Financial Statement Analysis Report (Doc)
Added on 2020-01-21
12 Pages2368 Words49 Views
FINANCIAL STATEMENT ANALYSIS
1.Introduction In association with rendering quality service, we all know that the primary concern ofevery business is in the financial activities it carries out. Every company developes financialstatements for the purpose of ascertaining the financial position. Various kinds of decisions aretaken on the basis of these statements. However the information prescribed within thesestatements is not adequate enough to come to a point or conclusion. Hence in order to fulfill thatdifferent kinds of technquies are used such as ratio analysis, trend analysis, off balance sheetanalysis, z-score etc. We have chosen to analyze the financial statements of two notable global companies—ShellOman and Al Maha—due to factors pointing directly at their depreciating revenue as well as theappreciation of their net profits. Analsis of statements is made in order to evaluate the financialperformance of both the companies. This kind of evaluation will help in judging the profitability,efficiency, profitability etc of the firms. 1.1.Limitation The major limitation of this report is that the scope attached to it is very limited. It isrestricted to only 4 years. It is not normally enough to ascertain a company’s performance.Objectives: This report tends to examine the financial efficiency, profitability, financialsoundness and plans of the two giant companies in the survey over a period of 4 years. 2.Trends And AnalysisThe domestic consumption of Omani crude production has improved at approximately 10%p.a. since the year 2002 with respect to the data released by the Ministry of Oil and Gas. The
volume of exports volumes, which accounts for 83% of the total production recorded in 2012,and was also used to garner a larger share (93%) in 2002. This rise in domestic consumption haslargely been attributed to a concerted effort made by the government to spread its dependence onrevenues from Oil firms which led to an increase in industrial, and transport patronage and use ofdomestic crude to fuel industries and has consequently brought about increased usage ofautomobiles. Al Maha has shown improved revenues and lower profit on a yearly basis. But withthe rebranding of filling stations in progress, and with stations functioning under the new brand,the company’s sales growth is believed to recover in no time.The growth in domestic consumption at a subsidized price has been in part responsible forbudgetary pressures raising the nation’s break-even oil price from $ 60/bbl in 2008 to theexpected $80/bbl in 2012, as regards the Standard. In recent developments, the governmenthinted the restructuring of its subsidy bill and draft legislation with a reformation proposal hasbeen submitted for approval to the Council of Ministers.Both companies participate and compete fiercely in all sectors of the economy. In retail,they can only contend on service, like presence and branding due to Government Directive of theretail price. In all the other sectors, the companies have room to compete on price. Although,Shell Oman has a separate benefit in the lubricant sector as it is the only company in Oman thathas a blending plant to itself.
1234050,000,000100,000,000150,000,000200,000,000250,000,000300,000,000350,000,000403,552430,570361,511336,015304,760,786318,498,270368,939349,414RevenuesShell OmanAl MahaYearsAmountHint: 1=2012, 2=2013, 3=2014, 4=2015As is clearly evident in the comparative chart above which traces the revenue growth ofboth companies, Al-Maha has shown a massive increase in revenues especially in the years 2012and 2013, while Shell Oman has revenue in growth. In the same vein, the revenu trend for Al-Maha is declining however it is expected that it will increase in the near future due toimprovements in the economy. It can also be noticed that tax burden is same at all the levels. The interest burden for forAl-Maha is high as compared to Shell Oman. Al-Maha is having high operating margin withregard to its competitors. The finacial leverage ratio for the company is also low. It is expectedthat they can improve the ROE through leveraging more. Although, according to the company’s
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents
Financial Analysis of Caltex Australialg...
|20
|3514
|188
BP Oil Company Profit and its Relevancelg...
|6
|752
|94
Financial Analysis of A.O. Smith Corporationlg...
|21
|3571
|231