Financial Reporting and Management Accounting

This report evaluates the financial position of British Petroleum and Royal Dutch Shell Corporations and the impact of financial crisis on their market share and financial position. It includes a study on financial evaluation methods, literature review, and findings on financial performance.

Running Head: Financial Reporting and management accounting
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Financial Reporting and management accounting

Financial Reporting and management accounting
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Contents
Introduction.......................................................................................................................3
Case Overview..................................................................................................................3
Company overview...........................................................................................................4
British Petroleum..........................................................................................................4
Royal Dutch Shell.........................................................................................................4
Financial performance of the companies..........................................................................5
British petroleum Limited.............................................................................................5
Royal Dutch Shell Limited.........................................................................................12
Financial crisis impact....................................................................................................20
Literature review.............................................................................................................20
Findings and Summary of study.....................................................................................22
Conclusion......................................................................................................................22
References.......................................................................................................................23
Appendix.........................................................................................................................26

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Introduction:
Financial evaluation and assessment on an organization is always done by the
management of the company and stakeholder of the company to evaluate and find the
position of the company in the industry. This study evacuates about the financial position of
the company in context with the inventors perspective, shareholder perspective, debt holder
perspective, bond holders perspective, suppliers and customers perspective and other
stakeholder perspective of the company. It evaluates that how the better strategy could be
planned for the company to manage and enhance the profitability and solvency level of the
company.
Financial evaluation is a study which includes various methods to evaluate about the
financial performance of an organization such as ratio analysis, capital assets pricing method,
trend analysis, industry analysis, dividend growth models, price earnings model etc. these
methods make it easy for the professionals to evaluate the performance of the company.
Further, the case studies, economy position of the country, annual reports of the company etc
also assist the company to make and manage a better conclusion about the position of the
company.
In this report paper, the study has been conducted on two companies which are
BRITISH PETROLEUM and ROYAL DUTCH/SHELL CORPORATIONS to evaluate their
financial performance ad impact of financial crisis on their market share and financial
position.
Case Overview:
BRITISH PETROLEUM and ROYAL DUTCH/SHELL CORPORATIONS are one
of the biggest corporations of Europe market. Both of these companies are performing and
operation their business in the market very well. But due to financial crisis, the position of the
companies has been affected and it has directly impacted on the financial position of the
company. The technological advances, profits, innovative products etc of both the companies
are quite attractive and managing the performance of the company every well.
In this study, financial position of both the companies has been evaluated and it has
been found that how the position has been impacted due to the financial crisis in the market.
The report explains that the company has faced few issues due to the financial crisis and

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though, currently few new strategies have been made by both of the companies to manage the
performance and the financial level of the company. In this paper, those strategies have been
studied and eventually, the study on literatures has also been done to evaluate the
performance of the company and the changes into the financial structure of the company.
The impact of financial crisis was quite higher on UK economy rather than other
economies due to various factors. The manufacturing base of UK is not much bugger and on
the other hand, the previous growth of the economy has been fuelled by financial activities
and financial services only which includes high retail sales which directly depend on the
credit sales.
Company overview:
British Petroleum:
British petroleum is an international company which headquarter is in England. The
company is operating its business under oil and gas industry. The company is one of the
seven largest oil and Gas Company in worldwide. The market capitalization of the company
is quite large and it has around 18000 service stations worldwide. The main products of the
company are natural gas, aviation fuels, petroleum, petrochemicals, oil equivalents etc. the
company is mainly listed in the London stock exchange. The company is performing in a
great manner in the market (Home, 2018). Though, it has been recognized that due to the
economy changes and the financial crisis, the profitability level and the turnover of the
company has been affected. Further, it has also been found that the current strategies of the
company are quite competitive.
Royal Dutch Shell:
Royal Dutch Shell is an international company which headquarter is in London,
England. The company is operating its business under oil and gas industry. The company was
the largest oil and Gas Company in worldwide in 2013. The market capitalization of the
company is quite large and it has around 44000 service stations worldwide. The main
products of the company are natural gas, aviation fuels, petroleum, petrochemicals, oil
equivalents etc. the company is mainly listed in the London stock exchange. The company is
performing in a great manner in the market. Though, it has been recognized that due to the
economy changes and the financial crisis, the profitability level and the turnover of the

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company has been affected (Home, 2018). Further, it has also been found that the current
strategies of the company are quite competitive
Financial performance of the companies:
Further, the financial position, place and performance of the company have been
evaluated and it has been found that the financial crisis has impacted on the financial position
and market stock position of the company. the financial performance of both the companies
have been evaluated through analyzing the ratio analysis study on both the companies and it
has been found that how both the companies have been affected:
British petroleum Limited:
Profitability ratio:
Profitability ratio study has been done on British petroleum limited to evaluate the
financial position and performance of the company and through the study it has been found
that the profitability level of the company in terms of return on shareholder funds has been
reduced to 0.12% in 2016 from 3.39% in 2014 and 9.78% in 2012 due to the financial
position and crisis of the company (Hillier, Grinblatt and Titman, 2011). It explains that the
company has faced huge loss due to the changes into the economy and fear of the investors.
Figure 1: Return on shareholder funds
Further, the operating profit margin ratio of the company has been evaluated. It
explains about the lower profitability position of the company and at the same time, it

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explains that the 2015 was the worst year for the company in terms of profitability as in 2014,
the position of the company has been affected a lot (Annual report, 2016). Though, few
changes have helped the company to manage it back.
Figure 2: Operating profit margin
Further, the gross profit margin ratio of the company has been evaluated. It explains
about the average profitability position of the company was quite higher before the financial
crisis. Following graph explains about the changes:
Figure 3: Gross profit margin
2016 2015 2014 2013 2012
Profitability

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Return on
shareholder
funds
NPAT/
Total equity 0.12% -6.67% 3.39% 18.14% 9.78%
Operating
profit margin
Operating
net profit /
Sales -1.23% -4.24% 1.38% 7.63% 4.84%
Gross Profit
Margin
Gross Profit
/ Sales 13.56% 10.69% 13.77% 17.75% 15.74%
(Morningstar, 2018)
Liquidity ratio:
Liquidity ratio study has been done on British petroleum limited to evaluate the
financial position and performance of the company and through the study it has been found
that the liquidity level of the company in terms of current ratio has been reduced to 1.16 in
2016 from 1.37 in 2014 and 1.43 in 2012 due to the financial position and crisis of the
company. It explains that the company has faced huge loss due to the changes into the
economy and fear of the investors in 2014. And currently, company is required to enhance
the current assets level so that it becomes easy for the company to pay off the short term debt.
Figure 4: Current ratio
Further, the quick ratio of the company has been evaluated and it has been found that
the quick ratio level of the company has been reduced to 0.86 in 2016 from 1.08 in 2014 and
1.07 in 2012 due to the financial position and crisis of the company. It explains that the

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company is required to enhance the quick assets level so that it becomes easy for the
company to pay off the short term debt in current situation (Horngren, 2009).
Figure 5: Acid Test ratio
Liquidity 2016 2015 2014
201
3
201
2
Current ratio
Current
assets/current
liabilities 1.16 1.29 1.37 1.33 1.43
Acid test ratios
Current assets-
Inventory/curre
nt liabilities 0.86 1.03 1.08 0.93 1.07
(Annual report, 2014)
Efficiency ratio:
Efficiency ratio study has been done on British petroleum limited to evaluate the
financial position and performance of the company and through the study it has been found
that the efficiency and working capital management level of the company in terms of
receivable collection period has been enhanced to 43.28 in 2016 from 32.78 days in 2014 and
36.07 days in 2012 due to the financial position and crisis of the company. It explains that the
cash turnover ratio for operations and short term of the company has been enhanced.

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Figure 6: Receivable collection period
Further, that the payable payment days have been enhanced to 48.82 days in 2016
from 27.23 days in 2014 and 33.14 days in 2012 due to the financial position and crisis of the
company. It explains that the cash turnover ratio for operations and short term of the
company had been managed by the company.
Figure 7: Payable payment days
Lastly, that the inventory turnover days have been enhanced to 39.95 days in 2016 from
21.68 days in 2014 and 31.09 days in 2012 due to the financial position and crisis of the

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company. It explains that the cash turnover ratio for operations and short term of the
company should be managed by the company (Damodaran, 2011).
Figure 8: Inventory days
Efficiency 2016 2015 2014 2013 2012
Receivables
collection period
Receivables/
Total sales*365 43.28 37.46 32.78 37.36 36.07
Payables
collection period
Payables/ Cost of
sales*365 48.82 30.45 27.23 52.82 33.14
Inventory days
Inventory/ cost of
goods sold *365 39.95 25.58 21.68 32.74 31.09
(Annual Report, 2015)
Gearing ratio:
Gearing ratio study has been done on British petroleum limited to evaluate the capital
structure position and performance of the company and through the study it has been found
that the gearing ratio of the company in terms of non bearing debt and equity has been
enhanced to 0.35 in 2016 from 0.34 in 2014 and 0.14 in 2012. It explains that the gearing
ratio of the company has been managed by the company.

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Figure 9:
Gearing Ratio
Gearing
Ratios 2016
201
5 2014 2013
201
2
Gearing
Noncurrent interest
bearing debt /
noncurrent interest
bearing debt +
equity (Bromwich
and Bhimani, 2005) 0.27 0.24 0.18 0.17 0.14
Investment ratio:
Investment ratio study has been done on British petroleum limited to evaluate the
investment position and performance of the company and through the study it has been found
that the earnings per share of the company has been reduced to 0.04 in 2016 from 1.23 in
2014 and 3.65 in 2012. It explains that the investment position of the company has been
reduced.

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Figure 10: Earnings per share
Further, the price earnings ratio of the company is quite higher. Though, it has been
evaluated that the company is not a good opportunity to invest for the investors in current
position.
Investment ratio 2016 2015 2014 2013 2012
Earnings per
share
NPAT/ Number
of ordinary shares
0.04 (2.12) 1.23 7.43 3.65
Price earnings
ratio
Market price per
share / earnings
per share 888.31
The above evaluation on British Petroleum explains that the various changes have taken
place into the position of the company in last few years. It explains that the company is
required to make new policies and strategies to manage and enhance the performance.
Royal Dutch Shell Limited:
Profitability ratio:
Profitability ratio study has been done on Royal Dutch Shell Limited to evaluate the
financial position and performance of the company and through the study it has been found
that the profitability level of the company in terms of return on shareholder funds has been

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reduced to 2.45% in 2016 from 8.65% in 2014 whereas it was 14.11% in 2012 due to the
financial position and crisis of the company. It explains that the company has faced huge loss
due to the changes into the economy and fear of the investors.
Figure 11: Return on shareholder funds
Further, the operating profit margin ratio of the company has been evaluated. It
explains about the lower profitability position of the company and at the same time, it
explains that the 2015 was the worst year for the company in terms of profitability. Though,
few changes have helped the company to manage it back (Arnold, 2013).
Figure 12: Operating profit margin

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Further, the gross profit margin ratio of the company has been evaluated. It explains
about the average profitability position of the company and at the same time, it explains that
due to the strong policies and future strategies of the company, gross profit margin has been
managed by the company (Annual report, 2014).
Figure 13: Gross profit margin
Profitability
Return on
shareholder
funds
NPAT/ Total
equity 2.45% 1.19% 8.65% 9.09% 14.11%
Operating profit
margin
Operating net
profit / Sales 2.34% 0.75% 6.56% 7.31% 10.44%
Gross Profit
Margin
Gross Profit /
Sales 20.42% 18.16% 17.16% 16.97% 17.79%
Liquidity ratio:
Liquidity ratio study has been done on ROYAL DUTCH SHELL PLC to evaluate the
financial position and performance of the company and through the study it has been found
that the liquidity level of the company in terms of current ratio has been enhanced to 1.17 in
2016 from 1.16 in 2014 whereas it was 1.18 in 2012. It explains that the company has
managed the liquidity position of the company (Davies and Crawford, 2011).

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Figure 14: Current ratio
Further, the quick ratio of the company has been evaluated and it has been found that
the quick ratio level of the company has been reduced to 0.88 in 2016 from 0.93 in 2014
whereas 0.87 in 2012 due to the financial position and crisis of the company. It explains that
the company is required to enhance the quick assets level so that it becomes easy for the
company to pay off the short term debt.
Figure 15: Acid Test ratio
Liqui
dity 2016 2015 2014 2013 2012

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Curre
nt
ratio
Current
assets/curr
ent
liabilities 1.17 1.32 1.16 1.11 1.18
Acid
test
ratios
Current
assets-
Inventory/
current
liabilities 0.88 1.09 0.93 0.79 0.87
(Gapenski, 2008)
Efficiency ratio:
Efficiency ratio study has been done on ROYAL DUTCH SHELL PLC to evaluate
the financial position and performance of the company and through the study it has been
found that the efficiency and working capital management level of the company in terms of
receivable collection period has been enhanced to 53.98 in 2016 from 34.30 days in 2014
whereas 49.56 days in 2012 due to the financial position and crisis of the company. It
explains that the cash turnover ratio for operations and short term of the company has been
enhanced (Annual Report, 2017).
Figure 16: Receivable collection period
Further, that the payable payment days have been enhanced to 53.64 days in 2016
from 0 days in 2014 and 39.12 days in 2012 due to the financial position and crisis of the
company. It explains that the cash turnover ratio for operations and short term of the
company had been managed by the company.

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Figure 17: Payable payment days
Lastly, that the inventory turnover days have been enhanced to 41.61 days in 2016 from
20.12 days in 2014 whereas it was 58.37 days in 2012 due to the financial position and crisis
of the company. It explains that the cash turnover ratio for operations and short term of the
company should be managed by the company (Morningstar, 2018).
Figure 18: Inventory days
Efficiency 2016 2015 2014 2013 2012
Receivables
collection period
Receivables/
Total sales*365 53.98 39.44 34.30 39.99 49.56

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Payables
collection period
Payables/ Cost of
sales*365 53.64 38.99 - 40.10 39.12
Inventory days
Inventory/ cost of
goods sold *365 41.61 25.93 20.12 28.70 28.37
Gearing ratio:
Gearing ratio study has been done on ROYAL DUTCH SHELL PLC to evaluate the
capital structure position and performance of the company and through the study it has been
found that the gearing ratio of the company in terms of non bearing debt and equity has been
enhanced to 0.27 in 2016 from 0.18 in 2014 whereas it was 0.14 in 2012. It explains that the
gearing ratio of the company has been managed by the company.
Figure 19: Gearing Ratio
Gearing Ratios 2016 2015 2014 2013 2012
Gearing
Noncurrent
interest bearing
debt / noncurrent
interest bearing
debt + equity 0.27 0.24 0.18 0.17 0.14
Investment ratio:

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Investment ratio study has been done on ROYAL DUTCH SHELL PLC to evaluate
the investment position and performance of the company and through the study it has been
found that the earnings per share of the company has been enhanced to 1.17 in 2016 from
0.00 in 2014. It explains that the investment position of the company has been better.
Figure 20: Earnings per share
Further, the price earnings ratio of the company is quite higher. Though, it has been
evaluated that the company is not a good opportunity to invest for the investors in current
position.
Investment
ratio 2016
201
5 2014
201
3 2012
Earnings per
share
NPAT/
Number of
ordinary
shares 1.17 0.00 0.00 0.00 0.00
Price earnings
ratio
Market price
per share /
earnings per
share 22.33
The above evaluation on ROYAL DUTCH SHELL PLC explains that the various
changes have taken place into the position of the company in last few years. It explains that
the company is required to make new policies and strategies to manage and enhance the

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performance (Baker and Nofsinger, 2010). Though, the investment opportunity of the
company is getting better.

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Financial crisis impact:
Further, the analysis has been done on the financial position, stock position of the
company and the exact impact of the financial crisis on its performance. The financial crisis
impact on both the companies have been evaluated through analyzing the annual reports,
financial analyst reports, newspapers, articles and the case study on both the companies. The
studies of financial crisis impact of both the companies are as follows:
Literature review:
BBC (2015) has shown in one of its reports about the impact of financial crisis on oil
and gas industry of UK. It has explained that the performance of the industry has been worst
in 2014.
Further, it has explained that the financial analyst forecasted that this crisis has
impacted on the FTSE 100 and due to it, the trust of inventors have affected. The report of
Cash float explains that the financial position of British petroleum has been lower suddenly in
2014 due to the large impact of financial crisis (Cash Float, 2018). Further, it has been
explained by PWC that though the company had very strong polices and strategies, still the
financial crisis has impacted on the performance of the company. The investment level of oil
and gas industry has been reduced a lot and that is why the profitability level and the
solvency level of the company have been affected (Business insider, 2018).
Annual report (2014) of ROYAL DUTCH SHELL PLC has explained that stock price
of the company has been lowered due to less interest of the investors in the industry. Further,

Financial Reporting and management accounting
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economical report of oil and gas UK (2014) explains that the oil and gas price has also been
lowered in 2014 due to lower demand and higher supply in the market. Financial crisis has
impacted on the GDP share of oil and gas industry in UK. Further, BP (2018) has explained
that the capital investment in the industry has been lowered from euro 15 billion to Euro 5.4
billion.
FXCM (2018) has explained that the customers found that the prices of the company
are quite high and it is not of worth and due to which the prices of the industry has been
lower. Further, the annual report (2015) of British petroleum and annual report (2015) of
ROYAL DUTCH SHELL PLC expressed that the cost has been reduced by the companies to
manage the performance and the financial level of the company. Though, the revenue of the
company has also been lowered due to the less unit cost of the companies and the concept of
value for customers of the company (Economic Report, 2018). Risk logic (2018) has
explained that the customers were finding the cost of oil and gas lot in 2014 and thus it was
not worth for the company and that is why the unit cost of the company has been reduced.
Further, Lee and Yue, (2017) has explained that the new strategy of reducing the cost and
level of net profit to offer the value to the customers of both the companies are great.
In addition, it has also been evaluated that the suppliers of the ROYAL DUTCH
SHELL PLC, BRITISH PETROLEUM and Oil and gas industry of UK have also reduced the
level of profit to manage the performance and the demand of the products in the market.
Though, Home (2018) has criticized this step of the companies and explained that the
companies were not supposed to reduce the prices, they must adopt other strategies to
manage the position of the company. FXCM (2018) has further argued that the price changes
were the best strategy which has helped both the companies and the industry to offer value to

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their customers (PWC, 2018). It has also helped the companies to rearrange the financial
position of the company.
The companies have also changed in their strategies about financial risk, return, cost
etc so that the financial position of the company and the performance of the industry could be
managed again (Abdelrehim, Maltby and Toms, 2015). Before 2014, the financial position of
both the companies were quite impressive but in 2014, the profitability level, solvency level,
efficiency level, liquidity level etc has been lower (Yahoo finance, 2018). Further,
Morningstar (2018) explains that both the companies have managed the position again and
currently, the financial analyst describe that in future years, the position of the company
would be better again.
More, it has been evaluated through various studied that financial crisis has not only
impacted on the companies but it has impacted on all the related parties of the company
(Gourevitch et al, 2016). Due to it, the sales turnover of the company has been lower; capital
investors have also reduced their level, suppliers have also faced the financial crisis impact.
BBC (2018) described further that due to the oil and gas industry’s financial impact, position
of the company has been lowered.
Findings and Summary of study:
Through the above study, it has been found that the financial crisis has impacted the
US economy a lot. In the year of 2014, oil and gas industry of UK has been impacted a lot
due to the financial crisis. The above evaluation on ROYAL DUTCH SHELL PLC,
BRITISH PETROLEUM and Oil and gas industry of UK explains that the various changes
have taken place into the position of the company in last few years. The study explains that
the financial crisis has impacted the profitability and the stock price of the company and due
to it, the economical position of UK has also been lowered.
Conclusion:
To conclude, both the companies had strong policies and thus the impact of financial
crisis is not much bigger. But though, the financial level of the companies has been lowered
and the capital investors of the company have divestment from the company. It explains that
the company is required to make new policies and strategies to manage and enhance the
performance. Though, the investment opportunity of the company is getting better in current
scenario and the company is suggested to maintain and follow the current strategies.

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References:
Abdelrehim, N., Maltby, J. and Toms, S., 2015. Narrative reporting and crises: British
Petroleum and Shell, 1950–1958. Accounting History, 20(2), pp.138-157.
Annual Report. 2014. British Petroleum PLC (Online). Available from:
https://www.bp.com/content/dam/bp-country/de_de/PDFs/brochures/BP_Annual_Report_and
_Form_20F_2014.pdf [Accessed 15 Feb 2018].
Annual Report. 2014. Royal Dutch Shell Plc (Online). Available from:
http://reports.shell.com/annual-report/2014/servicepages/about_disclaimer.php [Accessed 15
Feb 2018].
Annual Report. 2015. British Petroleum PLC (Online). Available from:
https://www.bp.com/content/dam/bp/pdf/investors/bp-annual-report-and-form-20f-2015.pdf
[Accessed 15 Feb 2018].
Annual Report. 2015. Royal Dutch Shell Plc (Online). Available from:
https://reports.shell.com/annual-report/2015/servicepages/disclaimer.php [Accessed 15 Feb
2018].
Annual Report. 2016. British Petroleum PLC (Online). Available from:
https://www.bp.com/content/dam/bp/en/corporate/pdf/investors/bp-annual-report-and-form-
20f-2016.pdf [Accessed 15 Feb 2018].
Annual Report. 2016. Royal Dutch Shell Plc (Online). Available from:
https://solutions.vwdservices.com/products/documents/0a781631-9b7a-4373-ade4-
08d18f12768b/?
c=ZWdPo5tSOZGp2BNo0%2F9qIb4vhwnLbCAAKfJJHFnLfTdxkxoYxRPWewYGLMKJi
8K3 [Accessed 15 Feb 2018].
Arnold, G., 2013. Corporate financial management. Pearson Higher Ed.
Baker, H.K. and Nofsinger, J.R. 2010. Behavioral Finance: Investors, Corporations, and
Markets. John Wiley & Sons.
BBC. 2018. Oil and gas industry in 'bleak' 2014, finds survey (Online). Available from:
http://www.bbc.com/news/uk-scotland-scotland-business-31590604 [Accessed 15 Feb 2018].

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25
Besley, S. and Brigham, E.F., 2008. Essentials of managerial finance. Thomson South-
Western.
Bierman, H., 2010. An introduction to accounting and managerial finance: a merger of
equals. World Scientific.
Bp. 2018. BP's chief economist on oil prices, a banking crisis and scoping the energy future
(Online). Available from:
https://www.bp.com/en/global/corporate/bp-magazine/conversations/bps-chief-economist-on-
oil-prices-and-the-energy-future.html [Accessed 15 Feb 2018].
Bromwich, M. and Bhimani, A., 2005. Management accounting: Pathways to progress. Cima
publishing.
Business insider. Financial Crisis (Online). Available from:
https://www.businessinsider.in/how-2007-financial-crisis-transformed-uk-housing-market-
2017-7?r=UK&IR=T [Accessed 15 Feb 2018].
Cash Float. 2018. The History of the Financial Crisis in the UK (Online). Available from:
https://www.cashfloat.co.uk/blog/money-borrowing/crisis-impact-uk-economy/ [Accessed 15
Feb 2018].
Damodaran, A, 2011, Applied corporate finance,3rd edition, John Wiley & sons, USA
Davies, T. and Crawford, I., 2011. Business accounting and finance. Pearson.
Economi report. 2018. Oil and gas UK (Online). Available from:
http://oilandgasuk.co.uk/wp-content/uploads/2015/05/EC041.pdf [Accessed 15 Feb 2018].
FXCM, 2018. How Does The Price Of Oil Affect The UK Economy? (Online). Available
from: https://www.fxcm.com/insights/how-does-the-price-of-oil-affect-the-uk-economy/
Gapenski, L.C., 2008. Healthcare finance: an introduction to accounting and financial
management. Health Administration Press.
Gourevitch, P., Martin, A., Ross, G., Bornstein, S. and Allen, C., 2016. Unions and Economic
Crisis: Britain, West Germany and Sweden. Routledge.
Hillier, D., Grinblatt, M. and Titman, S., 2011. Financial markets and corporate strategy.
McGraw Hill.

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Home. 2018. British Petroleum PLC (Online). Available from: https://www.bp.com/
[Accessed 15 Feb 2018].
Home. 2018. Oil & Gas UK figures show impact of oil price downturn on jobs (Online).
Available from: https://oilandgasuk.co.uk/oil-gas-uk-figures-show-impact-of-oil-price-
downturn-on-jobs/ [Accessed 15 Feb 2018].
Home. 2018. Royal Dutch Shell Plc (Online). Available from: https://www.shell.com/
[Accessed 15 Feb 2018].
Horngren, C.T., 2009. Cost accounting: A managerial emphasis, 13/e. Pearson Education
India.
Lee, J. and Yue, C., 2017. Impacts of the US dollar (USD) exchange rate on economic
growth and the environment in the United States. Energy Economics, 64, pp.170-176.
Morningstar. 2018. British Petroleum PLC (Online). Available from:
http://financials.morningstar.com/balance-sheet/bs.html?t=BP&region=usa&culture=en-US
[Accessed 15 Feb 2018].
Morningstar. 2018. Royal Dutch Shell Plc (Online). Available from:
http://financials.morningstar.com/cash-flow/cf.html?t=RDS.A&region=usa&culture=en-US
[Accessed 15 Feb 2018].
PWC. 2018. The impact of lower oil prices on the UK economy (Online). Available from:
https://www.pwc.co.uk/assets/pdf/ukeo-oil-prices-march-2015.pdf [Accessed 15 Feb 2018].
Risk logic. 2018. 5 impacts on BP oil crisis (Online). Available from:
http://www.risklogic.com.au/2010/07/5-key-impacts-of-the-bp-oil-crisis/ [Accessed 15 Feb
2018].
Yahoo Finance. 2018. Royal Dutch Shell Plc (Online). Available from:
https://au.finance.yahoo.com/quote/RDSA.AS?p=RDSA.AS [Accessed 15 Feb 2018].

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Appendix:
ROYAL DUTCH SHELL PLC ADR CLASS A (RDS.A) CashFlowFlag INCOME
STATEMENT
Fiscal year ends in December. USD in millions
except per share data.
2016-
12
2015-
12
2014-
12
2013-
12
2012-
12
Revenue
2400
33
2721
56
4313
44
4595
99
4817
00
Cost of revenue
1910
08
2227
39
3573
16
3815
85
3960
05
Gross profit
4902
5
4941
7
7402
8
7801
4
8569
5
Costs and expenses
Research and development 1014 1093 1222 1318 1314
Sales, General and administrative
1210
1
1195
6
1396
5
1467
5
1461
6
Depreciation and amortization
2499
3
2671
4
2449
9
2150
9
1461
5
Interest expense 2007 1888 1804 568 1251
Other operating expenses 3304 5719 4224 6352 3610
Total costs and expenses
4341
9
4737
0
4571
4
4442
2
3540
6
Income before income taxes 5606 2047
2831
4
3359
2
5028
9
Provision for income taxes 829 -153
1358
4
1706
6
2344
9
Net income from continuing operations 4777 2200
1473
0
1652
6
2684
0
Other -202 -261 144 -155 -248
Net income 4575 1939
1487
4
1637
1
2659
2
Net income available to common shareholders 4575 1939
1487
4
1637
1
2659
2
Earnings per share
Basic 1.16 0.62 4.72 5.2 8.5
Diluted 1.16 0.6 4.72 5.2 8.48
Weighted average shares outstanding
Basic 3917 3160 3156 3146 3131
Diluted 3946 3197 3156 3147 3134
EBITDA
3260
6
3064
9
5461
7
5566
9
6615
5
ROYAL DUTCH SHELL PLC ADR CLASS A (RDS.A) CashFlowFlag BALANCE
SHEET
Fiscal year ends in December. USD in millions 2016- 2015- 2014- 2013- 2012-

Financial Reporting and management accounting
28
except per share data. 12 12 12 12 12
Assets
Current assets
Cash
Cash and cash equivalents
1913
0
3175
2
2160
7 9696
1855
0
Total cash
1913
0
3175
2
2160
7 9696
1855
0
Receivables
3549
7
2940
8
4053
4
5035
7
6540
3
Inventories
2177
5
1582
2
1970
1
3000
9
3078
1
Prepaid expenses 4210 3262 3899 6836
Other current assets 5957
1311
4
1403
7 6445
Total current assets
8656
9
9335
8
9977
8
1033
43
1147
34
Non-current assets
Property, plant and equipment
Gross property, plant and equipment
4252
57
3538
28
3641
99
3711
15
3257
53
Accumulated Depreciation
-
1891
59
-
1709
90
-
1717
27
-
1792
18
-
1534
60
Net property, plant and equipment
2360
98
1828
38
1924
72
1918
97
1722
93
Equity and other investments
3920
7
3356
6
3567
3
3932
8
4321
7
Goodwill
1298
7 2010 2712 2563 2955
Intangible assets
1098
0 4273 4364 1831 1515
Deferred income taxes
1442
5
1103
3 8131 5785 4045
Prepaid pension costs 1456 3574
Other long-term assets 9553
1307
9 9986 9191
2156
6
Total non-current assets
3247
06
2467
99
2533
38
2541
69
2455
91
Total assets
4112
75
3401
57
3531
16
3575
12
3603
25
Liabilities and stockholders' equity
Liabilities
Current liabilities
Accounts payable
2806
9
2379
5
4192
7
4244
8
Short-term debt 8361 5530 7208 8344 7833

Financial Reporting and management accounting
29
Capital leases 1123
Income taxes payable 7085
Accrued liabilities
1240
5 377 382
1187
8
Deferred revenues
1182
0
Other current liabilities
2386
7
4162
3
7862
7
2370
0
3482
0
Total current liabilities
7382
5
7094
8
8621
2
9325
8
9697
9
Non-current liabilities
Long-term debt
6925
6
5284
9
3833
2
3621
8
2992
1
Capital leases
1373
6
Deferred taxes liabilities
1527
4 8976
1205
2
1194
3
1559
0
Accrued liabilities 549
Deferred revenues 1153
Pensions and other postretirement benefits
1413
0
1631
8
1118
2 6298
Minority interest 1865 1245 820 1101 1433
Other long-term liabilities
3599
4
4326
3
2741
6
2261
0
2161
0
Total non-current liabilities
1508
04
1063
33
9493
8
8420
7
7485
2
Total liabilities
2246
29
1772
81
1811
50
1774
65
1718
31
Stockholders' equity
Common stock 683 546 540 542 542
Retained earnings
1755
66
1801
00
1869
81
1834
74
1802
18
Accumulated other comprehensive income
1039
7
-
1777
0
-
1555
5 -3969 7734
Total Stockholders' equity
1866
46
1628
76
1719
66
1800
47
1884
94
Total liabilities and stockholders' equity
4112
75
3401
57
3531
16
3575
12
3603
25
ROYAL DUTCH SHELL PLC ADR CLASS A (RDS.A) Statement of CASH FLOW
Fiscal year ends in December. USD in millions except
per share data.
2016-
12
2015-
12
2014-
12
2013-
12
2012-
12
Cash Flows From Operating Activities
Net income 4777 2200 14730 16526 26840

Financial Reporting and management accounting
30
Depreciation & amortization 24993 26714 24499 21509 14615
Deferred income taxes -1720 -2701 461
Accounts receivable 5648
Inventory -5658 2827 7958 608 -1746
Other working capital -631 2694 -1553 -3268 5137
Other non-cash items -2866 -4625 1130 2118 833
Net cash provided by operating activities 20615 29810 45044 40440 46140
Cash Flows From Investing Activities
Investments in property, plant, and equipment
-
22116
-
26131
-
31854
-
40145
-
32576
Property, plant, and equipment reductions 2072 4720 9873 6346
Acquisitions, net
-
11186 -620 2737 -1000
Purchases of investments -3028
Sales/Maturities of investments 698
Other investing activities 267 -376 -413 999 107
Net cash used for investing activities
-
30963
-
22407
-
19657
-
40146
-
28453
Cash Flows From Financing Activities
Debt issued 18144 21500 7778 9146 5108
Debt repayment -7070 -6023 -4089 -6877 -4960
Repurchases of treasury stock -409 -3328 -5000 -1492
Cash dividends paid -9677 -9370 -9444 -7198 -7390
Other financing activities -2168 -1886 -3707 951 -1896
Net cash provided by (used for) financing activities -771 3812
-
12790 -8978
-
10630
Effect of exchange rate changes -1503 -1070 -686 -170 201
Net change in cash
-
12622 10145 11911 -8854 7258
Cash at beginning of period 31752 21607 9696 18550 11292
Cash at end of period 19130 31752 21607 9696 18550
Free Cash Flow
Operating cash flow 20615 29810 45044 40440 46140
Capital expenditure
-
22116
-
26131
-
31854
-
40145
-
32576
Free cash flow -1501 3679 13190 295 13564
BP PLC ADR (BP) CashFlowFlag INCOME STATEMENT
Fiscal year ends in December. USD in millions
except per share data.
2016-
12
2015-
12
2014-
12
2013-
12
2012-
12
Revenue
1866
06
2259
82
3586
78
3962
17
3882
85
Cost of revenue
1612
96
2018
30
3092
82
3258
78
3271
53

Financial Reporting and management accounting
31
Gross profit
2531
0
2415
2
4939
6
7033
9
6113
2
Costs and expenses
Sales, General and administrative
1049
5
1155
3
1269
6
1307
0
1335
7
Depreciation and amortization
1450
5
1521
9
1516
3
1351
0
1248
1
Interest expense 977 886 1148 2833 1125
Other operating expenses 1628 6065
1543
9
1070
5
1536
0
Total costs and expenses
2760
5
3372
3
4444
6
4011
8
4232
3
Income before income taxes -2295 -9571 4950
3022
1
1880
9
Provision for income taxes -2467 -3171 947 6463 6993
Net income from continuing operations 172 -6400 4003
2375
8
1181
6
Other -57 -82 -223 -307 -234
Net income 115 -6482 3780
2345
1
1158
2
Preferred dividend 2
Net income available to common shareholders 115 -6484 3780
2345
1
1158
2
Earnings per share
Basic 0.04 -2.12 1.23 7.43 3.65
Diluted 0.03 -2.12 1.23 7.39 3.62
Weighted average shares outstanding
Basic 3124 3054 3064 3155 3171
Diluted 3143 3054 3083 3174 3193
EBITDA
1318
7 6534
2126
1
4656
4
3241
5
BP PLC ADR (BP) CashFlowFlag BALANCE SHEET
Fiscal year ends in December. USD in millions
except per share data.
2016-
12
2015-
12
2014-
12
2013-
12
2012-
12
Assets
Current assets
Cash
Cash and cash equivalents
2348
4
2638
9
2976
3
2252
0
1954
8
Short-term investments 44 219 329 467 319
Total cash
2352
8
2660
8
3009
2
2298
7
1986
7
Receivables
2212
8
2319
4
3220
8
4055
9
3836
7

Financial Reporting and management accounting
32
Inventories
1765
5
1414
2
1837
3
2923
1
2786
7
Prepaid expenses 1486 1838 1424 1388 1058
Other current assets 3016 4820 5165 2675
2382
2
Total current assets
6781
3
7060
2
8726
2
9684
0
1109
81
Non-current assets
Property, plant and equipment
Gross property, plant and equipment
2888
83
2927
03
2817
01
2688
86
2410
55
Accumulated Depreciation
-
1591
26
-
1629
45
-
1510
09
-
1351
96
-
1206
07
Net property, plant and equipment
1297
57
1297
58
1306
92
1336
90
1204
48
Equity and other investments
2373
4
1883
6
2038
4
2740
0
2142
4
Goodwill
1119
4
1162
7
1186
8
1218
1
1186
1
Intangible assets
1818
3
1866
0
2090
7
2203
9
2404
1
Deferred income taxes 4741 1545 2309 985 874
Other long-term assets 7894
1080
4
1088
3
1255
5
1056
4
Total non-current assets
1955
03
1912
30
1970
43
2088
50
1892
12
Total assets
2633
16
2618
32
2843
05
3056
90
3001
93
Liabilities and stockholders' equity
Liabilities
Current liabilities
Accounts payable
2157
5
1683
8
2307
4
4715
9
2970
3
Short-term debt 6592 6898 6831 7381
1003
0
Capital leases 42 46 46
Accrued liabilities 5136 6261 7102 8960 6810
Other current liabilities
2500
9
2468
1
2656
2 9312
3104
3
Total current liabilities
5835
4
5472
4
6361
5
7281
2
7758
6
Non-current liabilities
Long-term debt
5107
4
4556
7
4597
7
4081
1
3876
7
Capital leases 592 657
Deferred taxes liabilities 7238 9599 1389 1743 1506

Financial Reporting and management accounting
33
3 9 4
Accrued liabilities 469 890 861 547 448
Pensions and other postretirement benefits 8875 8855
1145
1 9778
1354
9
Minority interest 1557 1171 1201 1105 1206
Other long-term liabilities
3987
1
4315
3
3586
6
3389
6
3515
9
Total non-current liabilities
1096
76
1098
92
1092
49
1035
76
1041
93
Total liabilities
1680
30
1646
16
1728
64
1763
88
1817
79
Stockholders' equity
Common stock 5284 5049 5023
1293
02
1184
14
Additional paid-in capital
1221
9
1023
4
1026
0
Retained earnings
7563
8
8136
8
1175
72
1020
82
8748
5
Treasury stock
-
1844
3
-
1996
4
-
2071
9
-
2097
1
-
2105
4
Accumulated other comprehensive income
2058
8
2052
9 -695
-
8111
1
-
6643
1
Total Stockholders' equity
9528
6
9721
6
1114
41
1293
02
1184
14
Total liabilities and stockholders' equity
2633
16
2618
32
2843
05
3056
90
3001
93
BP PLC ADR (BP) Statement of CASH FLOW
Fiscal year ends in December. USD in millions
except per share data.
2016-
12
2015-
12
2014-
12
2013-
12
2012-
12
Cash Flows From Operating Activities
Depreciation & amortization
1450
5
1521
9
1516
3
1351
0
1248
1
Investment/asset impairment charges -2796 1243 8070
-
1115
4 -421
Stock based compensation 779 321 379 297 156
Inventory -3681 3375
1016
9 -1193 -1797
Other working capital 483 -2532 -3244 -5650 -5054
Other non-cash items 1401 1507 2217
2529
0
1503
2
Net cash provided by operating activities
1069
1
1913
3
3275
4
2110
0
2039
7

Financial Reporting and management accounting
34
Cash Flows From Investing Activities
Investments in property, plant, and equipment
-
1670
1
-
1864
8
-
2254
6
-
2452
0
-
2307
8
Property, plant, and equipment reductions 1372 1066 1820
1811
5 9991
Acquisitions, net 508 172 1025 -1628 1339
Purchases of investments -1584
Sales/Maturities of investments 110 127 178 370
Other investing activities 68
Net cash used for investing activities
-
1475
3
-
1730
0
-
1957
4 -7855
-
1296
2
Cash Flows From Financing Activities
Debt issued
1244
2 8173
1239
4 8814
1108
7
Debt repayment -6685 -6426 -6282 -5959 -7177
Common stock issued 122
Cash dividends paid -4611 -6659 -5850 -5441 -5294
Other financing activities 831 377 -5528 -7814 -756
Net cash provided by (used for) financing
activities 1977 -4535 -5266
-
1040
0 -2018
Effect of exchange rate changes -820 -672 -671 40 64
Net change in cash -2905 -3374 7243 2885 5481
Cash at beginning of period
2638
9
2976
3
2252
0
1963
5
1406
7
Cash at end of period
2348
4
2638
9
2976
3
2252
0
1954
8
Free Cash Flow
Operating cash flow
1069
1
1913
3
3275
4
2110
0
2039
7
Capital expenditure
-
1670
1
-
1864
8
-
2254
6
-
2452
0
-
2307
8
Free cash flow -6010 485
1020
8 -3420 -2681