shell pakistan (repaired) financial analysis

7/31/2019 Shell Pakistan (Repaired) financial analysis

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SHELL PAKISTAN

2012

Financial management

Final project

Abdul Rehman

REG NO L1S11MCOM0055

SECTION B

U N I V E R S I T Y O F C E N T R A L P U N J A B


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Current ratio = Current Assets

Current liabilities

= 25,489,760

30,407,710

= 0.83 times

In this ratio current liabilities of company are more than its current

assets which is not favorable for the company.

Quick ratio = Current asset(Inventories + prepaid expenses)

Current Liabilities

= 25,489,760-12,668,324

30,407,710

= 0.42 times

In this ratio the quick assets amounts to pay off the short term loan of the

company which is not good on the behalf of the company.

Cash ratio = Cash + Cash equivalent

Current Liabilities= 8,941,413

30,407,710

= 0.30 times

In this ratio company cash and cash equivalent amounts also less than

the company liabilities in case of liquidation of company the amounts ofcash and cash equivalent is not so much to cover the debts and

shareholders investment. Which is also not favorable for the company?


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Debt to equity ratio = total liabilities

Shareholders equity

= 9,986,438

7,900,035

= 1.26 timesIn these ratio total debts is more than the shareholders equity which

means that shareholders contribution is less than the creditors and

lenders.

Debt to asset ratio = total liabilities/total debts

Total assets= 9,986,438

38,497,511

= 0.26 times

Total asset amount is higher than the total liabilities which is good for

the company in case of liquidation of the company total debts amount

cover by the total asset.

Interest coverage ratio = Earning before interest & tax

Interest expenses

= 3,712,754

86,350

= 42.99 times

Interest should be cover 42.99 times from the earning which is favorable

for the company.


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Debt-service coverage ratio = Earning before interest & tax

Interest + principal

1-(tax rate)

= 3,712,75486,350+9,986,438

1-35%

= 0.24 times

Receivable turnover ratio = Credit sales

Average Account Receivable

= 223,813,592= 9,395,541

= 23.82 times

This ratio is favorable for the company because receivable is good on

the behalf of the company and in this ratio company received the a/c

receivable 23.82 times as this ratio increased it is good for the company.

Receivable turnover (in days) = 360

Receivable turnover ratio

= 360

23.82

= 15.11

Company received the amounts from the debtors after 15.11 days if the

company


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Inventory turnover ratio= Cost of goods sold

Average inventory

= 185,403,153

12,727,689

= 14.56 times

This ratio favorable for the company because as early as possible goods

sold inventory should be placed. If goods replaced as goods sold than

there is no chance of shortage of inventory.

Inventory turnover (in days) = 360

14.56

= 24.72

This is favorable for the company to sell the inventory in no time.

Holding period should be minimum. Because as early as possible goods

sold company generates the revenues.

Payable turnover ratio = Credit purchases

Average account payable

= 6,117,41417,953,773

= 0.34 times

In this ratio company account payable has high amount but it is

favorable for the company to slow down such type of payable.

Payable turnover ratio (in days) = 360

Payable turnover ratio

= 3600.3407

= 1057

It is beneficial for the company to pay his payable not as early as

required because this is option to company to invest that amount in other

business and earns the profit.


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Net profit margin = Net profit

Sales

= 1,615,582

223,813,592= 7.2%

The amount of sales is higher than the net profit which means more

expenses and taxes decreased that profit amount which is not favorable.

Gross profit margin = Gross profit

Sales= 12,127,758

223,813,592

= 5.41%

The amount of sales is higher than the gross profit which means that

amount of cost of sale is more which is not good for the company.

Return of equity = Profit after tax

Shareholders equity

= 1,615,582

7,900,045

= 20.45%

Return on investment = Profit after tax

Total investment= 1,615,582

38,497,511

= 4.20%


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Earning per shares = Profit after tax

No. of outstanding shares

= 1,615,582

68,487,913

= 2.40%

Dividend per shares = Dividend declared


= 821,859,956

68,487,913

= 12.00

Dividend payout = Dividend per shareEarning per share

= 12.00

23.59

= 50.86%

Retention ratio = 1- Dividend payout

= 1-50.86%

= 49.14%

Price-earnings ratio = Market price per share

Earning per share

= 14223.59

= 6.02


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Earning yield = Earning per share

Market price per share

= 23.59

142

= 16.61%

Dividend yield = Dividend per share

Market price

= 12

142

= 8.5%

Market price to book value = Market priceBook value

= 142

11.53%

= 1231.56

Book value = Shareholders equity


= 7,900,035

68,487,913

= 11.53%


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Sr No Ratios

1 Current ratio 0.83

2 Quick ratio 0.42

3 Cash ratio 0.3

4 Debt to equity ratio 1.26

5 Debt to asset ratio 0.26

6 Interest coverage ratio 42.99

7 Debt-service coverage ratio 0.24

8 Receivable turnover ratio 23.82

9 Receivable turnover (in days) 15.11

10 Inventory turnover ratio 14.56

11 Inventory turnover (in days) 24.72

12 Payable turnover ratio 0.34

13 Payable turnover ratio (in days) 1057

14 Net profit margin 7.20%

15 Gross profit margin 5.41%

16 Return of equity 20.45%

17 Return on investment 4.20%

18 Earning per shares 2.40%

19 Dividend payout 50.86%

20 Retention ratio 49.14%

21 Price-earnings ratio 6.02

22 Earning yield 16.61%

23 Dividend yield 8.50%

24 Market price to book value 1231.56

25 Book value 11.53%

26 Dividend per shares 12


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shell pakistan (repaired) financial analysis

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