This is the short assignment on the financial analysis of annual reports of the petroleum company (PPL). for the last 5 years data by 2012 to 2015.

1. Introduction
Introduction to the Company
Pakistan Petroleum Limited (PPL) is a multinational and global competitive corporation. It is state
owned corporation of Pakistan. The incorporation of PPL was held on June 5, 1950. The company
headquarter is located in Karachi, the core business hub of Pakistan. Its major operation s is in oil
and gas field which include SUI GAS FIELD. The company has managed many businesses which
are related and non-related to petroleum. The company is planning to implement the strategic
relations in the global prospect.
The pioneer of the natural gas industry in the country, Pakistan Petroleum Limited (PPL) has been
a frontline player in the energy sector since the mid-1950s. As a major supplier of natural gas, PPL
today contributes over 20 percent of the country’s total natural gas supplies besides producing
crude oil, Natural Gas Liquid and Liquefied Petroleum Gas.
Brief Introduction to the Sector
Pakistan Petroleum Limited (PPL) plays the role of being a pioneer in the sector of Natural Gas
Industry in the Country. The sector established in the mid of 1950 with the development of needs
of energy. PPL was being the major supplier and a major contributor towards the development if
the sector. The sector comprised of dealing with energy production using Crude Oil, Natural Gas
Liquid and Liquefied Petroleum Gas.
PPL is keeping its operations in nine different fields in Sui, Kandhkot, Adhi, Mazarani, Chachar
Adam, Adam West, Shahdadpur and Shahadpur West. Around one billion cubic feet per day has
been producing which is an essential role for the country.
Historical Background
The company’s historical can be seen back in June, 1950 when it became a public limited company
and Burmah Oil Limited (BOC) from the UK became its major shareholder. BOC holding 70% of
the shares of the company and the remaining percentage were holding by the Government of
Pakistan.
Vision Statement
“To achieve energy self-sufficiency for Pakistan by becoming the most successful and efficient
discoverer and producer of oil and gas”

2. Mission Statement
“To serve the people of Pakistan in an area critical to their economic development by employing,
training and developing the best people available and empowering them to deliver extraordinary
results while insisting that they conform to the highest standards of professional and ethical
conduct”
Importance of PPL
PPL having numerous awards in different categories including corporate, employee’s performance,
management team, stocks and equity performance, stock markets, project management and many
other fields, the company has a great tendency of playing the role in the development of Pakistan.
However, the discovery of oil peaked in 1964. According to the consultants in the field, HIS
Energy stated that 90% of the world known reserves are in production face and hoping to make
different discoveries in other regions including Pakistan as well.
On a scale, the world is now a day consuming around 85million barrels of oil in a single day (or
40,000 gallons per second). PPL is keeping its operations in nine different fields in Sui, Kandhkot,
Adhi, Mazarani, Chachar Adam, Adam West, Shahdadpur and Shahadpur West. The increasing
demand and need of new discoveries has made different resources to be active in order to pin-point
the exact locations. As the consumption, has increased up to four times since the discovery,
Pakistan has a huge tendency of searching for new natural resources.
What to Find?
In this report, we would be assessing the company’s financial position in short and long term. This
will enable us to understand the contribution of the field. The report will also indicate the:
Company Performance
Ration analysis
Highlights
Key Indicators
Future Scope

3. Literature Review
1. More than 78 percent American corporations are interested to invest in Pakistani economy.
This also included in different sectors investments. Including petroleum sector, other
sectors will be also benefited from such precious investments. Those investors are
interested due to improved situation of security and huge potential of growth in the
economy. (Jan, 2017)
2. During 2014-15, the company faced a decline in their profitability. This decline was seen
by 67% to Rs5.87 billion. This decline was seen not only because of sales but the decreased
price of the petroleum products. Decline in petroleum prices affected the whole sector in
different scenarios. (Oct, 2015)
3. By analyzing different potentials by Petroleum Conservation Research Association
(PACRA), it was noted that there is deficiency of Research & Development in the
petroleum products and gasoline sector. Therefore, it needs to be enhanced different studies
which will reflect the utilization, consumption and preservation of petroleum and its
products. (Nov, 2012)
4. Pakistan shook hands with Iran to pipeline its project of getting gasoline products from
Iran. In this way, they would be able to have equipped with the latest sources of fuels and
consumptions.
Data Collection
The data for this report has been collected from “secondary sources”. Secondary sources including
company official website, media newspaper articles, internet and company’s financial reports.
Methodology
The quantitative data analysis techniques have been utilized to get the accurate result of the data.
However, the quantitative data provides the maximum outcome to the data as compared to the
qualitative data.

4. Financial Data Analysis
The company’s performance is based upon its financial stability. The financial data can be analyses
in a number of ways. We are using some important ratio analysis in order to get the company’s
financial position based upon it’s different operations related to finances. We have categorized the
analysis in 3 different types:
i. Profitability Analysis
ii. Operating performance/Liquidity
iii. Capital Structure
Profitability Analysis
The profitability analysis is done using gross margin, return on investment and Earnings before
interest and taxes. The below is the analysis of past 4-years performance of the company. This
analysis assesses the long-term position of the company.
Gross Margin: (net income/net sales) x 100
EBIT: (earnings before interest and taxes/net sales) x 100
Return on Equity: (net income/stockholder’s equity) x 100
Return on Capital: (net income/total capital/) x 100
RATIOS 2014-15 2013-14 2012-13 2011-12
Net profit to sales in
percentage
33 43 41 43
EBIT in percentage 48 61 58 60
Return on equity in percentage 18 28 28 33
Return on capital in percentage 22 35 36 44

5. It can be clearly seen through the graph that the company has faced downfall in its profitability.
There can be many reasons behind it including, the ups and downs in sales performances, increases
in debts, sales made on credits. On a broader view, there were fluctuations in prices of the
petroleum products. These were the reasons behind the company’s performance in the sector.
Operating Performance/ Liquidity Analysis
The operating performance or liquidity analysis of a company indicates its operational routine in
the short run and long run. The liquidity analysis is also done through the ratio analysis. We include
some important ratios which indicate the company’s performances. These ratios are analyses based
upon past 4 years’ data.
Current Ratio: current assets/current liabilities
Quick ratio: quick assets/current liabilities
Cash to liabilities: cash/current liabilities
Asset turnover: sales/total assets
Fixed asset turnover: sales/total fixed asset
Receivable Turnover: credit sales/accounts receivable
0
10
20
30
40
50
60
70
2014-15 2013-14 2012-13 2011-12
PROFITABILITY ANALYSIS
Net Margin EBIT Return on Equity Return on Capital

6. Ratios 2011-12 2012-13 2013-14 2014-15
Current Ratio 4.05 2.29 3.81 4.25
Quick Ratio 3.95 2.22 3.64 4.08
Cash to current
liabilities
1.63 0.94 0.99 0.99
Total asset
turnover
0.65 0.53 0.53 0.43
Fixed Asset
turnover
1.87 1.61 1.56 1.18
Receivable
Turnover
2.91 2.74 3.17 2.42
As we can clearly see the graphical representation of the company’s performances. The drastic
changes of current ratio and quick ratio indicates that the company had made sales on credits and
receivables increased and hence their other processes were also affected from it. The sector itself
proved to be unstable.
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2011-12 2012-13 2013-14 2014-15
LIQUIDITY ANALYSIS
current ratio quick ratio cash to current liabilities
asset turnover fixed asset turnover Receivable turnover

7. Capital Structure
The capital structure of a company indicates its shares’ performance along with the stockholder’s
interests. This can be analyzed using the market value of the stocks and price earnings ratio of
the specific share.
2011-12 2012-13 2013-14 2014-15
Market value per
share at year
closing
188.29 211.58 224.34 164.26
Price Earnings
Ratio
6.05 8.29 8.50 9.46
Cash dividend in
percentage
6.11 4.96 5.57 5.17
PE Ratio: market value per share/earning per share
PPL faced the downfall in share price due to different reasons, including the price effects of
petroleum products. This decrease in price also led to the decrease in the dividends yield of the
stockholders. Therefore, this analysis indicated an average downfall trend from last 4 years of
company’s performance.
0
1
2
3
4
5
6
7
8
9
10
2011-12 2012-13 2013-14 2014-15
CAPITAL ANALYSIS
PE Ratio Cash Dividend

8. Conclusion & Suggestions:
In concluding remarks, I would like to highlight the key factors which had affected the PPL
performance. Those factors were price, consumption, production and overall sales on debt. These
factors had badly impacted not only Pakistan Petroleum Limited but also other similar fields. PPL
is fully owned government corporation and hence it plays an essential role of being a dominant.
The company’s performance is seeming to be optimistic when the international factors of pricing
will become stable in the way to get the maximum output.
In recommendation, I would like to include that company needs to tackle the receivables in
upcoming time. The receivables (or debt sales) will have completely effect on the overall
operations within the organization. Hence, this thing is needed to be improved in future. Another
aspect is that overall change in pricing, this factor is determined by demand and supply, but in this
case. The company has a direct impact through its consumers whether they are individuals or
corporates.
References:
Company’s official website: www.ppl.com.pk
Financial Data: PPL annual financial reports 2011-12, 2012-13, 2013-14, 2014-15
Wikipedia: https://en.wikipedia.org/wiki/Pakistan_Petroleum
Articles
Literature Review1: https://www.thenews.com.pk/print/68963-pakistan-petroleum-limited-
profits-decline-by-57-percent-to-rs5.876-billion
Literature Review2: http://www.brecorder.com/2017/01/17/334881
Literature Review3: http://www.brecorder.com/2012/11/29/92858