Ratio analysis of shell pakistan

1. Ratio Analysis of
SHELL PAKISTAN
By: Mujtaba Khursheed

2. SHELL PAKISTAN
• Shell was incorporated in UK in 1899
• Shell Pakistan was established in 1950’s
• Shell employs 400+ people directly and over 12000 indirectly
• 790+ Fuel station across Pakistan
• 1,000,000+ customers everyday

3. What is Ratio Analysis..?
• Ratio analysis is a form of financial
statement analysis that is used to obtain
quick indication of a firm’s financial
performance in several key areas

6. Ratios
• Liquidity Ratio
• Asset Management Ratio
• Debt Management Ratio
• Profitability Ratio
• Market Value Ratio

7. Liquidity Ratio
Liquidity shows how company is strong
financial
• Current Ratio
• Quick Ratio

8. Current Ratio
• It shows how much company is able to pay off its short term Debt
(obligation)
Current Ratio =
Interpretation
ilitiesCurrentLib
etCurrentAss
For year 2016 For year 2017
Current Ratio = 27239755/31316757 Current Ratio = 23319967/28601244
Current ratio = 0.86 Times Current ratio = 0.81 Times

9. Current Ratio’s Graph

10. Quick Ratio
• It shows how much company is able to pay off its short term Debt
(obligation)
Quick Ratio =
Interpretation:
bilitiesCurrentLia
InventoryetCurrentAss −
For year 2016 For Year 2017
Quick Ratio =27239755/31316757 Quick Ratio =23319967/28601244
Quick Ratio = 0.83 Times Quick Ratio = 0.75 Times

11. Quick Ratio’s Graph

12. Asset Management Ratios
It measures how effectively the firm is using
its asset.
•Inventory Turnover Ratio
•Fixed Asset turnover Ratio
•Total Asset Turnover
•Average collection Period

13. Inventory Turnover Ratio
• It tells the number of time a company sells and replace its stock of
good during a period
Inventory Turnover Ratio =
Interpretation
• High ratio means goods were sold very quickly
• Demand was increased
• Sale also increased
Inventory
ofSoldCostofGood
For Year 2016 For Year 2017
Inventory Turnover =153638427/10366172 Inventory Turnover =153972023/9500585
Inventory Turnover=14.8Times Inventory Turnover=16.2Times

14. Inventory Turnover Ratio's Graph

15. Fixed Asset Turnover Ratio
• Fixed assets is the ratio of sale. It shows how well company is using
its fixed Assets to generate sales
Fixed Asset Ratio =
Interpretation
• High ratio means generating high sale
• Efficiency of assets
• Assets were maintained on time
setsNetFixedAs
Sales
For Year 2016 For Year 2017
Fixed Asset ratio =214852746/9150109 Fixed Asset ratio=205791893/10000115
ratio = 23.4Times ratio = 20.5Times

16. Fixed Asset Turnover Ratio's Graph

17. Total Asset Turnover Ratio
• It measures the turnover of all the firm’s assets
Total Asset Turnover =
Interpretation
• Total assets were used efficiently
• Increased of high revenue
• Able to pay off its debt early
sTotalAsset
Sales
For year 2016 For Year 2017
Total Asser Turnover=214852746/42510431 Total Asset Turnover=205791893/38893113
Total Asset Turnover=5 Times Total Asset Turnover=5.2 Times

18. Total Asset Turnover Ratio’s Graph

19. Average Collection Period
• It shows the average number of days company takes to convert its
A/c receivable into cash/Day that the cash is received from customer
Average collection period =
Interpretation
• Offered discount 2/10,n/30
• Do more operations
• Work can be done faster
365
Re/
sAnnualSale
ceiveablecA
For year 2016 For year 2017
Average collection =8417830/588637 Average collection =7773261/563813
Average Collection =14 Days Average Collection =13 Days

20. Average Collection Period’s Graph

21. Debt Management Ratio
• Debt ratio
• Time interest earned ratio

22. Debt Ratio
• It shows a company’s ability to pay off its liabilities with its assets
Debt Ratio =
Interpretation
• More then 50% means equity is less than debt burden
• 2017 company covered somehow its debt burden
• Because of increasing least amount of sale as compare to 2016
TotalAsset
itiesTotalLibil
For year 2016 For year 2017
Debt Ratio =31316757/42510431 Debt Ratio =28601244/38893113
Debt Ratio = 73.66% Debt Ratio = 73.53%

23. Debt Ratio’s Graph

24. Time Interest Earned Ratio
• Indicates the firms ability to meet its annual interest
payment.
• Time interest earned ratio =
eInterestCh
Ebit
arg
For year 2016 For year 2017
Time interest earned=5705822/140035 Time interest earned=4322960/132527
Time interest earned=40.7 Times Time interest Earned=32.6 Times

25. Time Interest Earned Ratio’s Graph

26. Profitability Ratio
Measures that indicate how well a firm is
performing in terms of its ability to generate profit.
•Profit Margin on sales
•Return on total Asset
•Return on Equity

27. Profit Margin on sales
• It measures how much out of every dollar of sales a company
actually keeps in earning
Profit Margin on sales=
For year 2016 For year 2017
PMOS=3182702/205791893 PMOS=6764907/214852746
PMOS = 1.5% PMOS = 3.1%
Sales
kHolderCommonStocvailableToNetIncomeA

28. Profit Margin on sale’s Graph

29. Return on Assets
• It shows the overall return on investment after interest and tax
• Return on total assets or investment =
For year 2016 For year 2017
ROTA/I=3182702/38893113 ROTA/I=6764907/42510431
ROTA/I = 8.1% ROTA/I = 15.9%
sTotalAsset
tockholdervailabeToSNetIncomeA

30. Return on total Asset/investment’s Graph

31. Return on Equity
• Measure the ability of a firm to generate profit from its
shareholders investments in the company.
Return on Equity =
For year 2016 For year 2017
Return on Equity=3182702/38799304 Return on Equity=6764907/42426539
Return on Equity = 8% Return on Equity=15%
tyCommonEqui
derorStockholvailaiblefNetIncomeA

32. Return on Equity’s Graph

33. Market Value Ratio
• Price earning ratio
• Market book ratio

34. Price earning ratio
• How much investor is willing to pay the price per share to earn the
share of your company or Measurement of the current share price
Price earning ratio =
Interpretation
• High ratio means firm’s growth is strong Financial
• Less debt burden
• Risk factor decreased as it was increased in 2016
For year 2016 For year 2017
Price earning ratio=480/63 Price earning ratio=646/29.74
Price earning ratio=7.6 Times Price earning ratio=21.7 Times
EPS
eicePerSharPr

35. Price earning ratio’s Graph

36. Market book ratio
• The market to book ratio provides an assessment of how investors view
the firm’s performance./it suggests how much investor is paying against
each dollar of book value
Market book ratio=
Interpretation
• High ratio means financially company is strong
• Investor invests more money
• Stocks are overvalued
For year 2016 For year 2017
Market book ratio=480/103.82 Market book ratio= 646/97.83
Market book ratio=4.62 Times Market book ratio=6.60 Times

37. Market book ratio’s Graph

38. Gross profit Margin
• It indicates how much company makes a profit after paying off its
cost of goods of sold .And also tells investor how much gross profit
every dollar of revenue a company is earning
Gross profit Margin
Interpretation
• High ratio means the efficiency of company
• In term of raw material and labor
• Got high outcome
For year 2016 For year 2017
Gross profit margin= 14003175/214852746 Gross profit margin=14876414/205791893
Gross profit margin=6.5% Gross profit margin=7.2%

39. Gross profit Margin’s Graph

40. Operating income/Profit
• The ratio tells the business is running successfully in term of profit
or not.
Operating income/Profit
Interpretation
• Less means expenses are high(administrative other expense)
• Because sale is less
• Due to less demand of product
For year 2016 For year 2017
Operating income=5157878/214852746 Operating income=3720233/205791893
Operating income=2.4% Operating income=1.8%

41. Operating income/Profit’s Graph