ITS ABOUT THE RATIO ANALYSIS OF SHELL AND PSO

1. 1

2. SAFIULLAH AWAN
Group Members
MUHAMMAD SULEMAN TARIQ
OZAIR IJAZ KIYANI
SALMAN AHMAD
UMER TAHIR KHAN
MUHAMMAD ZULQARNAIN
SAHIBZADA USAMA
SAEED
2

3. Ratio Analysis Of
PSO & SHELL
3

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.
4

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.
5

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.
6

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.
7

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.
8

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.
9

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.
10

11. VISION STATEMENT PSO
• To excel in delivering value to
customers as an innovative and
dynamic energy company that
gets to the future first.
11

12. VISION STATEMENT of SHELL
• To be the Top Performing
and Most Admired Refinery
in Asia.
12

13. WHAT IS RATIO ANALYSIS
• A tool used by individuals to conduct a
quantitative analysis of information in a
company's financial statements.
13

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
14

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.
15

16. 16

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
17

18. 0.85
1.08
0
0.2
0.4
0.6
0.8
1
1.2
PSO SHELL
Current Ratio
SHELL
PSO
PSO Shell
Rs
=313,514,125/288,346,263
1.08
Rs
27,724,683/ 32,642,090
=0.85
18

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)
19

20. PSO SHELL
RS 313514125-
86297218/288346263
=227216907/288346263
= 0.78
RS 27,724,683-
13,086,285/32,642,090
= 0.45
0.45
0.78
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
PSO SHELL
Quick Ratio
SHELL
PSO
20

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)
21

22. 19
7
0
2
4
6
8
10
12
14
16
18
20
PSO SHELL
Receivable Activities
SHELL
PSO
PSO Shell
RS 1187639316/175386168
6.77 TIMES
RS 250,784,741/13,086,285
19 TIMES
22

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
23

24. 19
54
0
10
20
30
40
50
60
PSO SHELL
Average Collection Period
in days
SHELL
PSO
PSO Shell
RS 175386168X365/1187639316
=53.9 DAYS
RS 13,086,285 X 365 / 250,784,741
24

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)
25

26. 26
PSO Shell
194008480x365/{86297218+11508152
28}
=194008480x365/1237112446
=57.2 Days
28,487,894 X 365 / 256,289,527
= 41 Days
41
57.2
0
10
20
30
40
50
60
70
PSO SHELL
Average Payable Period
In days
SHELL
PSO

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
27

28. 20
27
0
5
10
15
20
25
30
PSO SHELL
Inventory Turn Over In Days
SHELL
PSO
PSO Shell
86297218x365/1150815228
27.3 Days
(13,086,285*365)/
243,203242
20 Days
28

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
29

30. 23
20.3
0
5
10
15
20
25
PSO SHELL
Fixed Asset turnover
SHELL
PSO
PSO Shell
1187639316/58636904
=20.3 TIMES
Rs 250,784,741/ 10,954,082
23 TIMES
30

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
31

32. 6.5
3.19
0
1
2
3
4
5
6
7
PSO SHELL
Total Asset Turnover
SHELL
PSO
PSO Shell
1187639316/372151029
3.19 TIMES
250,784,741/38,678,765
6.5 TIMES
32

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)
33

34. -0.43
1
-0.6
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
1.2
PSO SHELL
Net Profit Margin on Sales
SHELL
PSO
PSO SHELL
RS 21818135/1187639316
=1 %
RS (1,067,133) / 250,784,741
-0.43%
34

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
35

36. 3.023
0
0.5
1
1.5
2
2.5
3
3.5
PSO SHELL
Gross Profit Margin
SHELL
PSO
36
PSO SHELL
RS 36824088/1187639316 =3% RS 7,581,499 / 250,784,741
=3.02 %

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
37

38. -2.76
5
-4
-3
-2
-1
0
1
2
3
4
5
6
PSO SHELL
Return on Asset
SHELL
PSO
38
PSO SHELL
RS 21818135/372151029
=5%
RS (-1,067,133) / 38,678,765
-2.76%

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)
39

40. 40
PSO SHELL
=21818135/78621157
=2.77%
= -1067133 – 330996 /
2780930
= -50.3 %
-50.3
2.77
-60
-50
-40
-30
-20
-10
0
10
PSO SHELL
Return on Equity
SHELL
PSO

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
41

42. 12
3.73
0
2
4
6
8
10
12
14
PSO SHELL
Debt To Equity Ratio
SHELL
PSO
42
PSO SHELL
Rs =293529872/78621157
= 3.73
Rs32,783,700/2780930
= 12

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
43

44. 8.5
7.8
0
1
2
3
4
5
6
7
8
9
PSO SHELL
Debt to Total Asset Ratio
SHELL
PSO
44
PSO SHELL
Rs 293529872/372151029x
100
= 7.88%
Rs 32,783,700/38,678,765
= 8.5%

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)
45

46. 4
6
0
1
2
3
4
5
6
7
PSO SHELL
Gearing Ratio
SHELL
PSO
46
PSO Shell
Rs
5183609/{5183609+78621157}
=5183609/83804766
= 6%
Rs 141,610/ Rs 2,992,540
,= 4.73%

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)
47

48. -100
803.06
-200
-100
0
100
200
300
400
500
600
700
800
900
PSO SHELL
Earning Per Share
SHELL
PSO
48
PSO Shell
Rs 21818135/{2716860/100}
= 21818135/27168.6
=803 RS PER SHARE
Rs(-1,067,133)/ Rs10701
= -100 RS PER SHARE

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
49

50. 50
2.54
0.48
0
0.5
1
1.5
2
2.5
3
PSO SHELL
Price Per Earning ratio
SHELL
PSO
PSO Shell
= 388.85 /803.06
= 0.4842
= 253.63/-100
= -2.54

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
51

52. 260
2893.8
0
500
1000
1500
2000
2500
3000
3500
PSO SHELL
Book value per share
SHELL
PSO
52
PSO Shell
78621157/27168.6
= 2893.8 per share
2,780,930/10701
= 260 PER SHARE

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.
53

54. • Market / Book Ratio = Market Price per Share
/ Book Value per Share
PSO Shell
388.85 / 100
=3.88
= 253.63 / 100
= 2.5363
54
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)
55

56. 1.1
14.07
0
2
4
6
8
10
12
14
16
PSO SHELL
Intrest Coverage Ratio
SHELL
PSO
56
PSO Shell
41971767/9544109
=14.07
RS 451,941/447109
=1.1 Times

57. 57

58. ANY QUESTION
58

59. 59