Financial Ratio Analysis of PSO and SPL (Shell) ........TAHIR SAMI