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Index Company Background Stock Market Research
Ratios and Industry Comparison Financial Statements and Analysis
Income Statement
Balance Sheet Cash Flow
Recommendation
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Company
Background BP was one of the worlds most leading oil and gas
companies.
It provided consumers with a variety of products
The products generated are from scratch
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History BP (Anglo Persian Oil company) was founded in 1901 by William Darcy 1908 BP found the black gold and from here on the legacy began.
1914 BP had an oversupply of oil and nobody to sell it to, the problem was at thatstage in time the technology was coal not oil.
BP played a big part in 1939 where the world war , their services where utilized verywell in this period
1969 BP struck it rich and attained oil from Alaska this further aided their healthygrowth.
1987 Black Monday, BP shares plummeted.
1997 BP became the first major energy company to acknowledge the potential risksof global warming.
2008 BP hit a gold mine; oil began to flow from the worlds largest floating platform atthe thunder horse field in Gulf of Mexico
2010 an explosion occurred in the new generated floating platform which was verydetrimental to the company
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Competitors Cairn energy
Parenco Premer Oil Salamander energy
Royal Dutch Shell Total S.A
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Recent Events January 2011 BP faced legal actions from its oligarch partners in the
TNK-BP as they tried to halt BPs recent share swap and arcticexploration deals.
The Gulf of Mexico spill in 2010 was another detrimental event whichset BP back in growth and profit.
BPs main partner in the exploded Gulf of Mexico oil well has agreed tocontribute 4 billion towards clean up costs and civil claims.
Early October the US regulators have approved BPs Gulf of Mexicodrilling plan
3.7 Billion Of bonds as oil were sold in March 2011 by BP as oil boostsenergy debt.
BP had lost trust from major buyers and where sinking to the deep low.*
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Ratios and IndustryComparison
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Liquidity
Measures a company's ability topay short-term obligations
The higher the current ratio, themore capable the company is ofpaying its obligations
Determines whether a firm hasenough short-term assets to coverits immediate liabilities withoutselling inventory
Companies with ratios of less than1 cannot pay their currentliabilities and should be looked at
with extreme caution.
0.90
0.95
1.00
1.05
1.10
1.15
1.20
2008 2009 2010
Ratio
Year
CURRENT RATIO
BP
IndustryAverage
0.70
0.75
0.80
0.85
0.90
0.95
2008 2009 2010
Ratio
Year
QUICK RATIO
BP
IndustryAverage
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Long Term Solvency
Determine how easily acompany can pay interest onoutstanding debt
The lower the ratio, the morethe company is burdened byinterest expense
Indicates what proportion ofdebt a company has relative toits assets
A debt ratio of greater than 1indicates that a company hasmore debt than assets, which isunsafe
-5.00
0.005.00
10.00
15.00
20.00
25.00
30.00
35.00
2008 2009 2010
Times
Year
INTEREST COVER
BP
IndustryAverage
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
2008 2009 2010
Ratio
Year
DEBT RATIO
BP
IndustryAverage
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Management Efficiency
Measure length of time, in days, thatit takes for a company toconvert resource inputs into cashflows
The shorter the cycle, the less timecapital is tied up in the businessprocess, and thus the better for the
company's bottom line.
Measures a firm's efficiency atusing its assets in generatingsales or revenue
The higher the better because itindicates the company is using itsasset efficiently to generate sales
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2008 2009 2010
Times
Year
TOTAL ASSETS TURNOVER
BP
Industry
Average
10.00
15.00
20.00
25.00
30.00
35.00
40.00
2008 2009 2010
Days
Year
NET TRADE CYCLE
BP
IndustryAverage
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Profitability
To show the margin oneach $1 of sales
The higher, the better
To show how productively afirm is using its assets togenerate earnings.
The higher, the better
20.00
25.00
30.00
35.00
40.00
45.00
50.00
2008 2009 2010
Percentage
Year
GROSS PROFIT MARGIN
BP
IndustryAverage
(1.50)
(0.50)0.501.502.503.504.505.506.507.508.509.50
10.5011.50
2008 2009 2010
Percentage
Year
RETURN ON ASSETS
BP
IndustryAverage
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Investment Ratio
A measure of the actualcash return (i.e. dividend) toshareholders on theirinvestment
The higher, the better
The price for which ashare of that companytrades on the stock market
The higher, the better
-
1.00
2.00
3.00
4.00
5.00
6.00
7.00
2008 2009 2010
Percentage
Year
DIVIDEND YIELD
BP
IndustryAverage
-
200.00
400.00
600.00
800.00
1,000.00
1,200.00
2008 2009 2010
pence
Market value per share
BP
Industry Average
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Balance Sheet
41%
-15%
-10%
24%
12%
3%
2010 2009 2008
Trend Analysis - Liabilities
Current Liabilit ies Long-term liabilit ies
43%
2%
-17%
15%
3%
-3%
2010 2009 2008
Trend Analysis - Assets
Current Assets Total Assets
-7%
12%
-3%
15%
3%
2010 2009 2008
Trend Analysis - Equity
Retained earnings Total L and SE
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Balance Sheet
31%
25%
31% 33%34%
32%29% 27%
33%
41% 38% 37%
2% 2% 2% 2%
2010 2009 2008 2007
L & E - Common-size Statments
Current Liabilities Long-term liabilities
Retained earnings Contributed capital
36%
29% 29%34%
40%
46%45% 42%
24% 25% 26% 25%
2010 2009 2008 2007
Assets - Common-size Statements
Current Assets
Property, plant and equipment, net
Other Assets
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Income Statement
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Cash Flow
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Recommendation
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Bibliography Bloomberg Finance L.P. BP anual report 2007 and 2010
Financial Times Forbes Wall Street Market www.opec.org/opec_web/en/data_graphs/40.h
tm
www.marketwatch.com