The Petroleum Industry

of Pakistan
Financial Ratio Analysis
 Presenting Party
 Ahsan Abbas(21065)
 Salman Mehmood (19761)
 Ameet Kumar Sawlani (21346)
 Muhammad Arif Masood (18739)
 Our selected companies
 We chose Shell Pakistan as our base
company and compared it’s financial
performance accordingly with PSO
and Hascol.
 Overview of SHELL
 Shell has the presence of over 100 years in the
Sub-continent. Shell Transport Co. and Royal
Dutch Petroleum Co. began importing kerosene
oil from Azerbaijan into the Sub-continent. Even
today, the legacy of the past is visible on a
storage tank carrying the year 1898.
 Mission: “You can sure of Shell”.
 Vision: To be the top performer of first choice.
 Overview of pso
 The creation of Pakistan State Oil (PSO) can be traced
back to the year 1974, when the government took over
and merged Pakistan National Oil (PNO) and Dawood
Petroleum Limited (DPL) as Premier Oil Company
Limited (POCL).
 Mission: “Committed to provide highest quality
petroleum products and services to our customers”.
 Vision: To excel in delivering value to customers as an
innovative and dynamic energy company that gets to the
future first.
 Overview of HASCOL
 The Hascol Co. was incorporated in 2001 under the
1984 companies ordinance, primarily to take advantage
of the petroleum sector de-regulation and undertaking
a program for owning, leasing and renting oil storage
facilities as well as importing petroleum products for its
own account.
 Mission: “To ethically compete within oil industry gaining
recognition for product innovation”.
 Vision: To develop a robust foundation of an oil
marketing Co. with best business practices and our
“Zero Harm Charter”.
TREND ANALYSIS OF SHELL
 1. LIQUIDITY WISE:
 CURRENT RATIO: Shell current ratio of 2014 and 2015 is 0.849
and 0.833 respectively which is below than 1. In both the years the
increase in current liabilities is higher than current assets. Current assets
and liability declined in 2015. This means the company does not have
enough assets to pay its current liabilities.

QUICK RATIO:
The quick ratio is declining by 0.48 which was 0.440 in 2014 and 0.392 in
2015. Hence, the firm cannot pay its short term debts from its most liquid
assets. The obvious reason is the increasing inventory and prepayments which
is not liquid as cash or accounts receivables.
2014 2015
Current Assets- 14,385,768 12,370,533
 Inventories-
Prepayments
Current Liabilities 32,642,090 31,488,155
Quick Ratio 0.440 0.392
 INVENTORY TURNOVER:
 The argument of increasing inventory in quick ratio clearly supports the decrease of inventory turnover rate
from 18.5 times to 14.0 times from 2014 to 2015 respectively. Although the cost of goods sold declined but an
increase in inventory means it takes relatively longer to sell the inventory. Therefore, more cash is tied up as
inventory.
2014 2015
 20 DAYS IN 2014 Cost of Goods 243,203,242 186,533,476
sold
 26 DAYS IN 2015
Inventory 13,086,285 13,281,189

Inventory 18.5 times 14.0 times

Turnover rate

 ACCOUNT RECEIVABLE TURNOVER RATE:

 . Accounts Receivable turnover rate for 2014 and 2015 respectively is 22.739 times and 23 times. This shows
the firm collected cash from its receivables after every 16 days. Account receivables turnover rate has
improved in 2015 from a slight margin due to the decrease in receivables in 2015 and the average collection
period was maintained which means the firm was able to turn receivables into cash
2014 2015
Total credit sales 250,784,741 191,128,351
Account 11,028,527 8,598, 668
receivable
Ratio 22.739 times 23.0 times
Asset Management Ratio
 Total Asset turnover rate (TATR):
 In 2014 the TATR is 6.48 and for 2015 it is 5.19, the decrease is by 1.29. This is
because the decline in sales and total assets in 2015 at a very high rate

2014 2015
Sales 250,784,741 197,128,351
Total Assets 38,678,765 37,934,443
Ratio 6.48 5.19
 Leverage Ratios: -
 Debt equity ratio: The debt equity ratio of 2014 and 2015 is
5.56 and 5.34 respectively for this shows that for every 1 dollar of equity financing the
bank debt financing has decreased from 5.56 in 2014 to 5.34 in 2015
2014 2015
Total Debt 32,783,700 31,953,621
Total Equity 5,895,065 5,980,822
Debt/Equity 5.56 5.34
ratio
Debt asset ratio:
Debt asset ratio of 2014 and 2015 is 0.847 and 0.842 respectively.This shows that 84.7% of total
assets is financed by debt in 2014 and 84.2% of assets are financed by debt in 2015 of total asset
has been financed by total debt. The firm position is at a very risky state because with more debt
comes more risk as interest has to be paid. Debt-asset ratio declined in 2015 because of slight
decrease in total debt and total assets.
2014 2015
Total Debt 32,783,700 31,953,621
Total Assets 38,678,765 37,934,443
Debt/Asset ratio 0.847 0.842
 Trend analysis

Shell PSO Hasco

l
Current ratio 0.833 1.10 0.888
Quick ratio 0.392 0.87 0.464
Inventory turnover 14 times 19.05 8.738
rate times times
No. of days in 26 19 41
inventory
Debt turnover 5.34 6.16 4.6
No. of days in 16 59 4
 Comparative analysis
Shell PSO Hascol
Current ratio 0.833 % 1.10 % 0.88 %
Quick ratio 0.392 % 0.87 % 0.46 %
Debt to equity ratio 5.34 % 3.14 % 4.6 %
Equity ratio 0.16 % 0.24 % 0.22 %
Inventory turnover rate 14 % 19.05 % 8.74 %
Inventory turnover 26 days 19 days 41 days
Gross profit margin 5.37 % 2.58 % 3.7 %
Net profit margin 0.46 % 0.76 % 1.47 %
Return on assets 2.40 % 2.03 % 4.3 %
Return on equity 15.23 % 8.43 % 25 %
 Market ratio analysis
Shell PSO Hascol Industry

Year 2014 2015 2014 2015 2014 2015 2014 2015

Earning per 2.07 16.43 53.46 106.4 4.9 32.88 20.14 51.90
share

Price to 4.83 0.61 0.19 0.09 2.04 0.30 2.35 0.34

earning ratio