BP and Shell Plc Report

Business and Financial Analysis of BP with comparison to Shell PLC 2011

1

Dissertation Topic

BUSINESS AND Financial analysis OF BRITISH

PETROLEUM WITH COMPARISON TO SHELL PLC

Supervisor: - Mr. John Waites

Submitted By

AAMIR YAQOOB

University ID: - 1092187255350

Year: 2011

Submitted in accordance with the requirements for

The degree of

MASTER OF BUSINESS ADMINISTRATION

At the

UNIVERSITY OF WALES


2

ACKNOWLEDGEMENT:

In the name of Allah (God) the most Beneficent the Merciful

All praise to Allah, the Almighty, on whom ultimately we depend for sustenance and

guidance.

First and special I offer sincerest thanks to my research supervisor MR. John Waites,

who really supported me in my research work and guide me with patience and devotion

to complete it to his best level, I found him not only a good research supervisor but also

a good friend who really guide me in friendly way, Secondly Dr. Ana-Maria Pascal

who also guide me to complete my all thesis and approve it for final submission.

I also convey special thanks to my elder brothers Mr.Sohail Yaqoob and Mr.Javed

Yaqoob for their indispensable help dealing with funds, special care and politeness. I

realise that without their efforts, it could have not been possible for me to do MBA

from UK.

I would like to special thanks to my cousins Mr.Zafar Iqbal and Mr.Nasir iqbal who

really help me with special care and pay my attention towards my degree, I also thanks

to my friend like Mr.Naveed Zahid who support me during my work and guide me to

choose right topic for my dissertation. Special thanks for my classmates and group

members Mr.Abdul Hameed, Mr.Paramjit Singh and Mr.Ali Warraich who really make

it possible to arrange group study and show their interest in group work, meetings and

presentation.


3

Finally, I am thankful to academic and administrative staff at LCB and University of

Wales who gave me an opportunity to complete my degree from one of the best

intuition in UK. Who designed and managed such an interesting MBA program which

helps me in my career development. I offer my Special thanks to Dr.Ana-Maria Pascal

(Principal and MBA Director of LCB) and all Professors and Lecturers. Your efforts

and hard work will always be remembered.

Dedications:

This thesis is dedicated to My Father and Mother who has supported me all the way

since the beginning of my life. I won‟t forget their sacrifice, love, motivation and

inspiration in building up my character and personality.

I would also like to dedicate my research work to my brothers and sisters who always

pray for me and for my success as well.


4

EXECUTIVE SUMMARY

This report is about the financial and business analysis of British Petroleum with

compare to the similar type of company Shell PLC, which are the world‟s 2nd

and third largest Oil Companies around the globe.

Both the companies are the giant of the petroleum industry. The British

petroleum in the recent past few years affected by the large oil Spill of the

history named as Deep water oil Spill or BP Oil Spill. The losses from this are

not only to the BP itself it has affected the environment and marine life also. The

environment and the marine life have recovered from this loss but the BP is still

impacted from this painful event in the past.

The Shell PLC in comparison is doing the business at its high performance and

is in level of British Petroleum in providing the services to the petroleum

industry.


5

List of Abbreviations Used

PLC Private Limited Corporation

BP British Petroleum

APOC Anglo-Persian Oil Company

AIOC Anglo-Iranian Oil Company

ROA Return on Assets

BA Business Analyst

BUC Business Use Case


6

List of Contents

Chapter 1 Introduction 10

1.1 Introduction 11

1.1.1 Definition – Financial Analysis 12

1.1.2 Background 13

1.2 The Significance 14

1.2.1 Financial Analysis 14

1.2.2 The Scope – Oil spilt in the Gulf 15

1.2.3 Issues – brief overview of Topic 15

1.2.4 Limitation of this research–a clear statement of

the dissertation 16

1.3 Research Questions 16

1.4 Research Objectives – reasons for the investigation and

Purpose of the study 17

Chapter 2 Review of Literature 18

2.0 Company‟s Overview 19

2.1 British Petroleum 19

2.2 Shell PLC 20

2.2.1 Efficiency 25

2.2.2 Financial Ratio 25

2.2.3 Profitability Ratio 25

2.2.4 ROA 26


7

2.4.5 Accounts Receivable Turnover (Credit Risk) 26

2.4.6 Steps for Financial Analysis 26

2.3 Business Analysis 30

2.4.1 Business Analysis (BA) 30

2.4.2 Methods for analysing business responses for

an event 31

2.4.3 Organizing the Analysis 32

2.4.4 Learning from the experiences 32

2.5 Modelling 33

2.6 Summary – overview to the subsequent section 34

Chapter 3 Research Methodology 35

3.1 Introduction 36

3.2 Choice of Sector 36

3.3 The Choice of the Organization 36

3.3.1 Financial Sector 37

3.4 Information Congregation 37

3.5 Method of Research 39

3.6 Data Collection 39

3.6.1 Primary Data Collection 39

3.6.2 Designing of Questionnaire 40

3.6.3 Surveys/Questionnaires 41

3.6.4 Collection of Secondary Data 43

3.7 Method of Data Analysis 43

3.7.1 Reliability of Data Collected 43

3.7.2 Validity of the data 43


8

3.8 Population Study 44

3.9 The Introduction of the Chapter That Follows 44

Chapter 4 Data and Analysis 45

4.1 Introduction – Data Analysis 46

4.2 Collection of Data Methods 46

4.2.1 Wide-ranging interviewing 46

4.2.2 Surveys 46

4.2.3 Company Yearly Reports 46

4.3 Financial analysis of the British petroleum with comparison

to the Shell PLC(From Annual Financial reports of the

Respective companies) 47

4.3.1 Assets 47

4.3.2 Liabilities 47

4.3.3 Liquidity 48

4.3.4 Equity Share Capital 49

4.3.5 Fixed Interest bearing Funds 50

4.3.6 Capital Gearing Ratio 50

4.3.7 Deep-water Oil spill Effect (BP Oil Spill) 51

4.4 Presentation of Data (From Questionnaires) 54

4.4.1 Working Environment 55

4.4.2 Financial Analysis 56

4.4.3 Business Analysis 68

4.5 Strategic Policy of the Companies 69

Chapter 5 Conclusions 70

5.1 Investigation and argument of outcomes with position to

Purpose of the study 71

5.2 Issues from the literature review 71

5.2 Recommendations 74

5.3 Suggestions 74

5.3.1 Through joint ventures, BP can enter the oil sands


9

Production markets 74

5.3.2 Business Strategy 75

5.3.3 BP can Restructures its Alternative Energy

Operations 75

5.3.4 Take Charge of its Cash 75

5.3.5 Manage inventory 75

5.3.6 Areas for the Further Research 75

References 77

Appendix 80

Appendix 2: Questionnaire 80


10

Introduction „‟In the introductory chapter we will give overview of the research topic,

its problems, aims and objectives along with hypothesis.‟‟


11

INTRODUCTION

The financial reporting by an organization is an allocation tool to classify the

accounting data for making control and the investor‟s able to have judgment making

power. For the attainment of same purposes the companies of various countries around

the globe had created the course of action to have more than annual or single financial

reporting to help the cause.

The financial reports of an organisation must reveal the evidences which might affect

judgment of the management of the organisation or the informed readers.

The financial declarations honor with benefits to the numerous people devoted to the

company for e.g. predictors, company executives and shareholders and even the public

allied or involved to the company as well. The data obtainable from the financial

reports provides the information about the company existing situation and also the

presentation in the last few years. These financial statements inspire the persons related

to the company and also the people who are interested in it. The financial reporting is

also the sort of check on the growth of the company over the past few years.

The business and financial analysis of the company is done to evaluate the effectiveness

and the paying/buying capacity of the company.

The financial and the business analysis both are very important and basic for the

company to check its profitability, stability buying/paying capacity, liquidity, liabilities,

market strategies and structure and feasibility for the future projects of the company.

The business analysis is also very much important as it gives the ability to the company

or the organisation to arrange and develop more and more strategies and policies but

yet it has many of the involvement of the financial analysis with this.

A careful analysis of the process of observation in atomic physics has

shown that the subatomic particles have no meaning as isolated

entities, but can only be understood as interconnections between the

preparation of an experiment and the subsequent measurement.

Erwin Schrodinger


12

FINANCIAL ANALYSIS:

The deep-seated idea behind the financial reporting is to endow with the weight of

judgment to the informed reader.

The financial analysis which the majority of the companies do is to test out the

profitability of the company in short and long term basis. The financial analysis of

company evaluates the paying and buying aptitude of the company to the creditors and

its position in the market. The liquidity is also a main reason to have the monetary

analysis for the company which develops the ability to maintain the constructive cash

flow from the obligations of the company.

METHODS:

There are various methods for the analysis of the financial issues of the company and

improve the present business situations of the company according to the present

situations.

A company can improve the performance in terms of financial issues and improve the

business inside the company by having a good look at the past performances and

existing performances and in light of these the company should develop the future

expected performance for the company.

The researcher had used the following under consideration to do the investigation.

Past Performances: Everything which had passed away is history but history is one

thing which builds our experiences and makes us more and more professional in terms

of business performances. A look at the past performances can make us enable to learn

from our mistakes, policies and strategies effectiveness and also the overall view of the

company‟s performance.

Existing performances: The Existing performance is the present situation which a

company is facing and it is the true picture of what a company is doing in terms of

financial matters and also the business dealings. It also shows the company‟s reputation

in the market and its product evaluation in the market with comparison to the similar

companies doing same business.


13

Future Expected Performance: the future is what which nobody knows but yet we

can expect by giving some outputs in short term and long term basis. It is just like

doing work and expecting the result of what we had input.

Comparison with the competitors: in the end of the various expected operation and

performances and analysing them completely the comparison with the different ideas

and thoughts to get the clear picture of the organisation according to the situation.

BACKGROUND

The study stands on the financial investigation of the British Petroleum and its

premeditated preparations in the market with comparison to its contenders. The

financial reporting is the conventional format of keeping the documentation of the

company which presents the information about the financial proceedings of the

business, person and the supplementary entities attached to the company in any way.

The need for the financial analysis and the business analysis is very important and

historical in terms of improvement in the business of the company and building its

reputation for better performance of the company.

The British Petroleum is very old and large petroleum company which is supplying the

petroleum countrywide at larger scale and for understanding the financial and business

structure of the company is very much considerable. For better understanding of the

financial analysis and business analysis the researcher has made a comparison of the

British Petroleum with the Shell PLC which is also very large Petroleum Company and

having the same business and financial structure as that of the British Petroleum.

The financial analysis is usually referred as the viability, stability and profitability of a

business and business analysis usually referred to as a fulfilling needs and requirements

of a business by identifying the various business solutions during the ongoing

performance of the company.


14

BREIF HISTORY

The British Petroleum is very historical and large and historical company and was

established ion way back in 1901 in name of Anglo Persion Oil Company. The

company during its performance has developed a lot and made many improvements and

now it has gained the shape of British Petroleum and biggest Oil Company nationwide.

When the comparison of British Petroleum with the Shell PLC is done the researcher

come to know that the Shell is a very large organisation in its operation and services

around the world.

Shell PLC (Royal Dutch Shell PLC) is one of the major petroleum products manufacturing

company around the world and is very famous around the globe. It‟s headquarter is located in

Hague, Netherlands.

A very large petroleum company in its operation which doing the business from almost more

than one century, it is the third largest petroleum company of the world and doing improvement

in the business day by day.

It is operating in more than 95 countries and providing more than 3.1 barrel of oil per day to the

more than 45,000 of its stations around the world in different countries.

SIGNIFICANCE

FINANCIAL ANALYSIS:

The foremost thing which has to be done in financial analysis is discussed in the

following opinions which are outcomes from the financial analysis as a consequence.

Opening or ending any business maneuver

Buying and selling of any manufactured product of the company or an

organisation

Arranging the requirements for the manufacturing of the products.

Developing policies and strategies for investing and lending various business

operations.

Any other decisions which are negotiable and address them according to the

rules and regulations of the company or a business organisation.

The main objectives of having the financial analysis are:

1. Check cost-effectiveness: the financial analysis enables the company to check the

profitability of the company for its various products in short term and long term basis

during the business.


15

2. Buying and paying Capacity: the financial analysis of the company also enables a

company to have a idea about its buying and paying capacity to the creditors of the

company.

3. Stability: the stability of the company is also checked by the financial analysis of

the company which is done for the purpose of having the assessment about the strength

of the company to retain in the market.

4. Solvency: is usually referred to as a ability of a com0pany or an organisation to pay

its debts of the company or an organisation as a priority case.

OIL SPILLS IN THE GULF:

The oil spills in the gulf which had affected a lot the consumer behavior towards the

British Petroleum in the past few years in gulf. The consumer‟s behavior had changed a

lot during this period and the strategies to overcome this problem developed by the

company are also the part of the research.

The British Petroleum had faced more than 5 Billion Dollars in the oil spills in the gulf

after which they had developed and strategy and prevention methods to avoid such kind

of losses in the future are also the part of the research. Such great losses not only cause

the financial losses to the company but also weaken the market position of the company

against the competitors.

BRIEF OVERVIEW OF TOPIC:

The financial analysis of the company is basically done for the sake of the evaluation of

the strength if it is said that the financial strengths will not be wrong.

The financial analysis enables to overview financial matters of the company which

includes the business transactions, investments and profitability and much more which

is related to the business dealings of the company.

The business analysis is generally the requirement analysis which enables the company

or an organisation to retain and maintain the requirements of the company or an

organisation according to the present needs and circumstances.


16

A CLEAR STATEMENT OF THE DISSERTATION:

The main purpose and the objective of the study are to study the financial and business

analysis of the British Petroleum with comparison to the Shell PLC. And also the

various financial transactions and their effects on the company. On the basis of the

analyzed factors and stimulating effects to the organization suggesting and figuring out

the best possible remedies for the organization at each level of the business

transactions.

The key purpose of the dissertation is to study the issue that how the company or an

organization can understand its financial and business analysis on the basis of which a

company or an organisation can make the performance more and more better

THE RESEARCH QUESTIONS

For the research on the British petroleum in terms of financial and Business analysis in

comparison with the Shell PLC the researcher has the following questions on which

researcher wants to work and analysis the data gathered to present a comparison of

these two big Oil/Petroleum companies

The questions for the research are

What is financial analysis? Explain the financial arrangements of BP and SHELL?

How much efficient is the strategic policy of BP, to grow and increase profitability

of the organisation in comparison to its competitors.

Who ecological aspects affect the strategic positions of BP and Shell?

Who oil spill affect the consumer behaviour of BP and Shell?

Which course of actions BP is using to minimize the force of the disaster event?

What are the risk factors that have an effect on the operation of both organisations?

How much efficient is the marketing policy of BP and Shell?

Which business segment BP is focusing most of its operational activities, for

example upstream or downstream?


17

REASONS FOR THE INVESTIGATION AND PURPOSE OF THE STUDY

However the main reason is to make the better performance of the company but the

better performance of the company can be done only by having the elimination of the

risk associated with the various business and financial matters of the company to have

the certainty and the stability of the business terms of the company for the long period

of time which build the reputation of the company in the market.

The companies work under the dynamic environment which causes their future to

remain uncertain and unpredictable. The uncertainty becomes more evident and the

proper functioning of the organization can be effected in a great deal. Our reason

behind the study is to eliminate this uncertainty and unpredictability of the organization

in the future.

The objective behind the research is to get the following

Financial strategy of British Petroleum and Shell PLC

Input characters of British Petroleum and Shell PLC marketing plans and their

supposition on supermarket sector.

To value the accomplishment subsequent to the British Petroleum and Shell PLC in

becoming leader of the marketplace.

Ways to improve financial and marketing strategy and its effect on BP and Shell.

OVERVIEW TO THE CHAPTER THAT FOLLOW

In subsequent chapter researcher discusses the literature review of topic and will realize

several matters and existing data to investigate the risking influences that are to affect

the enactment of the organisation.

The subsequent section is about the several literary rudiments and icons of the business

and financial analysis, there effects and significance in the pertinent field.


18

Review of Li terature „‟ This part of the research will intricate the different terms employed by the BP and Shell PLC

in terms of Business and Financial Analysis. Moreover their strategic positioning and the

market strategies are also discussed in this chapter of the research‟‟.


19

2.0 COMPANY’S OVERVIEW

Both of the companies are doing petroleum business and are wide in their performance

and capabilities of doing business. They are considered as giants of the petroleum

business as they are providing the Petroleum products at very vast range. British

Petroleum and the Shell PLC are in-fact the second and the third largest Petroleum

products providing Companies around the globe. Their product range and services are

very much effective and up-to the International standards which make them even more

reliable and efficient.

2.1 BRITISH PETROLEUM

“BP is a global enterprise which is committed to meeting

the world‟s growing energy needs in a responsible and

ethical way.”

–UK Ordinary Shareholder Guide

The British petroleum is rendering its services by providing the fuel for the

transportation, energy, retail energy and for the petrochemical products globally.

The British Petroleum is globally operated company and it is very vast in its

performance almost functioning in more than 80 Nations. The Headquarter of the

British Oil company is located in London, United Kingdom. The company has more

than 22,400 service stations around the globe and per day it provides equal or more

than 3.8 million barrel of oil

History:

In the year 1901 Shah of Iran has established William Knox D‟Arcy to hunt the

Petroleum who discovered it in the year 1908. In 14 April 1909, the Anglo-Persian Oil

Company (APOC) established which the leading momentous discovery in the Middle

East . In the year 1935 it has become Anglo-Iranian Oil Company (AIOC). With the

passage of years it has developed the shape of British Oil Company which is now one

of the major oil companies round the sphere.


20

Objective:

“We [BP] are maintaining our policy of returning cash to

shareholders through dividends and buybacks although we are

changing the relative proportion of each. Your board has confidence

in greater cash flows from our strong asset base, which has allowed

the company to increase both investment in its future growth and the

dividend component of our distribution to shareholders. ”Peter

Sutherland, Chairman of British Petroleum, February 2008

Chairman’s Letter

BP is acquiring many standards other than the profit as in its objective: safety, people

and performance. However there are many aspects of the company to focus about but in

this dissertation we will focus on the performance of the company in term of its

financial analysis and business analysis with comparison to the Shell PLC. This report

will present the performance of the company over the past few years, and also the

financial outlook of the company to the shareholders for the future performance of the

company

The company is committed to provide the petroleum products in different countries of

the world at high standards and in timely manner. It has covered many countries of the

world and has become the necessity of many countries besides which they can‟t do

anything.

Providing the better solutions for the petroleum industry and maintaining the reputation

in the market and interpretation of the key elements and stimulating elements of the

financial analysis of the company.

2.2 Shell PLC

Shell PLC (Royal Dutch Shell PLC) is one of the largest petroleum products

manufacturing company around the world and is very renowned around the globe. It‟s

headquarter is located in Hague, Netherlands.

A very large petroleum company in its operation which doing the business from almost

more than one century, it is the third largest petroleum company of the world and doing

improvement in the business day by day.

It is operating in more than 95 countries and providing more than 3.1 barrel of oil per

day to the more than 45,000 of its stations around the world in different countries.


21

History:

The Royal Dutch Shell PLC was established in February 1907 as named Royal Dutch

Petroleum Company the company has its roots back in 1980s when the Dutch

Petroleum company was founded by Jean Baptiste August Kessler. Over the years of its

performance it has acquired a good reputation and recognition in the market in

Petroleum Industry.

Objective:

Besides doing business and profitability the Shell PLC is committed to provide the

services that are based on the consumer satisfaction and building the reliability on the

products and services of the Shell PLC in the eye of the

Customers

Providing the consumer satisfaction packages and inventing the new methods and

techniques in the petroleum industry is the main prospective objective of the company

which has gathered the attention of the investors and the satisfaction and believe of the

investors on the company.


22

Source adapted from Business Essentials, Business Strategy, BPP learning media, pg. 25 “Aspects of the external

environment”

2nd Layer Economic

Social &

Cultural

3rd Layer

Pollution Materials

Ecological Physical

Environment

Technology Political & Legal

Shell

Competing Organisations

Competitive Environment

1st Layer

BP Exxon Mobil

Total Chevron

Goods to customers

Profit to Investors

Wages to Labour

Capital

Labour

Suppliers


23

Financial analysis

Mostly the companies generate the yearly, quarterly and half quarterly financial reports

to check the profitability and financial and business analysis of the company according

to the present situations.

Yet the finical and business analysis are not done most often on timely basis which

causes loss to the organisation and is a risking factor for any of the company or the

organisation which is committed to provide a good services and do more and more

business in their relevant field.

Provides an excellent long term perspective of risk and the

development of methods to measure and deal with risk, Explains

the shift from a focus on hazard risk to financial risk over the last

few decades

Bernstein, 1996, Against the Gods: The Remarkable Story of Risk, New York: John Wiley

& Sons, Inc.

Decision makers and thinkers most often study these report and build the financial and

business strategies for The Company or make the necessary changes in the relevant

field of their on-going business

To have assistance for the decision makers they are provided with the financial and

business analysis reports to have a acceptance and continuing of the on-going strategies

and to have a changes in the strategies or to develop new strategies.

The financial analysis is all about the understand, identify, analyse and adjust the

various issues inside the company.


24

Financial Analysis:

The above figure depicts the following scorecards analysis of ratios breakeven analysis and

various trends

2nd Layer

Economic Social &

Cultural

3rd Layer

Pollution Materials

Ecological Physical

Environment

Technology Political & Legal

Shell

Competing Organisations

Competitive Environment

1st Layer

BP Exxon Mobil

Total Chevron

Goods to customers

Profit to Investors

Wages to Labour

Capital

Labour

Suppliers


25

The overall financial ratio analysis is done for the purpose of the income statement

analysis and balance sheet analysis and with the supporting element of the financial

scorecard tool to provide the unique picture of the organisation and its financial

position in the market

The financial position of the company can be analysed by having the financial ratios

analyses for the income statements and balance sheet analyses which are supportive to

the various tools and techniques of financial scorecard. The financial analysis of the

company gives the profitability ratio of the company, liquidity, efficiency of the

company and also the assets and liabilities of the company.

2.2.1 Efficiency

There are mainly the following zones of functioning competence which are to be

consider

A/R: Re-education in the operation of certain financial matters like cash flow,

operating margins, increased probability and so on.

Inventories are also the main portion and part of the Operating efficiency of the

financial matters for any of the company or organisation.

A/P: high Outflows are also to be considered in this regard when we are talking

about the operating efficiency of the company.

2.2.2 Financial Ratio:

Definition: the quantitative analysis of the company‟s financial information. These

ratios are calculated from the present numbers and it is compared with the past year

ratios and then this is presented in the form of financial ratios.

Sustainable Growth: the level achieved when the company is capable of sustaining the

its growth from the internally generated funds and financials of the company or the

organisation

It is given as G = ROE x (1-d)

Where as

G = Sustainable Growth

ROE+ Return on the equity

d = Dividend pay-out Ratio

2.2.3 Profitability Ratio: it is generally the return on the present assets occupied by

the company or the organisation. It is a company‟s will to generate income from

the assets in its occupation which we might also called as debit vs. equity


26

2.2.4 ROA :

ROA (Return on Assets) is generally calculated as

Net Income + (1 - Tax Rate) (Interest Exp) + Min. Int. in Earnings

Average Total Assets

2.4.5 Accounts Receivable Turnover (Credit Risk)

Measures how soon sales will become cash

Amount of sales per A/R prefer a high amount of sales to A/R

Inverse of the percentage of sales from A/R

Accounts Receivable Turnover = Net Sales on Account

Average Accounts Receivable

Represents a path-breaking approach to dealing with risk for

insurers. Introduces the “funnel of doubt” terminology and

explains a strategy for immunizing an insurer from interest

rate risk.

Redington, 1952, “Review of the principles of life office valuations”, Journal of the

Institute of Actuaries, 78: 1-40.

2.4.6 Steps for Financial Analysis:

The financial analysis of the company can be done by following the following

guidelines or steps:

Step1: The very first step is to collect the financial statements of the company for last

couple of years and arrange them in order form to understand and analyse the reports

and statements according to the present circumstances. The data collected for this cause

can be from last 3 to 5 years, will be effective enough for the financial analysis of the

company.

At least the business analyst of the company has to gather the following statements for

last 3 to 5 years to get the effective financial analysis of the company.

Balance Sheet:

The balance sheet is that form of the financial declaration that recapitulates a company's

assets, liabilities and shareholders' equity at a precise opinion in time.


27

Formulation for Balance Sheet

Assets = Liabilities + Shareholders' Equity

Statement of Income:

Statement for Income of the company is that form of financial statement which is

usually called as profit loss statement.

The income statement of the company is a part of the monetary statements the

supplementary portions of the financial statements are balance sheets and the cash

flows.

The income statement is alienated into two folds: the functioning and non- functioning

units.

Statement of Shareholders equity:

Arrangement of the financial statement which minutiae the behavior of the equity of the

balance sheet, earnings and also the shares of the company are considerable in this

regard.

Cash Flow Statements;

That form of the financial statements which is not dependent on the future incomes it

only shows the net income in the statement.

Step 2: Take a look in a glance to have a view of the major movements in the specific

areas from the present year to the next year expected. For Example Checking the

revenue, assets and other financial matters and answer the questions that

Did revenue have a long jump?

Did the revenue have fall from top to the bottom?

The fixed assets fall or grown over the last period of financial analysis?

Did the company had made new purchases or sell any of its operating area during

the financial year?

And also gather the relevant information that is helpful in financial analysis and

development of the business structure of the company.

Step 3: Taking the look at the information notes which are additional to financial

statements of the company which might be helpful in financial analysis of the company

and make the development in the relevant field.

Step 4: Observe the balance sheet and make the overall analysis of the various

components of the company‟s assets, liabilities and equity. For Example: the look at the

overall equity as it has increased or decreased over the last years and what is the


28

position of the liabilities either they had increased or decreased during the last financial

year. The debt portion of the company has increased or decreased it should also be

analysed.

Step 5: observing the income statement of the company and examine the trends over

the last few years calculating and graphing significantly the following entries of The

Company of the past few years:

Revenues (Sales of the company)

Net Income(Total Profit or earning of the company over the last financial year)

After having look at these issues the company should keep an eye on the revenues

either revenues or the profit of the company are growing over the time or not?

The smooth functioning of the revenue and the profits are helpful and necessary for the

development and proper functioning of the company at short term and long term basis.

After having this step then calculation of the main components of the income statement

should be done in percentages form for each year. For example: calculate the

percentage cost of the goods sold and general administration expenses and overall

statements of the various financial statements over the sales of the company.

Step 6: The next step is to observe and examine the shareholder‟s equity statement of

the company for the last financial year. Then main thing to focus is that the company

has bought back some of the shares or issued new one and also the look at the earning

share as it is growing or shrinking. The main thing is that the signals of long term

strategies of the company in terms of financial matters.

If anything found during the analysis was suspicious the researcher should find out why

it is so?

Step 7: The next step in financial analysis is the examination of the cash flows

statement of the company which provides the information about the inflows and

outflows of the financials of the company during its operation in various business

operations.

The income statement gives us the information about the both cash and non-cash items

of the company but the cash flows statement attempts to identify and figure out the

actual cash flows of the company at the present circumstances

Again in this step if anything found suspicious will have to find out by the company

officials that why it is so?


29

Step 8: after doing all the steps provided above the very next step is to calculate the

ratios of the each of the statements for each of the year for the company over the past

few years. The ratios of the following terms should be calculated

Liquidity ratios: It is the representation of the financial metrics of the company

which shows its ability of paying its short term and long term debts for the

company.

Leverage Ratio: also called as the debt ratio. Debt Ratio = liabilities / assets.

This ratio is calculated as the debt to the capital ratio of the company, debt to

equity ratio or financial leverage ratio.

Profitability Ratios: the profitability ratios might include the following

o Return on Sales (Profit Margin) Ratio

o Return on Assets (ROA) Ratio

o Return on Net Worth Ratio

Efficiency Ratio: Ratios that are typically used to analyse how well a company

uses its assets and liabilities internally

Value Ratio: it is also a ratio analysis of the present value of the company in

the shares of the market.

After having these ratios the nest part of the analysis is the graphing of these ratios to

develop the better understanding of the ratios and the financial statements of the

company.

Step 9: Obtain and observe the data of the competitors of the company for the relevant

analysis of the various business and financial matters of the company and identify the

differences between the businesses of the various companies or the group of companies.

As the researcher had applied the method for the collection of the data for the Financial

and business performance of the British Petroleum the researcher can follow the same

pattern for acquiring the data from the other competitive companies doing the same

business or working in the same field of business.

The next step that a researcher had to follow is that after having the data for the

competitive companies doing the same business the researcher has to analyses that is

this company is favourable for the comparison or not ? Or fulfilling the research

requirements and covering the topic under the research or not? If the researcher found

that these companies are not fulfilling the requirement the researcher had to make

further research for the more suitable and favorable companies for the comparison.


30

Step 10: The next step after having the suitable and favorable comparison of the

company is to have the overview of the stock price of the company over the market and

having the detailed analysis of the price to the earnings ratio (P/E Ratio) for the

company under the case study for the research topic.

The researcher had to make the better understanding of the fluctuations in the stock

market prices and the Price to earnings ratio over the specific time span.

The purpose of having all these is to get the overview or the observation that the

fluctuations in the prices of the stock market are favoring the company in the light of

which the management of the company has to develop the future strategies and policies.

Step 11: after doing the previous step the next one id the review of the dividend pay-

out of the company and graphing of the dividend pay-out of the company for the past

financial year.

Step 12: the last but not the least step of the financial analysis of the company is to

review and observe all the data which is collected from the above steps from the

company or an organisation. The results obtained from the above steps will be the

mixture of the positive and negative responses and on the bases of the above results the

company has to answer the following questions to the management of the organisation

and the financial department has to develop the new strategies for the future in the light

of these results.

This is the whole procedure for the financial analysis for any of the company either it is

national or international, the companies do the financial analysis to get the clear picture

of the present business policies strategies and techniques which helps for the future

performances of the company in short term and long term basis.

2.3 Business analysis

Business analysis is a tool for finding the needs and requirement for the proper

functioning of the business and its development in the relevant field. The companies

develop a business analysis plans and strategies by which they conduct the business

analysis and get the whole picture of their business and the performance on the

company in the present scenario.

The business analysis of the company is done by the business analyst o the company.

2.4.1 Business Analyst (BA)

The Business Analyst (B.A.) is employed in the company to carrying out this task in the

company which maintain a business analysis report. The report is presented to the


31

Board of directors of the company for the necessary actions on the report and making

the policies and strategies for the future functioning of the company or the organisation.

The Business Analyst (BA) has two main traits in it.

Modeller: A modeller because it understands the information, processes behaviors and

internal environment of the business. The Business Analyst (BA) does this by

depending upon the pure knowledge and understanding about the terms processes and

influences of the business analysis in the company.

Analyst: An analyst because after having the understanding of the procedures, policies

and strategies of the company it analysis the present data and present it in a report form

for the necessary action to be taken against it at various stages of the performance of

the company.

Duties/ Obligations of Business Analyst:

A business analyst is a backbone for the business analysis of the company except which

the company in unable to do business analysis at all. The business analyst should:

Explore and discover the most demanding needs of the business which can enhance

the business or can improve the performance of the company to do more business.

Analyse and make improvements in the present procedures, processes and policies

of the company.

Presenting the most significant scopes for business projects.

Utilize and take help from the models for communicating and understanding

various business processes, procedures, policies and strategies of the company

inside the company.

Does better interpersonal communication inside the organisation

Adopting systematic approach for the business and understanding the business.

2.4.2 Methods for analysing business responses for an event

The business analyst can use the variety of different tools, techniques or methods of

modelling to get the clear picture of what is doing around in the business. If in the

present situation the current state is desired to be the future state for the company or an

organisation then there is no chances of improvement in the company. This stage is the

stage of making improvement and planning, developing and analysing strategies for the

improvement in the various processes inside the company or an organisation.


32

2.4.3 Organizing the Analysis

The business events take place outside the business but yet they are most important and

significant in the field of business and business analysis. Firstly the exploration of the

business events can help the cause of having the true picture from where the business

has its roots.

The responding to the business event with modelling is the main concerning area of the

business analyst. This response from the business analyst is known as Business Use

Case (BUC). The BUC is the basis of the subsequent business for the company or an

organisation.

2.4.4 Learning from the experiences:

Learn all you can from the mistakes of others. You won't

have time to make them all yourself.

~Alfred Sheinwold

The most effective method of improvement is learning the from the past experiences

and mistakes however they are made by us or any other but yet we can gain experience

which can help a lot to improve the business and techniques of the business.

The shell makes up for one of the top fifty percent of the biggest organizations

worldwide in the field of Oil and Gas Industry. The basic business of the Shell PLC is

providing the Petroleum (having other relevant product range also). According to the

fortune magazine the biggest top ten ranking companies are as under

1. Royal Dutch Shell 6. Total

2. Exxon Mobil 7. ConocoPhillips

3. Wal-Mart Stores 8. ING Group

4. BP 9. Sinopec

5. Chevron 10. Toyota Motor

(Source adapted from:

http://money.cnn.com/magazines/fortune/global500/2009/)

“A strong mission statement should relate and expand from the vision statement and

link four key areas: Purpose, Values, Standards and main Strategy” (source adapted

from: Mission model of Campbell et al, 1990, Business Studies, Ian Marcouse, pg352).

Ascertaining core issues of the companies supports with the internal analysis; though to

widespread the internal analysis additional investigation should be steered and explored

on the company‟s stakeholders. Stakeholders and their objects will touch the


33

company‟s strategy devising and arrangements. Any strategic planning that has ignored

its stakeholders is not likely to prosper. Stakeholders acquire power to inspiration of

operations, clienteles and government legislation and so on. for illustration: September

2000, UK‟s Fuel Strike organised by Cab drivers and Growers at national level,

investors here shaped a compression cluster to break the government tax upsurges on

fuel prices. They were chiefly representative in contradiction of the government, but the

obstruction prospered and the whole republic virtually derived to a halt. No doubt this

will have a knock off consequence on petroleum companies such as BP and Shell PLC.

Here the investors are the end user (taxi-drivers) and the government. It is momentous

to categorize and composure of the needs and projections of such assemblages, and to

performance sagely in estimation of all of them in command to avoid clash and defence

the corporate is as affluent as conceivable and keeps its „certificate to operate‟.

Complementary the essential of all stakeholders is predominantly significant for large

liveliness companies similar Shell, one of the world‟s biggest and most cost-effective

international companies.

Stakeholders can be categorised into three areas:

Internal: employees, managers (shareholders depending on their power and

influence)

Connected: shareholders, customers, suppliers, financial lenders

External: community, government, pressure groups and other organisations

2.5 Modelling

The companies should have developed proper models to adopt inside the organisation

to have a proper functioning inside the company. The modelling is also useful in that

manner that it provides a basic guideline for the workforce to adopt and follow it easily

and have a sample of work which they had to perform and how they had to perform.

But these models should be developed according to the present situations and

circumstances from which the organisation or company is passing. The effectiveness of

the model become more confirmed if it is developed keeping in view the present

situations and circumstances

“Models work when they are appropriate for the

particular circumstance, but some of the best investment

judgments over time have come when people recognized


34

that models derived in other periods were broken or not

directly relevant.”

Abby Joseph Cohen (American Financial analyst)

2.6 OVERVIEW TO THE SUBSEQUENT SECTION

The following section is methodology which clarifies the general procedure of

assortment and numerous reasons which envisioned researcher to choice the current

topic for investigation “Financial and Business Analysis”

Additionally next chapter also includes the method of collection of primary

and secondary data and its importance in my research to deal and analyze the various

aspects of financial analysis in short and long term basis and also its importance for the

organisation to collect such kind of data periodically.

Furthermore the samples and the data of the various analysis of the different

financial terms and its methods tools and techniques to collect the data from the various

sectors of the company or an organisation

The chapter will also include the key procedures, methods and techniques for the

collection of the primary and secondary data for the qualitative and quantitative

analysis of the various financial ratios of the company.


35

Methodology „‟In This part of the research the researcher had focused the various methods and procedures

for carrying out the research. Moreover the qualitative as well as the quantitative research for

both of the Petroleum companies is also discussed in terms of Business and Financial

Analysis.‟‟


36

1.1 RESEARCH METHODS- INTRODUCTION

Topic Assortment

The selected topic “Business and the Financial Analysis” is very much perceptible in

the arena of commercial and pecuniary sector for most of the administrations

internationally. The topic was familiarized to the investigator by (Named Name of

Lectures of thesis) who conveys me the adequate material regarding the central

concerns of the issue. The lectures on the designated subject by the instructors have

occupied the attention of the investigator to go through it for advance study. After

having a thorough study of the topic by the investigator the consideration of the

researcher had been congregated more toward it and treasures it motivating and the

significant one.

3.2 Choice of Sector

After the assortment of the topic the choice of the sector become the subsequent part of

the range process for the investigation. The financial and business scrutiny is very deep

and stimulating topic which has to cover virtually all the imperative segments of the

business area and the financial matters of any of the business corporation around the

globe. The economic and commercial analysis is the one of the stimulating and key

topic for the investigation for any of the company as it is the topic which can pronounce

and make better the business of the organization and surge the lucrativeness of the

company.

3.3 The Choice of the Organization

For the financial and business analysis the investigator had preferred the British

Petroleum one of the largest Petroleum Company around the world and has taken the

Shell PLC as in comparison with the similar type of company as British Petroleum in

terms of its services and product manufacturing.

The reason for selecting the larger Petroleum companies is to get the clear

understanding of the financial and business matters of the company and the in

comparison the Shell PLC is taken because it is also a larger Petroleum company and

has the same working as that of the British Petroleum. The comparisons of these two

companies are taken for the development of the complete understanding and analysis of

the topic under the research.


37

The major working of the BP in the field of petroleum products is very much effective

but the Shell being more reliable and effective have edge on many of the factors in

terms of business and financial sector.

3.3.1 Financial Sector

British Petroleum (BP) is a large Petroleum product providing company which has a

huge impact on the globe in financial sector The Company though also pacts with the

supervision of economic matters. The economic matters in this company and in the

organization live this contains, investment, acknowledgment, investment, insurances

and corporate governance.

The organization customarily pacts with the fiscal statements in terms of business

dealing and management of the business. The organization nevertheless have objective

to deliver the decent and esteemed products to customers but also in turn do upsurge the

economic capitals after trade of these products.

The organization is mostly having the financial matter which affects the business

matters of the organization at various stages of its performance which are the main

concern of the research for the researcher during carrying out of this research.

The organization is also affected by the fluctuation in the global market and variation

and inflation in the global market.

3.4 Information Congregation

While doing research on Financial and business analysis the material gathering from

and for the company correlated to the theme is very much point of apprehension to

convey research proficiently and efficaciously. The researcher had collected the

basic information from the newspapers, articles and generals for the developing the

better understanding of the topic furthermore supported by the financial reports and

books related to the topic under the research.

The information collecting is unswervingly allied to primary and secondary data

gathering from the company. The collection of the both type of data collection is done

by various methods, tools and techniques. The data collected is both Primary and

secondary data but mostly the research is based on the secondary data as it is more

valuable for the research purpose.

Primary Data

The primary data is the basic one for the collection of data as it is the information

recorded in the files and information of the company as it is gathered by the auditors of


38

the company for keeping the different types of records of the company. The data which

is collected directly from the auditors and maintained inside the company by the

auditors itself is recognized as a primary data and the method is acknowledged as

primary data collection. The researcher had contacted the company for the purpose of

the primary data collection, however find it difficult the cooperation from the company

regarding the primary data collection but yet the researcher managed to collect some of

the important data which was found useful for the topic under the research.

Secondary Data

The secondary data is the data which is collected from any source which is other than

the auditor‟s source of the company and it is the data which is derived or based on the

analysis of the various data of the company.

Method:

The researcher had used both of the methods for the purpose of data gathering (both

primary and secondary).

The researcher had collected the primary data by

Observation

Communication

Feedback from self-administered questions

Then the researcher had done the secondary data collection from the relevant books,

articles, essays and journals etc., related to the topic under investigation.

The Economic Reports/yearly reports are also basis for the secondary data assortment.

Qualitative and quantitative investigations together have been source of the

methodologies in this investigation. The qualitative technique of the investigation is

helpful in attainment of deeper understanding of the hitches connecting to the financing

and business transactions prepared by the company at several phases of the

performance.

The quantitative technique of the investigation is substantial for examining the

influence of the economic and business analysis of company, investigation done is

enlightening, explorative and elaborating to the issue of economic analysis and the

business analysis


39

3.5 Method of Research

For the healthier understanding and brief amplification of the several kinds of control

actions and influence on the operative of the company the British Petroleum (BP) has

been selected as a case study and also for the business and economic analysis.

Previously the British Petroleum is chosen as the case study for the research because it

is very large organization and is very useful for making the understanding of the

various topics of the research but the researcher had chosen the financial and business

analysis as the research topic and the British Petroleum as the case study and also the

Shell PLC which is also a very large organization in terms of Petroleum product

supplier is chosen as the comparison for the British Petroleum.

3.6 Data Collection

This section of the chapter is about the data collection (Primary and Secondary) and the

various methods, tools and techniques which are useful in collection of the data.

Moreover this section will also explain the questionnaires importance in the research

and their designing for the purpose of the collection of the data.

3.6.1 Primary Data Collection

Primary data is collected by the observation, communication and the self-designed

questionnaires. The primary data is collected by these three main elements which are

very handy and useful for the purpose of the collection of the primary data for any of

the research topic.

For the purpose of the collection of the primary data the researcher had designed the

questionnaires which are designed keeping in view the company profile and the

research topic “Financial and Business Analysis of the British Petroleum with

comparison to the Shell PLC”

The purpose of gathering the primary data is that it provides the first hand information

about the topic to the researcher instantly and it provides the handy and useful

information.

The original and authentic data collected for the success of singular determination and

also prove some time as problem solver for many trouble-shootings.

Information gathered on the pattern of secondary data gathering emphases specific area

or topic and also the technique for secondary data collection is reasonably classy and

time overwhelming for the investigator but the consequence of the research become

more efficient and focused according to the topic.


40

In this investigation the investigator had intended the surveys for gathering of the

primary data keeping in opinion the economic and business examination. The surveys

in (Appendix II) are intended together the absorbed and authentic and useful

information about the Economic analysis, its effects, causes and presentation methods.

The information however itself is not fit and feasible to takeout but the consequence

and analysis from the information is very much obliging and important to support and

authorize the views about the subject.

The primary data is collected by the following methods:

a. OBSERVATION

The observation is the first step of the primary data collection as it is the most authentic

and it provides valuable information. The observation of the various matters which are

related to the financial and business analysis of the company are observed directly by the

observer for the purpose of the research on the topic. Besides its authenticity and

importance it has many disadvantages on it part. It has limited measure behaviour, time

consuming and is subject to the investigator bias.

b. COMMUNICATION

The communication is also the method of the primary data collection it is done by the

personally taken interviews by the researcher from the different officials of the company

for the purpose of the research. It is also very effective method for the collection of the

primary data but yet it also has some drawbacks in it. It can be the biased one as it is based

on the information of the two people only investigator and the interviewer.

3.6.2 Designing of Questionnaire

The surveys are intended to support and demonstrate the investigation on the

designated subject of Economic and business analysis and numerous matters connected

to it that how the hazards are recognized measured, documented, considered and

control for the improvement of the company. Many more responses to the rising

inquiries are provided by the information congregated through these surveys. The

surveys are divided into sections to achieve the specific information and separate it

easily.

The questionnaires are designed to complete the information about the Economic and

business analysis and the internal control of the company but the Economic and

business analysis and internal control arrangement are actual extensive matters to insure

in the surveys yet the investigator had tried to shield maximum of them.


41

3.6.3 Surveys/Questionnaires

The investigator had organised the semi-structured surveys which are both open ended

and close ended fixated to accomplish the concentrated evidence about the matter. After

having all these things done the investigator had delivered the surveys to the contact

individual in the Company BP (British Petroleum) to gather the information.

The researcher had prepared the two types of the questionnaires which are

1) OPEN-ENDED QUESTIONS:

The open ended questions are those questionnaires in which the respondent has the full

authority to answer the questions in their own wording.

Significance:

It eliminates the factor of the answering the forced answer or choice from the answers

provided

The answers or the responses from the respondents come with the new issues and new

unlimited variety of the responses.

Drawback:

It comes with the responses of the respondent which comes with the biased answers

The responses from the responded comes with the difficult answers to code and

analyse in short time fame

Best Application;

Small scale for the collection of the primary data

Establishing the relationships of various maters and issues of the topic under the

researcher.

Also used as the final option after asking the all possible answers for the choice

It is also used for the collection of the facts and figures with compete views.

2) CLOSED-ENDED QUESTIONS:

The close ended questions are those questions in which the respondents have to choose

from the answers provided in the questionnaires and the respondents are bound to answer

from the provided answers.

It can be of various different types.

A) Yes – No Questions:

In this type of the respondents are partial to a optimistic or adverse situations.


42

Importance:

It reduces the fact of being biased answers from the respondents as it is totally based

on the positive and the negative responses from the respondent.

The responses collected from this type of the questions are done quickly and fast time

saving.

The coding of this type of the questions is very simple and inexpensive

Drawbacks:

Limited type of the response from the respondent

Wording can cause biases from these type of the questions.

Best Application:

The best application of this type of the questionnaire is during the interview when

there is not much time for the interviewer to gather the detail data and it saves time.

It is also very useful for the self-administered questionnaires when the topic under the

research permits.

B) Multiple Choice Questions:

In this type of the questions the respondents are limited to choice of more than two

positions. The multiple type of questions have mostly four to five options of answering the

provided questions which suits best to the question asked.

Significance:

This type of the questions minimizes the biased answers from the investigator

The response from the respondent through this type of the questionnaire is quick and

fast.

The coding of this type of the questions is very simple and inexpensive

It permits the greater range of the responses other than the yes or no answers.

Drawbacks:

good questions are difficult to write

wording can cause biases

Best Application

The best application of this type of the questionnaire is during the interview when

there is not much time for the interviewer to gather the detail data and it saves time.

It is also very useful for the self-administered questionnaires when the topic under the

research permits.


43

C) Rating Scales:

Respondent rates an attribute using the provided scale.

3.6.4 Collection of Secondary Data

Investigator initiated the exploration for the secondary data by glancing on the onternet

about the subject and found certain of them of his attention which are the rudimentary

step of his secondary data collection. More hunts on the subject leads the researcher to

the aiding books, articles and periodicals inscribed on the economic analysis. Though

the investigator found it problematic to catch any book which is exactly about his

investigation subject only but numerous books are conversing partly about the subject

which was also co-operative to the researcher.

3.7 Method of Data Analysis

This portion of the investigation discusses the examination of the data gathered (either

it is primary or it is secondary data). The ladders which are complicated for the process

of analysing of data will also come under attention.

The significant practises which are cast-off are qualitative and quantitative analysis.

3.7.1 Reliability of Data Collected

The most important factor during the data collection is that the data gathered by the

investigator should be reliable and authentic. The dependency of the data‟s reliability is

upon the measures taking during its collection by the researcher.

The data gathered is helpful for measures to be taken in the nearby future by the

company.

The gathered is used by the researcher for measures to be considered in the future by

the company. The reliability of the measures depends upon the consuction of the

research which should be accurate in all respect. The research depends on the following

questions

(1) How accurate is the investigation directed.

(2) Explanation of the data is precise and up-to-date?

(3) What is genuineness of the documents prepared by the investigator or

referenced by the investigator

3.7.2 Validity of the data

The validity of the data collected and analysed is defined by forte of assumptions,

implications or proportions.


44

The validity of the data is directly stated as the relevance of the data. The data will be

valid until the data is relevant for the research. The validity of the data is more

appreciable when it is referenced accordingly and precisely.

The investigator saw a clear and evident linking among the Economic and business

analysis and the internal control system in the light of valid data collected by him.

3.8 Population Study

The investigator has chosen the British Petroleum (BP), one of the largest petroleum

products providing company around the world which deals with various financial

matters inside it. The British Petroleum (BP) is very historic, huge and operative

petroleum company and was established ion way back in 1901 in name of Anglo

Persion Oil Company. The company during its performance has developed a lot and

made many improvements and now it has gained the shape of British Petroleum and

biggest Oil Company nationwide. The comparison of the British Petroleum is done

with the Shell PLC which is also a very large organization. Shell PLC (Royal Dutch

Shell PLC) is one of the largest petroleum products manufacturing company around the

world and is very renowned around the globe. It‟s headquarter is located in Hague,

Netherlands.

A very large petroleum company in its operation which doing the business from almost

more than one century, it is the third largest petroleum company of the world and doing


It is operating in more than 95 countries and providing more than 3.1 barrel of oil per

day to the more than 45,000 of its stations around the world in different countries.

3.9 THE INTRODUCTION OF THE CHAPTER THAT FOLLOWS

The following chapter of the research is totally based on the interpretation and

representation of the data which is collected from the primary and secondary resources

as discussed in this chapter.


45

Data and Analysis

This part of the research is truly based on the representation and

interpretation of the data collected as described in the previous chapter of the

research. However the reliability and efficiency of the data depends on the method

of the data collected.


46

4.1. Data Analysis

The data analysis chapter is not only based on the data collected from the

questionnaire but also the various reports previously released by the companies and

also the oil spills during the last few years which had effected a lot to the both of the

Petroleum Companies (BP and Shell PLC)

4.2 Collection of Data Methods

Collecting the relevant data and its interpretation is the key part of the research for

any of the investigating. The following portions to this will take on the data

collection for the research issues.

4.2.1 Wide-ranging interviewing

The researcher had taken several un-official interviews of the employment of the

company for getting the information regarding the topic under the research. The

researcher had also made several un official talks and discussion on the topic with

the employment of the company related to the financial and business analysis issues

of the company and concluded several results on the light of which he had

communicated further with the different employment of the company and in the

light of all the results had designed the questionnaires to get the effective

information on the topic under the research.

4.2.2 Surveys

The questionnaires are premeditated to get the associated evidence which is

supportive for the empathetic of the theme under dialogue and for making the better

judgement of both of the companies (British Petroleum and Shell PLC)

4.2.3 Company Yearly Reports

The annual reports of the company are also very important in financial and business

analysis of the company and are very significant in terms of having overview of the

company‟s performance in the last financial year.

The annual reports also depicts the overall business, ups and down in the business

throughout the year and the company investments, assets and liabilities are also

shown in these reports which are extremely helpful and supportive in terms of

having the financial and the business analysis of the company.


47

4.3 Financial analysis of the British petroleum with comparison to the Shell

PLC(From Annual Financial reports of the respective companies)

This section will discuss the financial analysis off the British Petroleum with

comparison to the Shell PLC and various aspects of the financial analysis with the

help of charts and graphs for the presentation of the data.

Moreover this section contain only the data collected from the annual reports of the

respective companies and analysed from different point of view for the purpose of

the research on the topic under discussion.

4.3.1 Assets

The valuable assets of British Petroleum and the Shell PLC are as under in

comparison to get the overall valuation of the assets of the company individually

over the last five years.

Year 2006 2007 2008 2009 2010

British

Petroleum

74,261,000 78,916,000 66,384,000 67,653,000 71369000

Shell PLC 97,892,000 9,18,85,000 11,53,97,000 9,64,57,000 105937000

Graph:1 (Current Assets of the British Petroleum and Shell PLC)

4.3.2 Liabilities

The liabilities of the British Petroleum and the Shell PLC are as under in

comparison to get the overall valuation of the liabilities the company individually

over the last five years.

2006 2007 2008 2009 2010

British

Petroleum

75298000 77068000 69793000 59320000 58320000

Shell

PLC

76748000 94384000 105529000 84789000 86789000

Graph: 2 (Current Liabilities of the British Petroleum and Shell PLC)

2006 2007 2008 2009 2010

British Petroleum 74261000 78,916,000 66,384,000 67,653,000 71369000

Shell PLC 97,892,000 91885000 115397000 96457000 105937000

0 50000000

100000000 150000000

Ass

ets

Assets of BP and Shell PLC For Last 5 Years


48

4.3.3 Liquidity

The liquidity is the ratio off assets over the liabilities of the company. The liquidity

ratio of the British Petroleum and the Shell PLC are as under in comparison to get

the overall liquidity of the company individually over the last five years.

2006 2007 2008 2009 2010

British Petroleum 0.99 1.02 0.95 1.14 1.22

Shell PLC 1.20 1.22 1.10 1.12 1.23

Graph: 3 (Liquidity ratio of the British Petroleum and Shell PLC)

The liquidity ratio represents or depicts the ability of the company to meet its short

term objectives over the given period of time. The above ratio is the ratio of assets

over liabilities of British Petroleum and the Shell PLC which is known as the

Liquidity Ratio as we know

Liquidity Ratio = Total Assets of the company / total Liabilities of the company

The liquidity ratio between the values of 1 to 1.5 is fine and shows the ability of the

company to meet the short term objectives is good enough. If the value exceeds

over the value of the 1.5 then we can say that the company is utilizing its liquid

2006 2007 2008 2009 2010

British Petroleum 75298000 77,068,000 69,793,000 59,320,000 58320000

Shell PLC 76,748,000 94384000 10529000 84789000 86789000

0

20000000

40000000

60000000

80000000

100000000

Liab

iliti

es

Liabilities of BP and Shell PLC For Last 5 Years

2006 2007 2008 2009 2010


Shell PLC 1.2 1.22 1.1 1.12 1.23

0

0.5

1

1.5

Liq

uid

ity

Liquidity ratio of the British Petroleum and Shell PLC for last 5

Years


49

assets at its best but if the value decreases below the limit of 1 it shows the inability

or we can say that the company is facing the problem to meet its needs for the

achievement of the short term objects.

In the graph 3 (Liquidity ratio of the British Petroleum and Shell PLC) the liquidity

of both the companies are showing good but for the British petroleum tin the year

2006 and also in the year 2008 the liquidity is below the standard value of the

companies to meet the short term objectives for the company over the given period

of time. Hence from the above data the research comes to the point that the British

Petroleum due to decrease in the liquidity ratio of the company below the standard

value faces problems in achievements of the short term objectives.

4.3.4 Equity Share Capital

The equity share capital of the British Petroleum and the Shell PLC are as under in

comparison to get the overall valuation of the equity share capitals the company

individually over the last five years.

2006 2007 2008 2009 2010

British

Petroleum

70000000 79925000 82789000 84053000 92789000

Shell PLC 55084000 51355000 50901000 73292000 61381000

Graph:4 (Equity Share Capital of the British Petroleum and Shell PLC)

2006 2007 2008 2009 2010

British Petroleum 70000000 79925000 82789000 8453000 92789000

Shell PLC 55084000 51355000 50901000 73292000 61381000

0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

80000000

90000000

100000000

Equ

ity

Shar

e C

apti

al

Equity Share Capital of the British Petroleum and Shell PLC


50

4.3.5 Fixed Interest bearing Funds

The fixed interest bearing funds of the British Petroleum and the Shell PLC are as

under in comparison to get the overall valuation of the fixed interest bearing funds

of the company individually over the last five years.

2006 2007 2008 2009 2010

British

Petroleum

84624000 93690000` 91303000 101613000 98304000

Shell PLC 105726000 123960000 127285000 136431000 137234000

Graph:4 (Fixed Interest Bearing Fund of the British Petroleum and Shell PLC)

4.3.6 Capital Gearing Ratio

The capital gearing ratio can be calculated from the from the equity share capital

and the fixed interest bearing funds

The capital gearing ratio can be calculated by having the ratio of these two values as

Capital Gearing Ratio = Equity Share Capital / Fixed Interest bearing funds

From having the ratios calculated from the above two articles the researcher come

to know the following gearing ratios for the British Petroleum Company and the

Shell PLC

2006 2007 2008 2009 2010

British

Petroleum

82.72 85.31 90.68 82.72 94.2

Shell PLC 52.10 43.09 39.9 53.72 58.14

2006 2007 2008 2009 2010

British Petroleum 84624000 93690000 91303000 101613000 98304000

Shell PLC 105726000 123960000 127285000 136431000 137234000

0

20000000

40000000

60000000

80000000

100000000

120000000

140000000

160000000

Fixe

d In

tere

st B

ear

ing

Fun

ds

Fixed Interest Bearing Fund of the British Petroleum and Shell PLC


51

The capital gearing ratio of the company is used to analyse the organisational

structure and its firmness in the market for the business. It simply shows the ability

of the company to pay the dividend and the fixed interest bearing. The above table

and graph shows that the reverse position of the British petroleum is better than that

of the Shell PLC.

4.3.7 Deep-water Oil spill Effect (BP Oil Spill)

The deep water oil spill in Mexico which has last for the three months in the year

2010 is very painful episode for the BP which has affected the mainstay of the BP

has affected a lot in terms of business and financials.

The following table gives a true picture of the loss to the BP due to the Oil Spills

2006 2007 2008 2009 2010


Shell PLC 52.1 43.09 39.9 53.72 58.14

0

10

20

30

40

50

60

70

80

90

100 C

apti

al G

ear

ing

Rat

io

Capital Gearing Ratio of British Petroleum and Shell PLC


52

Approximation of the oil Spills According to the BP

Information Source Date Approx.

Barrel/day Gallons/day m

3/day

Approximation by BP Documented 162,000 6,800,000 25,800

Approximation By USCG (United States Coast Guard) 23rd

of April 0 0 0

BP and United States Coast Guard 24th

of April 1,000 42,000 160

Official approximations 29th

of April 5,000 210,000 790


of May 19,000 800,000 3,000


of June 30,000 1,300,000 4,800

Drift Percentage Technical Group 19th

of June 60,000 2,500,000 9,500

International BP Approximation 20th

of June 150,000 4,200,000 16,000

Official approximations 2nd

of August 62,000 2,604,000 9,857


53

Approx. Barrel/day

Approximation by BP Documented

Approximation By USCG (United States Coast Guard) 23rd of April

BP and United States Coast Guard 24th of April

Official approximations 29th of April

Official approximations 27th of May

Official approximations 10th of June

Drift Percentage Technical Group 19th of June

International BP Approximation 20th of June

Official approximations 2nd of August


54

Classification Approximation Substitute 1 Substitute 2

Direct retrieval from wellhead 17% 17% 17%

Scorched at the surface 5% 5% 5%

Browsed from the surface 3% 3% 3%

Chemically disseminated 8% 10% 6%

Naturally disseminated 16% 20% 12%

Vaporised or liquefied 25% 32% 18%

Outstanding residual 26% 13% 39%

According to the above estimation about the 75 % of the oil from the BP lost in the

environment of the Gulf and caused a painful damage to the business and financial

competition with its competitors.

4.4 Presentation of Data (From Questionnaires)

This section of the chapter will include the presentation of the data collected from the

questionnaire and presented with the help of graphs and tables to get the better

0% 10% 20% 30% 40% 50% 60% 70% 80%

Direct retrieval from wellhead

Scorched at the surface

Browsed from the surface

Chemically disseminated

Naturally disseminated

Vaporised or liquefied

Outstanding residual

Approximation

Substitute 1

Substitute 2


55

understanding of the terms and techniques in financial and business analysis of various

matters of the company.

4.4.1 Working Environment

For the proper functioning of the company there is always a need to have a good and

friendly working environment for the employment of the company to work at their best

capacity. In other words we can say that for achieving the best capacity of the work that

the employment of the organisation or a company is capable of doing is only possible

when the working environment of the company suits the employments needs and

satisfaction.

For the purpose of evaluation of the working environment of the both of the companies

(British Petroleum and the Shell PLC) the researcher had designed the questionnaire to

get the overview of the working environment of both of the companies.

Every large organisation and companies develop strategies and polices for creating the

better workforce for improvement in the business and for that purpose the creating of the

working environment suitable for the employment of the organisation or the company is

must. There many factors which affects the working environment of the company.

The availability of the latest equipment‟s, incentives and benefits to the employment of

the company, friendly environment and proper strategies, policies and techniques help the

cause.

The more the availability of the factors discuss above more improvement will be in the

working environment of the company or the organisation in short term or on the long

term basis.

0%

20%

40%

60%

80%

100%

British Petroleum Shell PLC

Latest Quipments

Incentives and Benefits

Friendly Environment

Strategies and policies


56

The above graphs discussing the various factors helpful for the betterment of the working

environment of the company shows that the working environment of the both of the

companies almost resembles each other and almost has no difference in overall

comparison in this regard.

4.4.2 Financial Analysis

A. BRITISH PETROLEUM

1) Company has a strong policies and strategies to make the financial

analysis at various stages of the business.

The response from the respondent of the British Petroleum suggest that the company has

strategies and polices for the financial analysis of the company but yet the documentation

of these needs revision to get the more positive response from the employment of the

company which will built more healthy and affective financial analysis system for the

company in the future.

A 20%

DA 2%

SA 69%

SDA 6%

DN 3%

Response from the respondents


57

2) The financial statements of the company are developed for the analysis

of the financial strengths and weaknesses and are unbiased views of the

present situation of the company.

The above chart depicts the valuation of the financial reports which shows a

mix views from the respondents of the British Petroleum company but most of

them agreed to the fact that the financial reports prepared by the company are

unbiased and neutral.

3) The company has a well-documented and established financial policies

and strategies for the business dealings

However the company might have well documented and established financial

policies but the above chart shows the unawareness among the employment of

the British Petroleum Company about the policies, strategies and techniques.

A 52%

DA 10%

SA 28%

SDA 7%

DN 3%


A 40%

DA 35%

SA 10%

SDA 10%

DN 5%



58

4) The financial strength of the company has increased during the last five

years.

The above chart for the British petroleum company clearly depicts the

awareness and appreciation of the financial strength of the company which had

increased during the last five years of its performance.

5) The present polices and strategies of the financial matters inside the

organisation are satisfactory and needs no changing

The respondents of the British Petroleum company responses to the fact that

there is a need of changes in the present policies and strategies for the financial

matters of the organisation. There is a different opinion from the different

respondents but after analysing the whole chart we can say that the respondents

do want changes in the present policies and strategies related to the financial

A 38%

DA 5%

SA 52%

SDA 5%

DN 0%


A 17%

DA 30%

SA 43%

SDA 10%

DN 0%



59

matters of the company to make the performance of the company even better

from the past.


organisation are not satisfactory and need revisions at various stages.

On the question of the revision of the policies and strategies of the financial

policies of the company there is a strong agreement of the employment of the

company in the answer. The respondents from the British Petroleum wants clear

changes in the present policies and strategies of the company related to the

financial matters of the company.

The present stability of the company in the market is improving past few

years

A 50%

DA 10%

SA 30%

SDA 10%

DN 0%


A 20%

DA 2%

SA 69%

SDA 6%

DN 3%



60

The respondent of the British petroleum agrees with the fact that the stability of

the company has increased a lot in the past few years and in present the

company‟s policies and business is stable in the market.

The stability of the company is improved at the present as compare to the past

few years‟ stability of the company in the market.

7) The liquidity and the profitability of the company is increasing in past

few years

The respondent‟s response against the above question suggests that the

company‟s profitability and the liquidity has increased in the past few years.

And company had gained more profit as compare to the last few years.

8) The paying and buying capacity of the company is increased in past

few years

A 20% DA

2%

SA 69%

SDA 6%

DN 3%


A 20%

DA 5%

SA 66%

SDA 6%

DN 3%



61

The response from the respondents of the British petroleum company suggest

that the increase in the buying and selling capacity is noticed in the last few

years and at the present the buying and the selling capacity of the company had

reached its maximum level.

9) The assets of the company are more than the liabilities of the company

The respondents of the British petroleum responses to the fact that the company

occupied more assets than the liabilities on it which shows that the company is

presently in profit and doing good business. The assets of the company had

increased a lot in the last few years however there is a slight decreased in the

liabilities of the company yet in profit.

A 17%

DA 8%

SA 63%

SDA 9%

DN 3%



62

B. Shell PLC

1) Company has a strong policies and strategies to make the financial

analysis at various stages of the business.

The response from the respondent of the Shell PLC suggest that the company has

strategies and polices for the financial analysis of the company but yet the documentation

of these needs revision to get the more positive response from the employment of the

company which will built more healthy and affective financial analysis system for the

company in the future.

2) The financial statements of the company are developed for the analysis

of the financial strengths and weaknesses and are unbiased views of the


The above chart depicts the valuation of the financial reports which shows a

mix views from the respondents of the Shell PLC Company but most of them

A 20%

DA 2%

SA 69%

SDA 6%

DN 3%


A 72%

DA 10%

SA 11%

SDA 7%

DN 0%



63

agreed to the fact that the financial reports prepared by the company are

unbiased and neutral.

3) The company has a well-documented and established financial policies

and strategies for the business dealings

However the company might have well documented and established financial

policies but the above chart shows the unawareness among the employment of

the Shell PLC Company about the policies, strategies and techniques.

4) The financial strength of the company has increased during the last five

years.

The above chart for the Shell PLC Company clearly depicts the awareness and

appreciation of the financial strength of the company which had increased

during the last five years of its performance.

A 50%

DA 35%

SA 10%

SDA 5%

DN 0%


A 18% DA

5%

SA 72%

SDA 5%

DN 0%



64



The respondents of the Shell PLC company responses to the fact that there is a

need of changes in the present policies and strategies for the financial matters of

the organisation. There is a different opinion from the different respondents but

after analysing the whole chart we can say that the respondents do want changes

in the present policies and strategies related to the financial matters of the

company to make the performance of the company even better from the past.



On the question of the revision of the policies and strategies of the

financial policies of the company there is a strong agreement of the

A 24%

DA 24%

SA 26%

SDA 26%

DN 0% Response from the respondents

A 45%

DA 5%

SA 35%

SDA 15%

DN 0% Response from the respondents


65

employment of the company in the answer. The respondents from the

Shell PLC wants clear changes in the present policies and strategies of the

company related to the financial matters of the company.

7) The present stability of the company in the market is improving past

few years

The respondent of the Shell PLC agrees with the fact that the stability of the

company has increased a lot in the past few years and in present the company‟s

policies and business is stable in the market.

The stability of the company is improved at the present as compare to the past

few years‟ stability of the company in the market.

A 9%

DA 2%

SA 80%

SDA 6%

DN 3%



66

8) The liquidity and the profitability of the company is increasing in past

few years

The respondent‟s response against the above question suggests that the

company‟s profitability and the liquidity has increased in the past few years.

And company had gained more profit as compare to the last few years.

9) The paying and buying capacity of the company is increased in past few

years

The response from the respondents of the Shell PLC company suggest that the

increase in the buying and selling capacity is noticed in the last few years and at

the present the buying and the selling capacity of the company had reached its

maximum level.

A 22%

DA 3%

SA 65%

SDA 6%

DN 4%


A 20%

DA 5%

SA 66%

SDA 6%

DN 3%



67

10) The assets of the company are more than the liabilities of the

company

The respondents of the Shell PLC responses to the fact that the company

occupied more assets than the liabilities on it which shows that the company is

presently in profit and doing good business. The assets of the company had

increased a lot in the last few years however there is a slight decreased in the

liabilities of the company yet in profit.

A 17%

DA 8%

SA 63%

SDA 9%

DN 3%



68

4.4.3 Business Analysis

The business analysis of the company shows the following trends as shown in the

diagram.

0 20 40 60 80 100

Buying/ Paying Capacity

Profitability

Liquidity

Reputation

Stability in Market

Market Strategies

Market Structure

Financial Policies

Risk management

Planning for the future Projects

Feasibility Reporting

Financial Reporting

Business Analysis

Buying/

Paying Capaci

ty

Profitability

Liquidity

Reputation

Stability in

Market

Market

Strategies

Market

Structure

Financial

Policies

Risk manageme

nt

Planning for

the future Projec

ts

Feasibility

Reporting

Financial

Reporting

Business

Analysis

Shell PLC 58 88 38 95 80 65 60 80 65 40 35 85 75

British Petroleum 68 78 28 90 70 59 50 75 58 30 15 70 65

Chart Title


69

4.5 STRATEGIC POLICY OF THE COMPANIES

The strategic policies of both of the petroleum companies are almost same in before last

few years but after the great incident of BP oil Spills in the last couple of years a dramatic

change in the strategic policy of the British petroleum has come in front. The major

change had been made by the management of the British Petroleum after the incident of

the Oil Spill is the main course of interest for the researcher.

The British petroleum has now built a new strategic planning to meet the losses from the

oil spill in the Gulf and had recovered a lot but yet they had to do more on this factor.


70

CONCLUSION ‘’This chapter of the research is the final one which will include the conclusions

and the recommendations in the light of all the discussion on the topic under

investigation. Moreover the further areas of the research on this topic will also be

discussed.’’


71

5.1 Investigation and argument of outcomes with position to purpose of the study.

The monetary and the commercial analysis both are very important and basic for the

company to check its profitability, stability buying/paying capacity, liquidity, liabilities,

market strategies and structure and feasibility for the future projects of the company.

There are various methods for the analysis of the financial issues of the company and

improve the present business situations of the company according to the present situations.

The British Petroleum is very historical and large and historical company and was established

ion way back in 1901 in name of Anglo Persion Oil Company. The company during its

performance has developed a lot and made many improvements and now it has gained the

shape of British Petroleum and biggest Oil Company nationwide.

When the comparison of British Petroleum with the Shell PLC is done the researcher come to

know that the Shell is a very large organisation in its operation and services around the world.

Shell PLC (Royal Dutch Shell PLC) is one of the largest petroleum products manufacturing

company around the world and is very renowned around the globe. It‟s headquarter is

located in Hague, Netherlands.

5.2 Issues from the literature review.

The British Petroleum is one of the largest Oil and Gas Companies which is rendering there

services to provide fuel for transportation, energy, retail energy and for petrochemical

products around the globe.

The company is committed to provide the petroleum products in different countries of the

world at high standards and in timely manner. It has covered many countries of the world and

has become the necessity of many countries besides which they can‟t do anything.

Shell PLC (Royal Dutch Shell PLC) is one of the largest petroleum products manufacturing

company around the world and is very renowned around the globe. It‟s headquarter is

located in Hague, Netherlands.

A very large petroleum company in its operation which doing the business from almost more

than one century, it is the third largest petroleum company of the world and doing


It is operating in more than 95 countries and providing more than 3.1 barrel of oil per day to

the more than 45,000 of its stations around the world in different countries.

The overall financial ratio analysis is done for the purpose of the income statement analysis

and balance sheet analysis and with the supporting element of the financial scorecard tool to

provide the unique picture of the organisation and its financial position in the market


72

Income statement of the company is that form of financial statement which is usually called

as profit loss statement.

The income statement of the company is a part of the financial statements the other parts of

the financial statements are balance sheet and the cash flows.

The income statement is divided into two portions: the functioning and non- functioning

sectors.

Business analysis is a tool for finding the needs and requirement for the proper functioning

of the business and its development in the relevant field. The companies develop a business

analysis plans and strategies by which they conduct the business analysis and get the whole

picture of their business and the performance on the company in the present scenario.

The business analysis of the company is done by the business analyst o the company.

The Business Analyst (B.A.) is employed in the company to carrying out this task in the

company which maintain a business analysis report. The report is presented to the Board of

directors of the company for the necessary actions on the report and making the policies and

strategies for the future functioning of the company or the organisation.

The companies should have developed proper models to adopt inside the organisation to have

a proper functioning inside the company. The modelling is also useful in that manner that it

provides a basic guideline for the workforce to adopt and follow it easily and have a sample

of work which they had to perform and how they had to perform.

British Petroleum (BP) has implemented strategic economic supply administration in order to

emphasis on the progress of its stakeholders. This strategy is fanatic to persuasive and

possession stakeholders by generating and transporting extreme reoccurrence on their

reserves. In order to entice potential stakeholders in the business, British Petroleum (BP) has

to adopt upbeat strategies for potential stakeholders on their reserves and holding of all

stakeholders in the main policy of British Petroleum (BP).

The most perceptive outcome from stakeholder inspection is that Shell PLC has greater

sustenance from important stakeholders the Shell PLC Board, shareholders and ecological

pressure groups than British Petroleum (BP). It is largely because Shell PLC has substantial

involvement in situation preparation, which has always assumed it and benefit over

contestants in the past. Shareholders are more probable to be helpful of Shell PLC‟s strategic

choice to change into the renewable market, acceptance such a move. Alternately, British

Petroleum (BP) has been accomplishment poorly and lacks Shell's scenario planning ability.

Since the other main oil firms have not moved towards renewable energy, British Petroleum


73

(BP) is in a more difficult position, and is less able to encourage shareholders of the need to

embrace renewable energies through its SBU. Both companies British Petroleum (BP) and

Shell PLC have huge resources to draw on, in term of producing, distributing and marketing

of the various products around the globe. The shell has a strong scenario plan is a strong form

of assets, which is the great benefit over its opponents from last many years they cannot

simply acquire.

Issues that want consideration as it will influence on British Petroleum (BP) performance.

Firstly it emphasis on ecological issues related to the BP. The environmental law averts

withdrawal of extra natural capitals all over the period just to make maintainable practice of

the natural possessions. Company should have to halt developments are the reason to harm

the environment which might cause the unemployment and loss of jobs also. Strong criticism

done by the Green Groups Companies Shareholder damage their venture due to reduction in

the assessment of shares

The factors such as the legal ones that like company that sources damage to the nature and

become responsible for reducing the effects of those are considerable.

British Petroleum (BP) is doing its processes with hard regulation for boring and mining the

natural assets that contain crude oil. Tall valued tools and apparatus should be allowable to be

used for boring in order to stopover events similar to the oil spill which had affected the

British Petroleum (BP).

A technical matter Sequences is Ocean II reporting and controller circulation utensils to

formulate drawn from the tap beforehand boring. DWC ability should be used to decrease

intervals and charge for observing the position for inspection. DPC technology that Sketches

the 3D imageries for the site beneath maritime superficial that will afterwards choose for oil

withdrawal.

The British Petroleum (BP) under some various political issues has larger options for the

extraction of the oil for e.g. Iraq, Iran, Nigeria and Brazil etc. however the British Petroleum

(BP) has edge by these political factors other than this BP has many other factors and

prospects to capitalize and produce the cash flow for the upcoming plans.

The most important issue was of the OIL Spills in the Gulf of Mexico. The United States‟

Government has enforced the penalties for the harm made to the atmosphere, alongside such

life-threatening incident excluding the damage in only one quarter BP recuperating its place

instead of amalgamation or partially auction of shares BP Premeditated to establishment

sideways the perfect possessions to achieve the charge of cleaning he spill. Additional


74

significant phase which British Petroleum (BP) has occupied was skip dividend imbursement

for the period in command to convalesce the adversity state. After examining the situation

discussed above British Petroleum (BP) deliberately in solid station because of universal

processes 3rd uppermost marketplace shares in upstream events and overriding marketplace

spot

The oil spill is the main effected incident of the British Petroleum (BP). The business location

of British Petroleum (BP) after that happening has diminished a lot. British Petroleum (BP)

tracks the High values of tools to be castoff for mining, newest equipment‟s and accomplish

the ecological issues.

5.2- Recommendations:

There is some health and the safety issues as an accident had influenced I Texas Refinery

which brings the intention to this matter. This matter had led to the payment of approximate

96 million Dollars to make improvement in its health and the safety standards. British

Petroleum (BP) reputation has weakened over the last several years due to the events in the

past. There are also the momentous matters connected to the deficiency in the governance of

the company. British Petroleum (BP) has to take the issues extremely and make the essential

steps executed to improve the current situations and progress the commercial and economic

values of the company.

British Petroleum (BP) has to review the interior tactical strategy for the upcoming to

recuperate the fatalities from the oil Spill in the Gulf. Furthermore the new-fangled hazards

organization policies have to be industrialized to overwhelmed and decrease such kind of

events in the upcoming.

British Petroleum (BP) has robust location in downstream actions and much of its revenue

impending from downstream actions. British Petroleum (BP) should advance profoundly in

upstream events and contest unswervingly with Shell PLC and encounter future demands.

Now companies are looking to capitalize in substitute basis of dynamisms. British Petroleum

(BP) should also deliberate other choices and separate itself from its contestants.

5.3 - Suggestions:

5.3.1- Through joint ventures, BP can enter the oil sands production markets:

British Petroleum (BP) should toner numerous contracts with oils and manufacture

corporations that have the prospective of growing BP's experience to that type of

manufacture. The consequence of such contracts make it conceivable for both companies to

recall a collection of resources deprived of needful that they have to track all of the resources.


75

5.3.2- Business Strategy:

Enormous deterioration in revenues of British Petroleum (BP) in 2008 has loss of

approximately 62% of the total revenue. The failure of British Petroleum (BP) incomes just

owes to little charge oil worth. In an exertion to counterbalance decreasing proceeds, British

Petroleum (BP) can decrease wealth expenditure for 2009 and taken added events to cut

functioning charges. Through frequent dismissals and cuts in wealth expenses, British

Petroleum (BP) has the possible of plummeting yearly costs from $32 billion in 2007 to $28

billion in 2009. BP.s price decreases reflect the company‟s, “sustained focus on

simplification and competence.”

5.3.3- BP can Restructures its Alternative Energy Operations:

In instruction to decrease cost and enlarged the economic presentation BP. British Petroleum

(BP) streamlines its substitute liveliness procedures. British Petroleum (BP) began

reformation its liveliness actions in 2009 as part of the company's strategy to decrease

working costs and make control an economically modest procedure of energy.

5.3.4- Take Charge of its Cash:

British Petroleum (BP) should have a cash flow budget. Evaluation and apprise it frequently.

Accomplish its cash flow by judgment outgoings. Decrease the quantity of bank accounts.

Use of electronic banking to decrease dues & custodies. Should choose a bank account that

outfits the commercial requirements to decrease facility dues and overdraft charges.

Capitalize extra funds in higher attention accounts and competition the possessions to its

obligations.

5.3.5- Manage inventory:

British Petroleum (BP) should uphold record stages to competition compulsory

manufacture/sales dimensions. Use least re-order argument and also measure the opportunity

of plummeting the dissimilar kinds of account held. Position delivery of inventory to coincide

with production requirements i.e. 'just in time'. Try to get record on package where

conceivable to decrease level of currency knotted up in record. Accomplish unvarying run-of-

the-mill takes to classify outdate, damaged and slow touching items.

5.3.6- Areas for the Further Research

Inspire cash and credit card expenditures where conceivable and proposition credit as a last

option. Have borrower‟s comprehensive a credit request, evaluation of their economic

declarations and accomplish orientation checks. Speed up gathering efforts by transmitting

declarations early and punctually subsequently up insolvents. Deal with all insolvents


76

inquiries punctually as well as take phases to decrease faults in report, billing, speeches etc.

Contemplate accusing attention on unpaid financial records or at slightest 'note' that attention

is payable on statements. Limit recognition terms down to 7 day as well as offer small

reductions to inspire quick imbursement. Decrease sales/volume reductions to unhurried

spenders to reproduce extra period and charge of follow up.


77

REFERENCES USED 1. Business analysis & valuation: using financial statements: Krishna G.

Palepu, Paul M. Healy - 2008 - 336 pages

2. Financial analysis: tools and techniques: a guide for managers :Erich A.

Helfert - 2001 - 485 pages

3. Financial analysis and decision making: tools and techniques : David E.

Vance - 2002 - 411 pages –

4. Financial Statement Analysis 9E - Page 2 Wild - 2006 –

5. A financial and business analysis of Indiana grain elevators: E. G. Byer,

G. B. Wood, George S. Abshier - 1950 - 39 pages - Snippet view

6. Schaum's quick guide to business formulas: 201 decision-making : Joel

G. Siegel, Jae K. Shim, Stephen Hartman - 1997 - 354 pages

7. Financial statement analysis and business valuation: Robert B. Dickie -

2006 - 399 pages –

8. Fuzzy logic in financial analysis: Ana María Gil Lafuente - 2005 - 450

pages –

9. A Weberian analysis of business groups and financial markets: Sandro

Segre - 2008 - 131 pages –

10. Financial analysis: tools and techniques : Erich A. Helfert - 2001 - 485

pages –

11. International financial reporting standards: a practical guide: Hennie

van Greuning - 2009 - 334 pages –

12. Financial analysis: a controller's guide: Steven M. Bragg - 2000 - 342

pages –

http://www.google.com.pk/search?hl=en&tbm=bks&tbm=bks&q=inauthor:


78

13. Financial analysis and decision making: David E. Vance - 2002 - 411

pages –

14. Financial analysis: the next step: James O. Gill, Moira Chatton - 2000 -

110 pages

15. Financial analysis: principles and procedures: Jerry A. Viscione - 1977

- 271 pages –

16. Financial analysis: Bill Rees - 1995 - 390 pages

17. Essentials of financial analysis: G. Thomas Friedlob, Lydia Lancaster

Folger Schleifer - 2003 - 234 pages –

18. Financial analysis: a programmed approach: Neil Seitz - 1984 - 320

pages –

19. Optimisation, econometric and financial analysis: Erricos John

Kontoghiorghes, Cristian Gatu - 2007 - 277 pages

20. Financial analysis of M&A integration: Stuart Ferguson, Stuart

Ferguson (Ph. D.) - 2003 - 358 pages –

21. Financial analysis: a user approach: Gary A. Giroux - 2003 - 297

pages

22. Financial analysis: a managerial introduction: Richard Malcolm Sano

Wilson, Gerard McHugh - 1987 - 310 pages

23. Financial analysis, planning & forecasting: theory and application:

Alice C. Lee, John C. Lee, Cheng F. Lee - 2009 - 1101 pages –

24. Techniques of Financial Analysis: A Guide to Value Creation:

Erich A. Helfert - 2002 - 570 pages –

25. The portable financial analyst: what practitioners need to know: Mark

P. Kritzman - 2003 - 260 pages –

26. Business Analysis: Debra Paul, Malcolm Eva, Keith Hindle - 2010 - 256

pages

http://www.google.com.pk/search?hl=en&biw=1024&bih=632&tbm=bks&tbm=bks&q=inauthor:

http://www.google.com.pk/search?hl=en&biw=1024&bih=632&tbm=bks&tbm=bks&q=inauthor:


79

27. Seven Steps to Mastering Business Analysis: Barbara A. Carkenord -

2008 - 353 pages –

28. Strategic management and business analysis: David Williamson, Peter

Cooke, Wyn Jenkins - 2003 - 263 pages

29. A Guide to the Business Analysis Body of Knowledge (Babok Guide):

Iba, Kevin Brennan - 2009 - 272 pages

30. Professionalizing Business Analysis: Kathleen B. Hass - 2007 - 119

pages –

31. Business analysis: Association of Chartered Certified Accountants

(Great Britain) - 2008 - 638 pages

32. Mastering business analysis with Crystal Reports 9: Chris Tull - 2003 -

450 pages –

33. Business analysis using regression: a casebook: Dean P. Foster,

Robert A. Stine, Richard P. Waterman - 1998 - 348 pages –

34. Business analysis and valuation: Krishna G. Palepu - 2007 - 572 pages

–

35. Business analysis & valuation: using financial statements: Krishna G.

Palepu, Paul M. Healy - 2008 - 336 pages –

36. Business Analysis of Web.de AG: Andreas Birkholz - 2007 - 88 pages –

37. A business analysis: intellectual disability services state plan: Victoria.

Community Services Victoria - 1990 - 30 pages

38. Financial Report : British petroleum – Annual 2010

39. Financial Report : Shell PLC – Annual 2010

http://books.google.com.pk/books?id=azRz5iJV4eUC&printsec=frontcover&dq=business+analysis&hl=en&ei=vphgTpSKFY2s8QPT6ekC&sa=X&oi=book_result&ct=book-preview-link&resnum=2&ved=0CDgQuwUwATgK


80

APPENDIX- 2

Questionnaires

Q U E S T I O N N A I R E

This work of dissertation is on Financial and business analysis is done under the University

of Wales with the intention of having a research on the given topic “Financial analysis

and business analysis of British Petroleum in comparison with Shell

PLC.’’ Both are very large petroleum companies in terms of their supply of petroleum.

The information gathered from this questionnaire will be kept only for the purpose of the

research on the provided topic from the researcher‟s University and will not be disclosed to

any unconcerned person at any stage.


81

Part I: Basic Information

Name: _____________________

Designation: _____________________

Department: _____________________

Company: _____________________

Qualification: _____________________

Time Period of the Present Job: _____________________

Part II: Working Environment:

1. Does the working environment inside your company is developed under

the strategies and policies of the company?

Yes No Might Be I don‟t Know

1. Do the company having strategic plans for the improvement in the

working environment for the workforce?


1. Is your company stronger enough to deal with the drawbacks created by

the lack of interest in the working environment?



82

Part III: Financial Analysis of the company:

Company has a strong policies and strategies to make the financial analysis

at various stages of the business.

Agree Disagree Strongly Agree Strongly Disagree I don‟t Know

The financial statements of the company are developed for the analysis of

the financial strengths and weaknesses and are unbiased views of the



The company has a well-documented and established financial policies and

strategies for the business dealings


The financial strength of the company has increased during the last five

years.


1. The present polices and strategies of the financial matters inside the




83

The present polices and strategies of the financial matters inside the



The present stability of the company in the market is improving past few

years


The liquidity and the profitability of the company is increasing in past few

years


The paying and buying capacity of the company is increased in past few

years


The assets of the company are more than the liabilities of the company



84

Part III: Business Analysis of the company:

Please fill the following chart in according to the ranking as you think

about the company‟s Performance in the following Elements

Poor Nice Good V. Good Excellent

Buying/ Paying Capacity

Profitability

Liquidity

Reputation

Stability in Market

Market Strategies

Market Structure

Financial Policies

Risk management

Planning for the future Projects

Feasibility Reporting

Financial Reporting

Business Analysis

BP and Shell Plc Report

Documents

accounts receivable turnover

competing organisations bpgoods

equity share capital

long term basis

capital gearing ratio

short term objectives

proper functioning inside

bp oil spill