Comprehensive Analysis of Global Trade Finance for Suncor Energy

This report provides a financial analysis of Suncor Energy's global trade finance, examining various aspects such as product costs, logistics expenses, operating costs, and selling prices. The analysis delves into the company's cash flow statement, comparing the results from 2019 and 2018 to assess the impact of operating activities, investing activities, and financing activities. The report highlights the factors influencing cash flow, including changes in crude oil differentials, acquisition activities, and debt obligations. The analysis is based on Suncor Energy's 2019 annual report, providing insights into the financial performance and viability of various transactions within the context of global trade finance. The report utilizes information from Suncor.com and other financial sources to support its findings.

Running head: GLOBAL TRADE FINANCE
GLOBAL TRADE FINANCE
Name of the Student:
Name of the University:
Author Note:

1GLOBAL TRADE FINANCE
Table of Contents
The financial side of transaction................................................................................................1
Analysis of the cash flow...........................................................................................................2
References..................................................................................................................................3

2GLOBAL TRADE FINANCE
The financial side of transaction
Product cost – As Suncor is a Canadian integrated energy company, it has various products
that are associated with the operational and production process of the company (Thomas &
Gilbert, 2014). The company deals with petroleum products, fossil fuel products, and many
more products, each of them has some product costs. Suncor’s further expansion and
development will have an adverse material impact on the financial conditions and operations
of the business.
Logistic costs – For efficiently maintaining the quality of management, various charges are
incurred, such as materials cost, equipment cost, cost for qualifies personnel, and logistics
infrastructure cost. There is a specific risk associated with logistics and offshore fabrication.
The tariff duties and quotas will affect the cost of materials and offshore fabricated related to
equipment.
Operating costs – Various cash operating costs are taken into consideration to evaluate the
operating performance of the company (Grüner & Schönenberger, 2015). Cash operating
costs of oil sands operations, Fort Hills and Syncrude are adjusted to remove costs associated
with oil sands running mining and upgrading. Cash operating costs assumes to be non-GAAP
financial measures of the company. The operating expenses incudes costs such as contract
services, employee costs, materials, energy and many more.
Selling price – Due to Suncor’s Refining and Marketing business, the management of the
company believes that there might be fluctuation in the cost or selling price of the products.
There will be fluctuation in demand for products, margin volatility, and even in market
competitiveness (Kryvtsov & Vincent, 2014). Various market risk and volatility are
associated with the business as the company downstream business unit involved in a new
product, and this will result in fluctuation in selling price or cost of the products. In 2019, an

3GLOBAL TRADE FINANCE
amount of $11244 was incurred as operating, selling, and general expenses. Suncor’s selling
price of oil and natural gas are determined according to US dollar benchmark prices.
Analysis of the cash flow
By critically evaluating the 2019 annual report of the Suncor energy it is seen that the cash
flow statement of the company reflects different results that have to be taken into
consideration for the examining the viability of numerous transaction. The cash flow
statement indicates that the company generates a cash flow of $10.421 billion from operating
activities in 2019. In 2018, cash flow from operating activities was $10.580 billion that is
more as compared to 2019 results (Suncor.com, 2020). Improvement in western Canadian
crude oil differentials has a positive impact in 2019. As the production increases, the
expenses also associated and this indicates that cash is used from the working capital of the
company that ultimately leads to decrease in cash flow from operating activities.
In investing activities, the result was $5.088 billion in 2019 and $6.697 billion in 2018. In
2019, less acquisition activity results in decrease of cash flow from investing activities. As in
2018, there was purchase of 5% additional interest in Syncrude.
For financing activities there was an increase in cash flow from 2019 to 2018 as in 2019 it
was $5.537 billion and in 2018, it was $4.426. The significant reason for an increase in cash
flow was due to decrease in current debt obligation of the company, less debt payments, and
increase in dividends paid.

4GLOBAL TRADE FINANCE
References
Suncor.com. (2020). Annual Report – Financial Reports | Suncor. Retrieved 28 February
2020, from https://www.suncor.com/en-ca/investor-centre/financial-reports/annual-
disclosure
Grüner, A., & Schönenberger, F. (2015). Risk Cluster Framework-How to analyse companies
by operating leverage.
Kryvtsov, O., & Vincent, N. (2014). On the importance of sales for aggregate price
flexibility (No. 2014-45). Bank of Canada working paper.
Thomas, D. S., & Gilbert, S. W. (2014). Costs and cost effectiveness of additive
manufacturing. NIST special publication, 1176, 12.