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FINANCIAL ANALYSISNOTE: All the financial figures we used for calculation are taken from the annual financial reports of PSO of year 2010 and 20111. CURRENT RATIO. Current Ratio = current assets / current liabilities.20102011

Current Ratio=

Current Ratio= 1.16 times

Current Ratio=

Current Ratio= 1.16 times

InterpretationThe organizations having current ratio more than 1 shows that organization has more assets then its liabilities. In case of PSO it is clear that it has 1.16 rupees in assets to cover 1 rupee liabilities.2. Quick RATIO. Current Ratio = / current liabilities.20102011

Quick Ratio=

Quick Ratio= 0.46

Quick Ratio=

Quick Ratio= 0.63

InterpretationThe organizations having Quick ratio less than 1 shows that organization has less assets then its liabilities. In case of PSO it is clear that it has 0.63 rupees in 2011 and 0.46 rupees in 2010 to cover 1 rupee liabilities.3. Asset turnover RATIO. 1. Asset Turn-over=

20102011

Asset Turn-over=

Asset Turn-over= 3.67

Asset Turn-over=


InterpretationThe result of the ratio is showing that PSO had the asset turnover of 3.67 and 3.12 in 2010 and 2011 respectively, which is very good even though it is decreased little bit 2011 but still it is very good. It means that the utilization of assets is in good position. It is indicting that how much the company has the efficiency in maintaining the operations of the company.4. inventory turnover RATIO. Inventory Turn-over=

20102011

Inventory Turn-over=

Inventory Turn-over=6.26 days


Inventory Turn-over=6.81 days

InterpretationThe result of the ratio is showing that PSO had the Inventory turnover of 6.26 and 6.81 in 2010 and 2011 respectively, which is very good.

5. inventory Period. Inventory Period=

20102011

Inventory Period=

Inventory Period= 58.24

Inventory Period=


InterpretationThe result of the ratio is showing that PSO had the Inventory period of 58.24 and 53.24 in 2010 and 2011 respectively, which is not very good.6. Avg Collection PeriodAvg Collection Period =

20102011

Avg Collection Period =




InterpretationThe result of the ratio is showing that PSO had the Avg Collection Period of 7.15 and 10 in 2010 and 2011 respectively, which means that they receive cash from their creditor on average in 7.15 days in 2010 and in 10 days in 2011. In 2011 DSO increase which is not good for the organization.7. Debt/equity ratioDebt/equity ratio =

20102011

Debt/equity ratio = 100

Debt/equity ratio=0.03

Debt/equity ratio=3%




InterpretationThe result of the ratio is showing that PSO had the Debt/equity ratio of 3% and 2% in 2010 and 2011 respectively, which means that they have debt of 3% of total equity in 2010 and 2% of equity in 2011.8. Debt/Asset ratioDebt/Asset Ratio = 100

20102011

Debt/Asset Ratio = 100

Debt/Asset Ratio =


Debt/Asset Ratio =

InterpretationThe result of the ratio is showing that PSO had the Debt/asset ratio of 0.85% and 0.84% in 2010 and 2011 respectively, which means that they have debt of 0.85% of total assets in 2010 and 0.84% of assets in 2011.9. Gross profit % ageGross profit % age = 100

20102011

Gross profit % age = 100

Gross profit % age =



InterpretationThe result of the ratio is showing that PSO had the gross profit ratio of 3.29% and 4.17% in 2010 and 2011 respectively, which means that they earn 3.92 rupees in gross profit by investing 100 rupees in 2010 and 4.17 rupees in 2011 respectively.10. Net profit % ageNet profit % age = 100

20102011

Net profit % age = 100

Net profit % age =


Net profit % age =

InterpretationThe result of the ratio is showing that PSO had the net profit ratios of 1.22% and 1.80% in 2010 and 2011 respectively, which means that they earn 1.22 rupees in net profit by investing 100 rupees in 2010 and 1.80 rupees in 2011 respectively.11. Return on asset Return on asset = 100

20102011

Return on asset = 100

Return on asset =


Return on asset =

InterpretationThe percentages of two consecutive years are showing that the company is profitable as relative to its total assets. And its assets are generating good revenue. Company has a good ROA result in 2010 to 4% and in 2011 they have ROA of 5.6%. I will say that the company is in good position in generating the revenue by its assets for last two consecutive years.12. Return on Equity Return on Equity = 100

20102011

Return on Equity = 100

Return on Equity =


Return on Equity =

InterpretationThe percentages of two consecutive years are showing that the company is profitable as relative to its total equity. And its equity is generating good revenue. Company has a good ROE result in 2010 to 31% and in 2011 they have ROE of 35%. I will say that the company is in good position in generating the revenue by its Equity for last two consecutive years.13. Fixed Asset turnover RATIO. Fixed Asset Turn-over=

20102011

Fixed. Asset Turn-over=

Fixed. Asset Turn-over= 83.69



InterpretationThe result of the ratio is showing that PSO had the fixed asset turnover of 83.69 and 83.23 in 2010 and 2011 respectively, which is very good even though it is decreased little bit 2011 but still it is very good. It means that the utilization of assets is in good position. It is indicting that how much the company has the efficiency in maintaining the operations of the company.14. Long term Debt/Asset ratio Long-term Debt/Asset Ratio = 100

20102011

Long-term Debt/Asset Ratio = 100

Long-term Debt/Asset Ratio = 0.46%



InterpretationThe result of the ratio is showing that PSO had the long term Debt/asset ratio of 0.46% and 0.38% in 2010 and 2011 respectively, which means that they have long term debt of 0.46% of total assets in 2010 and 0.38% of assets in 2011.15. Operating Cycle Operating Cycle = No of days of inventory + No of days of Receivables

20102011

Operating Cycle = 58.24 + 7.15

Operating Cycle = 65.39 days

Operating Cycle = 53.54 + 10


InterpretationThe result of the ratio is showing that PSO had the Operating cycle of 65 days and 63 days in 2010 and 2011 respectively, which means from startup of operations to the profit; they took 65 days in 2010 and 63 days in 2011. In 2011 the time improves because DSO decreases in 2011.

FINANCIAL ANALYSISNOTE: All the financial figures we used for calculation are taken from the annual financial reports of Shell for year 2010 and 20111. CURRENT RATIO. Current Ratio = current assets / current liabilities.20102011

Current Ratio=

Current Ratio= 0.84

Current Ratio=

Current Ratio= 0.90

InterpretationThe organizations having current ratio more than 1 shows that organization has more assets then its liabilities. In case of PSO it is clear that it has 0.84 rupees in assets to cover 1 rupee liabilities in 2010 and 0.90 in 2011.2. Quick RATIO. Current Ratio = / current liabilities.20102011

Quick Ratio=

Quick Ratio= 0.36

Quick Ratio=

Quick Ratio= 0.53

InterpretationThe organizations having Quick ratio less than 1 shows that organization has less assets then its liabilities. In case of PSO it is clear that it has 0.36 rupees in 2011 and 0.53 rupees in 2010 to cover 1 rupee liabilities.3. Asset turnover RATIO. Asset Turn-over=

20102011

Asset Turn-over=


Asset Turn-over=


InterpretationThe result of the ratio is showing that PSO had the asset turnover of 5.8 and 5.03 in 2010 and 2011 respectively, which is very good even though it is decreased little bit 2011 but still it is very good. It means that the utilization of assets is in good position. It is indicting that how much the company has the efficiency in maintaining the operations of the company.4. inventory turnover RATIO. Inventory Turn-over=

20102011


Inventory Turn-over=12.78days


Inventory Turn-over=13 days

InterpretationThe result of the ratio is showing that PSO had the Inventory turnover of 12.78 and 13 in 2010 and 2011 respectively, which is very good.

5. inventory Period. Inventory Period=

20102011

Inventory Period=


Inventory Period=


InterpretationThe result of the ratio is showing that PSO had the Inventory period of 28.54 and 26.7 in 2010 and 2011 respectively, which is not very good.6. Avg Collection PeriodAvg Collection Period =

20102011





InterpretationThe result of the ratio is showing that PSO had the Avg Collection Period of 15.79 and 21.57 in 2010 and 2011 respectively, which means that they receive cash from their creditor on average in 15.79 days in 2010 and in 21.57 days in 2011. In 2011 DSO increase which is not good for the organization.

7. Debt/equity ratioDebt/equity ratio =

20102011



Debt/equity ratio=2.4%




InterpretationThe result of the ratio is showing that PSO had the Debt/equity ratio of 2.4% and 2% in 2010 and 2011 respectively, which means that they have debt of 2.4% of total equity in 2010 and 2% of equity in 2011.8. Debt/Asset ratioDebt/Asset Ratio = 100

20102011


Debt/Asset Ratio =


Debt/Asset Ratio =

InterpretationThe result of the ratio is showing that PSO had the Debt/asset ratio of 0.79% and 0.83% in 2010 and 2011 respectively, which means that they have debt of 0.79% of total assets in 2010 and 0.83% of assets in 2011.9. Gross profit % ageGross profit % age = 100

20102011





InterpretationThe result of the ratio is showing that PSO had the gross profit ratio of 5.41% and 5.04% in 2010 and 2011 respectively, which means that they earn 5.41 rupees in gross profit by investing 100 rupees in 2010 and 5.04 rupees in 2011 respectively.10. Net profit % ageNet profit % age = 100

20102011


Net profit % age =


Net profit % age =

InterpretationThe result of the ratio is showing that PSO had the net profit ratios of 0.72% and 0.36% in 2010 and 2011 respectively, which means that they earn 0.72 rupees in net profit by investing 100 rupees in 2010 and 0.36 rupees in 2011 respectively.11. Return on asset Return on asset = 100

20102011


Return on asset =


Return on asset =

InterpretationThe percentages of two consecutive years are showing that the company is profitable as relative to its total assets. And its assets are generating good revenue. Company has a good ROA result in 2010 to 4.2% and in 2011 they have ROA of 5.2%. I will say that the company is in good position in generating the revenue by its assets for last two consecutive years.12. Return on Equity Return on Equity = 100

20102011


Return on Equity =


Return on Equity =

InterpretationThe percentages of two consecutive years are showing that the company is profitable as relative to its total equity. And its equity is generating good revenue. Company has a good ROE result in 2010 to 10.04% and in 2011 they have ROE of 11%. I will say that the company is in good position in generating the revenue by its Equity for last two consecutive years.13. Fixed Asset turnover RATIO. Fixed Asset Turn-over=

20102011

Fixed Asset Turn-over=

Fixed Asset Turn-over= 17.20



InterpretationThe result of the ratio is showing that PSO had the fixed asset turnover of 17.20 and 19.96 in 2010 and 2011 respectively, which is very good. It means that the utilization of assets is in good position. It is indicting that how much the company has the efficiency in maintaining the operations of the company.14. Long term Debt/Asset ratio Long-term Debt/Asset Ratio = 100

20102011


Long-term Debt/Asset Ratio = 0.49%Long-term Debt/Asset Ratio = 100


InterpretationThe result of the ratio is showing that PSO had the long term Debt/asset ratio of 0.49% and 0.38% in 2010 and 2011 respectively, which means that they have long term debt of 0.49% of total assets in 2010 and 0.38% of assets in 2011.15. Operating Cycle Operating Cycle = No of days of inventory + No of days of Receivables

20102011





InterpretationThe result of the ratio is showing that PSO had the Operating cycle of 44.33 days and 48.27 days in 2010 and 2011 respectively, which means from startup of operations to the profit; they took 44.33 days in 2010 and 48.27 days in 2011. In 2011 the time increases because DSO Increases in 2011.

Additional Funds needed for PSO in 2012

AFN= 305,349,571

Additional Funds needed for Shell in 2012

AFN= 9,776,189

PSOPro Forma Balance Sheet December 31, 2012Assets

Non-current Assets

Property, plant and equipment7,301,677

Intangibles34,586

Long term investments2,777,001

Long term loans389,464

Long term deposits178,497

Deffered tax1,148,984

Current Assets

Inventory138,406

Stock in trade114,454,071

Trade debt149,666,198

Loan and advances516,859

Deposits and short term payments1,232,857

Other receivables27,024,333

Taxation7,574,341

Cash and bank balances2,770,807

Net assets in Bangladesh252,814,896

Total Assets568,022,977

EQUITY AND LIABILITIES

Equity

Share capital1,715,190

Capital reserves493,189

Revenues reserves39,694,606

Non-Current Liabilities

Long term deposits153,698,316

Retirement and other service benefits2,233,717

Current Liabilities

Trade and other payables344,525,802

Provisions688,512

Accrued Interest432,133

Short term borrowing24,541,511

Total Equity and Liabilities568,022,976

ShellPro Forma Balance Sheet December 31, 2012Assets

Non-current Assets

Property, plant and equipment7,982,423

Intangibles1,585,325

Long term investments3,299,532

Long term loans112,696

Long term deposits233,090

Long term debtors4,478

Deferred tax1,660,579

Current Assets

Inventory18,171

Stock in trade21,416,666

Trade debt2,986,691

Loan and advances79,838

Deposits and short term payments325,359

Other receivables17,559,905

Cash and bank balances1,726,136

Total Assets58,990,889


Equity

Share capital684,880

Capital reserves2,096,050

Inappropriate profit5,477,191


Asset retirement obligation189,351

Current Liabilities

Trade and other payables34,271,292

Accrued mark-up217,645

Short term running finance7,866,032

Short term loans7,879,000

Taxation253,829

Total Equity and Liabilities58,935,270

VERTICAL ANALYSIS OF BALANCE SHEET OF PSO

Assets20112010

Non-current Assets

Property, plant and equipment2.33% 3.17%

Long term investments0.88%1.00%

Long term loans0.12%0.16%

Long term deposits0.06%0.006%

Deffered tax0.36%0.00%

Total Non Current Assets3.75%4.39%

Current Assets

Inventory0.04%0.06%

Stock in trade36.31%28.97%

Trade debt47.48%58.10%

Loan and advances0.16%0.20%

Deposits and short term payments0.39%0.18%

Other receivables8.57%7.20%

Taxation2.40%0.02%

Cash and bank balances0.88%0.88%

Total Current Assets96.25%96.25%

Total Assets100%100%

EQUITY AND LIABILITIES20112010

Equity

Share capital0.65%0.85%

Capital reserves15.30%13.66%

Total equity15.95%14.51%

Long term liabilities


Retirement and other service benefits0.85%0.93%

Total Long term liabilities1.24%1.40%

Trade and other payables73.04%77.15%

Provisions0.26%0.34%

Accrued Interest0.16%0.16%

Short term borrowing9.34%6.44%

Total Equity and Liabilities100%100%

InterpretationVertical Analysis is described as for a single financial statement each item is expressed as a percentage of a significant total. Figure above is the vertical analysis of PSO Balance sheet. It is showing that the fixed assets are decreased in 2011 that is not the good thing for PSO but the current assets are not increasing well. In 2010 and 2011, current assets were 96.25 % respectively of the total asset.Now if we see the figure it is showing that current liabilities are stable and there is a minor decrease in 2011. But the fixed liabilities are decreased and its the good thing for PSO. Now if we look at the capital, it is also increasing over two year. The reason is that company is generating more shares for gaining capital instead of taking more loans from bank therefore it is good for PSO as well. VERTICAL ANALYSIS OF INCOME STATEMENT OF PSO

Profit and Loss Account20112010

Net sale100%100 %

COPS95.8%96.07%

Gross Profit4.17%3.93%

Other operating income0.22%0.19%

Other Operating expenses1.32%1.27%

Profit from Operations3.07%2.86%

PBT2.19%2.42%

InterpretationIn the vertical analysis of income statement, all the items are considered as the part of percentage of total income. But in case of PSO, as it is product providing organization so its net income will be considered as 100% and all other items are considered as the part of it.The value of operational and administration cost, depreciation and taxation for last years are in the Income Statement. Administration and operational cost are increased in the last year, thats why the operating expenses increased in 2011 so it`s not good for PSO. Similarly taxation and depreciation also increased in the last years. These are the reasons due to which the profit in 2011 decreased from 2.42% to 2.19%.

HORIZONTAL ANALYSIS OF BALANCE SHEET OF PSO

Assets20102011%age Change

Non-current Assets

Property, plant and equipment63752336084731-4.55673

Intangibles3625028822-20.491

Long term investments2019270231416814.60419

Long term loans3178893245542.096644

Long term deposits12595114874818.0999

Deferred tax957487

Current Assets

Inventory1138631153391.296295

Stock in trade585986689537839362.76546

Trade debt1175010741247218326.14527

Loan and advances4099874307165.056014

Deposits and short term payments3673781027381179.6523

Other receivables145575422252027854.69835

Cash and bank balances1778056230900629.86126

Total Assets20224774126267340629.87705

EQUITY AND LIABILITIES20112010%age Change

Equity

Share capital171519017151900

Capital reserves4931894758293.648369

Total equity396946062714503946.23153

Long term liabilities


Retirement and other service benefits2233717188775118.32689

Total Long term liabilities

Trade and other payables191851017156035716 22.95327

Provisions688512688512 0

Accrued Interest43213333021330.86493

Short term borrowing245415111302101588.47617

Total Equity and Liabilities26267340620224774129.87705

HORIZONTAL ANALYSIS OF INCOME STATEMENT OF PSOProfit and Loss Account20112010%age Change

Net sale82053036474275795110.47076

COPS78625005971359170710.18206

Gross Profit342803052916624417.53418

Other operating income1815951147905422.77787

Other Operating expenses10879122941188515.58919

Profit from Operations252171342123341318.76157

PBT17974434179631520.062806

Profit for the year14779314904959663.31463

InterpretationLike the horizontal analysis of balance sheet, in it we also compare the values of different items of balance sheet for different years. Administration and operational cost is continuously increasing for last two years so for PSO it is bad. Similarly the depreciation is also increasing, although its percentage of increasing is low but still its not good for PSO. But on other hand taxation of PSO is decreasing and the reason is that PSO paid more provision of the tax in 2011. When the tax implemented in 2012, the additional amount deducted from the provision paid in 2011, so therefore the percentage of tax paid by PSO decreases in 2012. VERTICAL ANALYSIS OF BALANCE SHEET OF ShellAssets

Non-current Assets20112010

Property, plant and equipment13.53%16.89%

Intangibles2.68%4.36%

Long term investments5.6%6.61%

Long term loans0.19%0.21%


Long term debtors0.0075%0.029%

Deferred tax2.81%5.17%

Current Assets

Inventory0.031%0.0376%

Stock in trade36.31%32.07%

Trade debt5.07%5.3%

Loan and advances0.13%0.198%

Deposits and short term payments0.51%0.79%

Other receivables29.71%25.16%

Cash and bank balances2.93%2.71%

Total Assets100%100%


Equity20112010

Share capital1.39%1.78%

Capital reserves4.26%5.44%

Inappropriate profit11.14%13.30%


Asset retirement obligation0.38%0.49%

Current Liabilities

Trade and other payables49.8%51.78%

Accrued mark-up0.49%0.22%

Short term running finance16%4.12%

Short term loans16.2%21.82%

Taxation0.516%0.99%

Total Equity and Liabilities100%100%

InterpretationVertical Analysis is described as for a single financial statement each item is expressed as a percentage of a significant total. Figure above is the vertical analysis of Shell Balance sheet. It is showing that the fixed assets are decreased in 2011 that is not the good thing for Shell but the current assets are increased little bit and thats the good thing for Shell. Now if we see the figure it is showing that current liabilities are stable and there is a minor decrease in 2011. But the fixed liabilities are decreased and its the good thing for PSO. Now if we look at the capital, it is also decreased over two year. And thats why company needs to issue debt in the market to get capital.VERTICAL ANALYSIS OF INCOME STATEMENT OF ShellProfit and Loss Account20112010

Net sale100%100 %

COPS94.30%93.86%

Gross Profit5.69%6.14%

Other operating income1.96%1.88%

PBT1.29%1.54%

Profit for the year0.41%0.82%

InterpretationIn the vertical analysis of income statement, all the items are considered as the part of percentage of total income. But in case of Shell, as it is product providing organization so its net income will be considered as 100% and all other items are considered as the part of it.The value of operational and administration cost, depreciation and taxation for last years are in the Income Statement. Cost of goods sold in the last year increased due to which the gross profit is also decreased in 2011. Operating expenses are also increased in 2011 so it`s not good for Shell. Similarly taxation and depreciation also increased in the last years. These are the reasons due to which the profit in 2011 decreased from 0.82% to 0.41%. And that is the also reason due to which their Equity also reduced.

Horizontal ANALYSIS OF BALANCE SHEET OF ShellAssets

Non-current Assets20112010%age Change

Property, plant and equipment665202065027732.295129

Intangibles13211051679707-21.3491

Long term investments274986102547853979.2856

Long term loans939148196014.58516


Long term debtors373211442-67.3833

Deferred tax13838161993350-30.5784

Current Assets

Inventory15143145024.42008

Stock in trade178472221234843844.5302

Trade debt2488910201335823.61984

Loan and advances6653276187-12.6728

Deposits and short term payments271133305384-11.2157

Other receivables14633255968686651.06284

Cash and bank balances1438447104502537.64714

Total Assets491590813849751127.69418


Equity20112010%age Change

Share capital

Capital reserves6848806848800

Inappropriate profit209605020960500


Asset retirement obligation1893511871041.200936

Current Liabilities

Trade and other payables244951031993655022.86531

Accrued mark-up21764586350152.0498

Short term running finance78660321586438395.8298

Short term loans78790008400000-6.20238

Taxation253829382822-33.6953

Total Equity and Liabilities491590813849751127.69418

HORIZONTAL ANALYSIS OF INCOME STATEMENT OF ShellProfit and Loss Account20112010%age Change

Net sale21914934919753091110.94433

COPS206668670185403153 11.46988

Gross Profit1248067912127758 2.910027

Other operating income42934093712754 15.63947

PBT28327173044085 -6.94356

Profit for the year9059901615582 -43.9218

InterpretationLike the horizontal analysis of balance sheet, in it we also compare the values of different items of balance sheet for different years. Cost of goods sold is increased 11% in last year so for Shell it is bad. Similarly the depreciation is also increasing, although its percentage of increasing is low but still its not good for Shell. Gross profit increased little bit of 2.91% but its not enough to run the organization. As we can see that the PBT is decreased 6% due to which the profit for the year 2011 also decreased 43% in 2011.

1. Opinion to Share-HoldersThe Return on Equity of PSO is 35 % in 2011 but In Shell their Return on Equity is only 11% thats the reason due to which their Equity Capital decreased in 2011 so share-holders need to think about their investment because the net income of Shell is also decreased in 2011 thats not the good sign for Share-holder. 2. Opinion to ManagementManagement of Shell need to think about their COSG because it is continuously increases and its operating expenses are also increased due to which their PBT in 2011 decreased 6% and their profit decreased 43% in 2011 which can lead shell to the bankruptcy. 3. SuggestionsPSO have too much inventory due to which their quick ratio is suddenly decreases from 1.63 to 0.46 only after deducting inventory. The DSO of PSO is also increases in 2011 so also need to reduce that. The operating cycle of PSO is very high which is 63 days as compare to Shell they have operating cycle of just 48 days so PSO need to reduce their operating cycle to get revenue as early as possible.

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