'Financial Analysis of Oil Marketing Companies\r'

'?ANALYSIS OF OIL AND shove a enormous MARKETING SECTOR- AN OVERVEW OF ITS GROWTH OVER THE LAST cardinal YEARS (2001 †2005) AUTHOR: Akhlaq Ahmad Enroll No. 111031-004 stall no: 03215008455 BBA-6 (Morning) SUPERVISOR: Mr. Musbashir Sadiq Bahria Institute of Management & cultivation actioning system Sciences, Bahria University Shangrila Road, bena E-8, Islamabad ABSTRACT Pakistan’s parsimony is undergoing signifi stackt geomorphological changes since 1999-2000. The real GDP harvest-festival is accelerating everyplace the net quint historic on-going. Over the side by side(p) atomic number 23 stratums, 7-8 roleage harvesting is targeted to be sustained, which go out posit a huge rise in the free readiness hire.\r\nThe qualification sphere of influence in Pakistan comprises of anele, natural plash, forcefulness (hydro and nuclear) and coal. The crude and turgidity bea has a lot of potential in Pakistan. Pakistan is classified as poc ket-size foregoingity by foreign investors because of the liquid economic and political situation. However, efforts ar existence do by the G all everyplacenment to promote investiture in the inunct and sp anele welkin, by miscellaneous incentives much(prenominal) as liberal granting of exploration licenses, restructuring and reform of the oil and boast celestial spheres, deregulation of bells, and privatization of selected assets.\r\nThe reform has enhanced transpargonncy, fashioning decision makers a contende of the dissimilar The objective of this thesis is to read whether the anoint and bodge sphere in Pakistan has really progressed and whether thither argon better opportunities for investment funds and surrender in this sector this instant than in that location were in the past. For the target of de bournining the purport of harvest-festival in the crude and go overcome on sphere of influence, cardinal embrocate and drift merchandising Companie s (O&GMC) were selected and their monetary selective information encounter over a finis of fiver years (2001 †2005).\r\n pecuniary data relevant to the sample companies was poised from published accounts of the companies, in their annual taradiddles. This data was condensed and summed up for the four companies and modeled in tables and then apply for digest. The leaves were held to be representative of the entire crude market sector and holdm to show a marked trend of suppuration in the fiscal indicants reveal that there has been a marked improvement in the out festering of this industry. ACKNOWLEDGMENT First of all I am actually much thankful to ALLAH ALMIGHTY, who gave me strength & power to complete this task efficiently & effectively.\r\nI am similarly very much thankful to my parents who gave me the introductory knowledge of how to read & write, who also prayed for me every clipping, peculiarly in the hour of rent & trouble . thank to my intimately prestigious Supervisor Mr. Mubashir Sadik for providing me guidelines for each & every survey. Thanks to Mr. Abdul Ahad Maud and Mr. Faisal Subhan who were very cooperative and considerate during the whole cessation of data collection. I am also very grateful to all those who helped me & gave me up-to-date information or any a nonher(prenominal) information regarding this abstract patch completing this task. Thank you in anticipation.\r\nDADICATION TO MY LOVING PARENTS set back OF CONTENTS ABSTRACTi ACKNOWLEDGMENTiii DADICATIONiv TABLE OF CONTENTSv reheel OF TABLESvi LIST OF FIGURESix CHAPTER 11 INTRODUCTION1 Broad puzzle Area/Background1 pro constituentnale5 Problem bring upment6 Objectives of the ingest7 enquiry Questions8 Limitations9 CHAPTER 210 LITERATURE REVIEW10 CHAPTER 315 mode15 Procedure17 CHAPTER 421 RESULTS AND DISCUSSION21 CHAPTER 566 CONCLUSION AND RECOMMENDATION66 Conclusion66 Recommendations 68 GLOSSARY 69 REFERENCES73 L IST OF TABLES defer 4. 1: Pakistan subject fossil oil confederation circumscribed end tacks (2001-2005)21 elude 4. : Pakistan State anoint companionship hold Income Statements (2001-2005)22 dodge 4. 3: Pakistan State rock oil phoner especial(a) upright piano customary size of it of chemical equilibrium Sheets (2001-2005)23 delay 4. 4: Pakistan State rock oil lodge limit tumid viridity surface of Income statement (2001-2005)24 tabularize 4. 5: Pakistan State rock oil Company contain swimming special K size of it of Balance Sheets (2001-2005)25 put off 4. 6: Pakistan State Oil Company contain flat familiar Size of Income statement (2001-2005)27 delay 4. 7: home motif Pakistan Limited Balance Sheets (2001-2005)28 submit 4. : shield Pakistan Limited Income Statements (2001-2005)29 remit 4. 9: baffle Pakistan Limited good greens Size of Balance Sheets (2001-2005)30 Table 4. 10: slash Pakistan Limited unsloped special K Size of Income Stat ements (2001-2005)31 Table 4. 11: Shell Pakistan Limited plain Common Size of Balance Sheets (2001-2005)32 Table 4. 12: Shell Pakistan Limited plane Common Size of Income Statements (2001-2005)34 Table 4. 13: Sui blue mess up Pipelines Limited Balance Sheets (2001-2005)35 Table 4. 14: Sui blue shooter Pipelines Limited Income Statements (2001-2005)36 Table 4. 5: Sui blue go down on Pipelines Limited Vertical Common Size of Balance Sheets (2001-2005)37 Table 4. 16: Sui northern Gas Pipelines Limited Vertical Common Size of Income Statements (2001-2005)38 Table 4. 17: Sui Northern Gas Pipelines Limited plane Common Size of Balance Sheets (2001-2005)39 Table 4. 18: Sui Northern Gas Pipelines Limited plane Common Size of Income Statements (2001-2005)40 Table 4. 19: Sui southern Gas Company Balance Sheets (2001-2005)41 Table 4. 20: Sui Confederate Gas Company Income Statements (2001-2005)42 Table 4. 1: Sui Southern Gas Company Vertical Common Size of Balance Sheets (2001-20 05)43 Table 4. 22: Sui Southern Gas Company Vertical Common Size of Income Statements (2001-2005)44 Table 4. 23: Sui Southern Gas Company Horizontal Common Size of Balance Sheets (2001-2005)45 Table 4. 24: Sui Southern Gas Company Horizontal Common Size of Income Statements (2001-2005)46 Table 4. 25: Oil and Gas foodstuffing Sector coalesced Balance Sheets (PSO, Shell, SNGPL, SSGC) (2001-2005)47 Table 4. 26: Oil and Gas Marketing Sector Consolidated Income Statement (PSO, Shell, SNGPL, SSGC) (2001-2005)48 Table 4. 7: Oil and Gas Marketing Sector Vertical Common Size of Balance Sheet (PSO, Shell, SNGPL, SSGC) (2001-2005)49 Table 4. 28: Oil and Gas Marketing Sector Vertical Common Size of Income Statement (PSO, Shell, SNGPL, SSGC) (2001-2005)51 Table 4. 29: Oil and Gas Marketing Sector Horizontal Common Size of Consolidated Balance Sheet (PSO, Shell, SNGPL, SSGC) (2001-2005)52 Table 4. 30: Oil and Gas Marketing Sector Horizontal Common Size of Consolidated Income Statement (PSO, She ll, SNGPL, SSGC) (2001-2005)53 Table 4. 31: Important figures to be employ in the calculating the ratios54 Table 4. 2: Ratios for beat the Liquidity of the sector 55 Table 4. 33: Ratios for measuring the ache consideration Debt leaveing(a) Ability57 Table 4. 34: Ratios for measuring the put on expertness of the sector59 Table 4. 35: Ratios of the measurement of the market value of the sector63 LIST OF FIGURES bole-build 4. 1: Ratios for measuring the broad bound Debt Paying Ability55 encounter 4. 2: Ratios for measuring the bulky Term Debt Paying Ability57 Figure 4. 3: Ratios for measuring the Long Term Debt Paying Ability59 Figure 4. 4: Ratios for measuring the Long Term Debt Paying Ability61 Figure 4. : Ratios for measuring the Long Term Debt Paying Ability63 Figure 4. 6: Graphs to specify the growth of the oil & sport marketing companies65 CHAPTER 1 INTRODUCTION Broad Problem Area/Background It is universally recognized that faculty is one of the most importan t inputs for economic growth and national development. The manipulation of push button is one of the decisive indicators of the level of development of any country. Developed countries use to a greater extent vitality per unit of economic turnout and far more than than energy per capita than developing countries.\r\n sparing growth is the key to this situation and for economic growth we need energy. Pakistan’s thriftiness is undergoing significant structural changes since 1999-2000. The real GDP growth is accelerating over the bear five years. Over the next five years, 7-8 percent growth is targeted to be sustained, which will demand a huge rise in the energy use. The energy sector in Pakistan comprises of oil, natural catalyst, power (hydro and nuclear) and coal. The primitive primary energy supplies measured in scathe of oil equivalent (toe) stood at 50. trillion tonnes in 2003-04. Oil and gas account for intimately 80% of the energy sector of Pakistan with oil and gas existence 29. 9 percent and 49. 7 percent respectively. In order to measure the growth of the energy sector the best proxy might be to mensurate the performance of the oil marketing companies. As these are the companies which are not unaccompanied selling the oil ground products which meet the major needs of the energy in Pakistan but also these companies are dealing in the recently made popular categorical Natural Gas.\r\nAs this Oil and Gas sector represents more than 80% of the energy consumed in Pakistan so the companies which are dealing with the marketing of these fuels need to be assessed for their fiscal performance and results in the past some years. If these companies are showing growth we might wear off that the energy sector is growing and the economy is on the right path. The first gas field was observe in at Sui in 1952 and go aways the basis for Pakistans elongated gas network. Pakistan imports crude oil (it only avers 17% to 20% of what it needs) , however is self sufficient in natural gas.\r\nOf the companies that are being questioned in the present study, Pakistan State Oil Company Limited (PSOCL) and Shell Pakistan are the main planks in the oil industry. Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC), distributes major parting of the natural gas. Pakistan declared 1997-98 an â€Å"Oil and Gas Year”. As a result of offering incentives to potential investors, including foreign companies, some $2. 5 billion of investment was attracted. Oil and Gas usage Figures? Oil Consumption (In tones): 1999-00 2000-01 2001-02 2002-03 2003-04 17,768,000 17,648,000 16,950,000 6,542,000 13,421,000 Gas Consumption 2003 ( In mmcft): 1999-00 2000-01 2001-02 2002-03 2003-04 712,001 768,068 872,604 872,264 1,051,418 Consumption of oil and gas has been fairly wet throughout the 1990s with the gas inlet increase at a rate of 4. 9 percent duration the oil expending increasing at a slightly reduced rate of 2. 5 percent. Until 1999, the government tightly controlled the oil and gas industries of Pakistan. No decision could be made without referring to the higher(prenominal) authorities, and when decisions were made, they were a lot based on political as contradictory to economic considerations.\r\nSince early 2000, an ambitious pro-market reform platform is being implemented, and gradually, the straightjacket under which the industry utilize to operate is being dismantled. As a result, the sector has changed dramatically over the travel five years, and Pakistan now leads South Asia in sector reform (Economic check into of Pakistan, 2004-05). The government actions gravel focused on promoting semiprivate investments in the upstream, deregulating most of the market for crude oil products, establishing a regulatory agency for the gas sector, and introducing market-related price caps for crude products.\r\nThe government’s long condition goal is to create a competitiv e, efficiently-run, fiscally smooth, and a largely privatized oil and gas sector providing supplies to a large share of population. It is important to note that a structural shift is taking place since 2000-01. The last five years occupy seen a substantiative trend towards greater gas consumption and a negative trend in the petroleum products consumption. authentic progress has been made in the restructuring and reform of the oil and gas sectors, deregulation of prices, and privatization of selected assets.\r\nThe reform has enhanced transparency, making decision makers aware of the various aspects of the blood line. Rationale Oil and Gas is an important sector in Pakistan economy and it largely affects the GDP of Pakistan, therefore there is a great emphasis on exploration and marketing. The consumption of Oil was 16. 45 meg tonnes in 2002-3 and consumption of gas was 872,264 million cubic feet. The acceleration in growth of energy consumption is not move when seen once more st a 15. 4 percent growth in large scale manufacturing and an 8. 5 percent growth in real GDP. Higher consumption of energy simply reflects the rising of economic activity in a country. Oil and natural gas are an integral part of the everyday life. Not only do they make the economy move, they heat and cool it our homes and bring home the bacon electricity. A large number of products are made from oil and gas, including plastics, life-saving medications, art silk, cosmetics, and many separate items you whitethorn use daily. Even from Strategic bakshish and defense view point Pakistan is dependent on oil and gas. Problem Statement\r\nOil and gas sector of Pakistan has changed dramatically over the last five years and Pakistan now leads South Asia in sector reform. The endeavors made to increase the oil and gas supplies need to be analyzed and companies encouraged. With this premise in encephalon four, Oil and Gas marketing companies have been selected to analyze their monetary p erformance that would also indicate their success. Objectives of the study The objective of research study is to analyze the growth and development of the Oil and Gas Marketing Sector in Pakistan.\r\n on-line(prenominal)ly according to the Board of enthronization of Pakistan there are 26 (local and international) companies operating in upstream, 7 downstream companies, and 4 refineries. The focus of this abstract is on the progress of downstream companies that are based in Pakistan. Four leading downstream companies have been selected and their fiscal performance studied for a period of five years from 2001 to 2005 to see whether these companies are pecuniaryly stronger and what their rate of growth is and to de boundaryine reasons bum the growth. look into Questions 1.\r\nWhat is the impressiveness of Oil and Gas sector in Pakistan economy? 2. What is the growth scenario of Oil and Gas Marketing companies in Pakistan? 3. What is the pecuniary performance of the selected Oil and Gas marketing companies during the research period (2001-2005)? 4. What conclusions can be drawn nearly the industry based on the financial performance of the selected companies? Limitations Limitations: This research study has menstruation limitations that are not easy for the police detective to castigate at this level. The general level of inflation has not been adjusted for.\r\nOverall prices of oil have increase repayable to unavoidable natural phenomenon like war in Iraq and Hurricane Katrina. The gainfulness of the oil marketing companies could be imputable to increase in prices of petroleum and it may not be the true measure of their financial performance. Some secondary data was not slowly available and was very difficult to obtain. As the research work was given to the researcher during the semester so the time constraint played its role. Despite time constraint, the researcher has conducted a comprehensive research.\r\nThe limited visualise in the research field is also a offspring of consideration. This is the first study that goes to researcher’s faith. Hence, the researcher does not possess any experience in the field. CHAPTER 2 LITERATURE REVIEW The starchy itself and extraneous go outrs of chief city- creditors and investors â€all undertake financial statement compendium. The compositors case of analysis varies according to the specific interests of the party involved. treat creditors (suppliers’ owed money for goods and services) are primarily kindle in the liquidity of a firm.\r\nTheir claims are defraud shape, and the baron to pay these claims quickly is best judged by an analysis of firm’s liquidity. The claims of bond bondholders, on the former(a) hand are long-term. Accordingly, bondholders are more interested in the cash flow magnate of the firm to service debt over a long period of time. They may evaluate this ability by analyzing the capital structure of the firm, the major sources a nd uses and uses of funds, the firm’s profitability over time, and projections of next profitability over time, and projections of incoming profitability.\r\nThe purpose of financial statement analysis is to examine past and current financial data so that a familys performance and financial position can be evaluated and future risks and potential can be estimated. pecuniary statement analysis can yield valuable information about trends and sexual congressships, the quality of a keep societys wages, and the strengths and weaknesses of its financial position (Woelfel, 1989). Investors in a partnership’s habitual stock are mainly concerned with present and expected future sugar as well as with the stability of these earnings about a trend line.\r\nAs a result, investors usually focus on analyzing profitability. They would also be concerned with the firm’s financial material body insofar as it affects the ability of the firm to pay dividends and avoid b ankruptcy. Internally, vigilance also employs financial analysis for the purpose of internal control and to better provide what capital suppliers seek in financial gibe and performance from the firm. From an internal control stand point, management needs to undertake financial analysis in order to plan and control effectively.\r\nTo plan for the future, the financial music director must assess the firm’s present financial position and evaluates opportunities in relation to this current position. With respect to internal control, the financial manager is particularly concerned with the return on investment provided by various assets of the company and in the capability of asset management. Finally, to bargain effectively for outside funds, the financial manager needs to be attuned to all aspects of financial analysis that outside suppliers of capital use in evaluating the firm (Horne & Wachowicz, 2001).\r\n financial analysis of a company should include an examination of the financial statements of the company, including notes to the financial statements, and the auditors report. The auditors report will state whether the financial statements have been audited in accordance with generally recognised auditing standards. The report also indicates whether the statements fairly present the companys financial position, results of operations, and changes in financial position in accordance with generally accepted accounting principles. Notes to the financial statements are oftentimes more meaningful than the data found within the body of the statements.\r\nThe notes explain the accounting policies of the company and usually provide detailed explanations of how those policies were applied along with supporting details. Analysts often compare the financial statements of one company with other companies in the kindred industry and with the industry in which the company operates as well as with prior year statements of the company being analyzed (Foste r, 1999). comparative financial statements provide analysts with significant information about trends and relationships over two or more years. comparative statements are more significant for evaluating a company than are single-year statements.\r\nThe analysis of financial data employs various techniques to emphasize the comparative and relative importance of the data presented and to evaluate the position of the firm. These techniques include ratio analysis, familiar size analysis, study of difference in components of financial statements among industries, review of descriptive material, and comparisons of result with other types of data. The information derived from these types of analyses should be blended to determine overall position. No one type of analysis supports overall findings or serves all types of users.\r\nFinancial statement analysis is a judgmental process. One of the primary objectives is identification of major changes ( crook points) in trends, amounts and re lationships and investigation of the reasons underlying those changes. Often, a turning point may signal an early warn of a significant shift in the future success or failure of the business. The judgment process can be improved by experience and by the use of analytical tools. The components of financial statements, curiously the balance sheet and the income statements, will vary by type of industry (Gibson, 1998).\r\nEconomies — all economies — run on energy. Energy is needed to build up food and become goods, power machines and appliances, transport raw materials and finished products, and provide heat and light. The more energy available to a society, the better its prospects for sustained growth; when energy supplies dwindle, economies savvy to a halt and the affected populations suffer (Klare, 2005). Since population War II, economic growth around the cosmos has been fueled largely by abundant supplies of hydrocarbons — that is, by petroleum and natural gas.\r\nSince 1950, worldwide oil consumption has grown eightfold, from approximately 10 to 80 million barrels per day; gas consumption, which began from a littler base, has grown even more dramatically. Oil and gas will account for 65% of world energy in 2025, a larger share than at present; and because no other source of energy is currently available to replace them, the future health of the global economy rests on our ability to produce and consume more and more of these hydrocarbons (U. S surgical incision of Energy, 2004).\r\nPetroleum refers to crude oil and natural gas or simply oil and gas, found in petroleum reservoirs generally thousands of feet below the surface. Exploratory swell are drilled to discover petroleum wells, while development wells are drilled to produce a portion of previously discovered oil and gas. Estimated volumes of recoverable gas within the reservoir are called oil and gas militia (Brock, Jennings & Feiten, 1990). The oil and gas sector or th e petroleum industry has the pursuit four major segments: 1. Exploration and Production r E&P where oil and gas companies look for underground reservoirs, and produce the discovered oil and gas using drilled wells. This thesis focuses on this sector of the oil and gas industry. 2. Hydrocarbon processing which includes oil refineries and gas processing plants. 3. Transport, Distribution and Storage by which petroleum is travel from the producing well areas to crude oil refineries and gas processing plants. Oil is moved by pipeline, truck, lighter or tanker and Natural gas is moved by pipeline. 4. Retail/Marketing which ultimately markets in various ways the refined products.\r\nCHAPTER 3 METHOD Sample For the sample selection of four marketing companies, out of the population of 7 companies listed in the KSE, the criteria used were: 1. Share chief city of the company 2. gross revenue tax income 3. Distribution data of the companies pratd on these criteria the four companie s selected that are operating in Pakistan were the pastime: Pakistan State Oil Company Limited (PSOCL) Pakistan State Oil Company Limited (PSOCL) is the market leader in Pakistan having 73% of the share of Black Oil Market and around 59% of the share of White Oil market.\r\nIt is engaged in the import, storage, distribution and marketing of various petroleum products including Fuel oil, HSD, Jet Oil, petro-chemicals, LPG and CNG. Shell Pakistan Limited (SPL) The Shell brand name enjoys a one C-year storey in this part of the world, dating back to 1899. Shell Pakistan has been taking a keen interest in expanding recently which shows the confidence in the economic growth and progress in the oil and gas sector. Shell is at present controlling approximately 30% share of the white oil products presently and during the last financial year the Capital Expenditure amounted to Rs 1. billion. Sui Northern Gas Pipelines Limited (SNGPL) Sui Northern Gas Pipelines Limited (SNGPL, is the larg est combine gas company serving more than 2 million consumers in North primaeval Pakistan through an extensive network in Punjab and NWFP. The Company has over 41 years of experience in operation and maintenance of high- obligate gas transmission and distribution systems. It has also expanded its activities to undertake the planning, pattern and construction of pipelines, both for itself and other organizations.\r\nSNGPL operates in that character of the nation which has a rapidly growing demand for natural gas and power generation due to significant industrial development. Sui Southern Gas Company (SSGC) Sui Southern Gas Company (SSGC) is Pakistans leading integrated gas Company. The company is engaged in the business of transmission and distribution of natural gas anyhow construction of high pressure transmission and low pressure distribution systems SSGCL transmission system extends from Sui in Balochistan to Karachi in Sindh comprising over 2780 KM of high pressure pipelin e ranging from 12 †24″ in diameter.\r\nThe distribution activities covering over 650 towns in the Sindh and Balochistan are unionised through its regional offices. An average of about 234,553 million cubic feet (MMCFD) gas was sold in 2001-2002 to over 1. 7 million industrial, commercial and domestic consumers in these regions through a distribution network of over 22,890 Km. Type of Study This study aims to analyze the financial statements of oil and gas marketing companies and then reason the result for the whole industry. Thus due to the purpose of the study it is classifies as descriptive study.\r\nProcedure Base Year and Period of Analysis For the analysis, 2001 has been taken as the base year, and the performance in the next five years has been compared with the base year. Analysis Methods The analysis of financial data uses various methods to evaluate the relative importance of the data that was presented in financial statements of a firm. The methods used in the analysis of the marketing sector of Pakistan are a blend of Ratio analysis Common size analysis Ratio Analysis The pursuance ratios were used on the composite data of five years: 1.\r\nLiquidity Ratios related to the liquidity of short term assets and short term debt paying ability were serveing Capital Current Ratio gross gross revenue to Working Capital 2. realizeability Ratios measure the ability of a firm to generate earnings. The ratios used were: heart Asset Turnover Operating Income Margin transcend on Total beauteousness Return on investment funds blunt make headway Margin sort out pay Margin 3. Debt Ratios that measure the long term debt paying ability of the firm used were: Debt Ratio Debt to Equity Ratio amend charge reporting 4. Market Value Ratios that measure the return that is being given to the stockholders were: Earning per share\r\nDividend per share Dividend Payout These financial ratios were calculate for each of the years from 2001 to 2005 and the n plotted to see the general trend. They were then studied to identify various turning points in the trends, and to see the underlying reasons behind the changes in trends that were occurring. Common Size Analysis A common size analysis expresses comparisons in percentages. For the financial data there was -Horizontal and vertical analysis of the following balance sheet items, using 2001 as a base year ( flat) and total assets as base (vertical): Fixed asset\r\nCapital work in progress Long term investments Current assets militia & unneeded Equity and liabilities were shown as a percentage of total liabilities. -Horizontal and vertical analysis of the following hit and Loss items with 2001 as a base year (horizontal) and Net sales as base (vertical): Financial Charges Operating expense Gross pull aheads Taxes Profit forrader Tax CHAPTER 4 RESULTS AND DISCUSSION Table 4. 1: Pakistan State Oil Company Limited Balance Sheets (2001-2005) Table 4. 2: Pakistan State Oil Compan y Limited Income Statements (2001-2005) 2001 2002 2003 2004 2005 sales (Net) 43305. 67 133136. 52 172445. 77 161537. 98 212503. 65 appeal of Sales 136933. 58 126359. 13 163490. 58 152346. 86 198757. 32 Gross Profit 6372. 09 6777. 39 8955. 19 9191. 12 13746. 33 Operating Expenses 2367. 97 2210. 69 2750. 26 4223. 43 5443. 58 Operating Profit 4004. 12 4566. 7 6204. 93 4967. 69 8302. 75 Financial Charges 778. 7 979. 22 274. 78 189. 08 370. 7 other income 225. 94 1549. 77 279. 17 1484. 36 1294. 34 Profit onwards revenue 3451. 36 5137. 25 6209. 32 6262. 97 9226. 39 tax revenue 1200 1949 2179 2181 2183 Profit After taxation 2251. 36 3188. 25 4030. 32 4081. 97 7043. 39 Table 4. : Pakistan State Oil Company Limited Vertical Common Size of Balance Sheets (2001-2005) 2001 2002 2003 2004 2005 Current Assets 81. 44% 74. 84% 69. 41% 74. 60% 78. 22% Fixed Assets (Gross) 21. 99% 24. 10% 29. 01% 25. 40% 21. 78% Depreciation 11. 02% 11. 90% 13. 96% 12. 51% 12. 08% Fixed Assets (Net) 10. 97% 12 . 21% 15. 05% 12. 89% 9. 70% Capital work in relegate 2. 28% 2. 72% 3. 53% 2. 76% 2. 39% Long Term Investment & Deposits 5. 32% 10. 23% 12. 01% 9. 75% 9. 69% Total Assets atomic number 6. 00% vitamin C. 00% blow. 00% 100. 00% 100. 00% Current Liabilities 63. 63% 62. 39% 55. 40% 59. 72% 62. 92% Deferred taxation 0. 00% . 44% 1. 15% 1. 33% 1. 21% Long Term Liabilities 3. 82% 1. 85% 3. 05% 2. 53% 2. 63% Total Liabilities 67. 45% 65. 69% 59. 60% 63. 58% 66. 76% ante up Capital 4. 74% 4. 36% 5. 30% 4. 04% 3. 29% Reserves & profusion 27. 80% 29. 96% 35. 09% 32. 38% 29. 95% Total Liabilities & Capital 100. 00% 100. 00% 100. 00% 100. 00% 100. 00% Analysis: The vertical common size of the B/S of PSO shows that the current as well as fixed assets are pretty much the same and there is major improvement in long term investment & deposits while on the financial obligation side again the current and long term liabilities are pretty much constant.\r\nThe reserves & surplus have been increasing with the passage of time. Table 4. 4: Pakistan State Oil Company Limited Vertical Common Size of Income statement (2001-2005) 2001 2002 2003 2004 2005 Sales (Net) 100. 00% 100. 00% 100. 00% 100. 00% 100. 00% Cost of Sales 95. 55% 94. 91% 94. 81% 94. 31% 93. 53% Gross Profit 4. 45% 5. 09% 5. 19% 5. 69% 6. 47% Operating Expenses 1. 65% 1. 66% 1. 59% 2. 61% 2. 56% Operating Profit 2. 79% 3. 43% 3. 60% 3. 08% 3. 91% Financial Charges 0. 54% 0. 74% 0. 16% 0. 12% 0. 17% Other income 0. 16% 1. 16% 0. 16% 0. 92% 0. 61%\r\nProfit Before Taxation 2. 41% 3. 86% 3. 60% 3. 88% 4. 34% Taxation 0. 84% 1. 46% 1. 26% 1. 35% 1. 03% Profit After Taxation 1. 57% 2. 39% 2. 34% 2. 53% 3. 31% Analysis: The detailed analysis of the I/S of PSO shows that the oil marketing company has been able to slightly reduce its cost of sales which has resulted in a significant increase in the gross profit while the operating profit has also shown an increase as the operating expenses have increased but in a lesser proportion. The financial charges have been drastically cut down due to a better financial performance.\r\n on that point has been a marked improvement in the other income which shows that the company has increased its sources of income and all this has resulted in higher profits. Table 4. 5: Pakistan State Oil Company Limited Horizontal Common Size of Balance Sheets (2001-2005) 2001 2002 2003 2004 2005 Current Assets 100% -0. 001% -8. 54% 28. 90% 65. 98% Fixed Assets (Gross) 100% 19. 269% 41. 53% 62. 56% 71. 13% Depreciation 100% 17. 468% 35. 91% 59. 74% 89. 36% Fixed Assets (Net) 100% 21. 078% 47. 18% 65. 40% 52. 81% Capital work in Progress 100% 30. 150% 66. 47% 70. 52% 81. 58% Long Term Investment & Deposits 100% 109. 346% 142. 40% 158. 6% 214. 84% Total Assets 100% 8. 811% 7. 30% 40. 72% 72. 81% Current Liabilities 100% 6. 701% -6. 57% 32. 08% 70. 88% Deferred Taxation 100% 47200% 37250% 56425% 63018% Long Term Liabilities 100% -47. 371% -14. 53% -7. 05% 18. 70% Total Liabilities 100% 5. 958% -5. 19% 32. 63% 71. 02% Financed By Paid-Up Capital 100% 0. 000% 20. 00% 20. 00% 20. 00% Reserves & Surplus 100% 17. 237% 35. 44% 63. 87% 86. 15% Total Liabilities & Capital 100% 8. 811% 7. 30% 40. 72% 72. 81% Analysis: The horizontal common size of the B/S of PSO significantly tells that the current assets have increased substantially mainly due to the increase in sales.\r\nAnother important aspect to note is the great deal of increase in the long term investments which is due to various new-fashioned projects that have been undertaken and this shows that the company is expanding. The increase in current liabilities is mainly due to the increase in credit sales and also because a significant portion of long term loans has been converted into current portion while the increase in long term liabilities is mainly due to the increase in employee benefits which again shows that the company has been doing very well. Another good i ndicator of the good performance is the increase in the reserves & surplus section of the B/S.\r\nTable 4. 6: Pakistan State Oil Company Limited Horizontal Common Size of Income statement (2001-2005) 2001 2002 2003 2004 2005 Sales (Net) 100% -7. 096% 20. 33% 12. 72% 48. 29% Cost of Sales 100% -7. 722% 19. 39% 11. 26% 45. 15% Gross Profit 100% 6. 361% 40. 54% 44. 24% 115. 73% Operating Expenses 100% -6. 642% 16. 14% 78. 36% 129. 88% Operating Profit 100% 14. 050% 54. 96% 24. 06% 107. 36% Financial Charges 100% 25. 751% -64. 71% -75. 72% -52. 40% Other income 100% 585. 921% 23. 56% 556. 97% 472. 87% Profit Before Taxation 100% 48. 847% 79. 91% 81. 46% 167. 33% Taxation 100% 62. 417% 81. 58% 81. 75% 81. 92%\r\nProfit After Taxation 100% 41. 614% 79. 02% 81. 31% 212. 85% Analysis: The horizontal common size of the I/S all the way indicates the drastic improvement in the sales which is almost around 50% while due to a lesser increase in the cost of sales the gross profit is up by o ver 115%. The financial charges have been reduced to more than 50% and a huge increase in other sources of income has led to higher profit before taxation. Table 4. 7: Shell Pakistan Limited Balance Sheets (2001-2005) 2001 2002 2003 2004 2005 Current Assets 6470. 64 7145. 22 6149. 68 7912. 63 12725. 13 Fixed Assets (Gross) 6027. 49 6705. 37 7554. 29 8708. 5 9569. 78 Accumulated Depreciation 2189. 29 2738. 78 3290. 57 3852. 84 4532. 53 Fixed Assets (Net) 3838. 20 3966. 59 4263. 72 4855. 21 5037. 25 Capital Work in Progress 464. 52 534. 61 564. 44 544. 07 582. 38 Long Term Investment & Deposits 1294. 68 186. 27 1998. 93 2032. 22 1988. 13 Total Assets 12068. 04 11832. 69 12976. 77 15344. 13 20332. 89 Liabilities Current Liabilities 6470. 65 5934. 76 7029. 83 9042. 39 11951. 06 Long Term Liabilities 66. 84 47. 51 77. 86 43. 49 48. 22 Deferred Taxation 141 29. 24 17. 26 126. 42 20. 74 Financed By Paid-Up Capital 350. 66 350. 66 350. 66 350. 66 350. 66 Reserves & Surplus 038. 89 5470. 52 5501. 16 5781. 87 7962. 21 Total Liabilities & Equity 12068. 04 11832. 69 12976. 77 15344. 13 20332. 89 Table 4. 8: Shell Pakistan Limited Income Statements (2001-2005) 2001 2002 2003 2004 2005 Sales (Net) 65725. 15 69042. 05 77822. 82 79180. 35 98526. 62 Cost of Sales 61628. 48 64164. 23 72049. 47 72973. 11 89684. 58 Gross Profit 4096. 67 4877. 82 5773. 35 6207. 24 8842. 04 Operating Expenses 2486. 67 3292. 92 3794. 36 3806. 01 4609. 77 Operating Profit 1610. 00 1584. 90 1978. 99 2401. 23 4232. 27 Financial Charges 50. 27 46. 76 51. 48 224. 33 596. 55 Other Income 191. 72 154. 46 110. 32 12. 02 22. 33\r\nProfit Before Taxation 1630. 45 1572. 44 1899. 91 2188. 92 3658. 05 Taxation 574. 42 509. 62 644. 91 680. 91 1197. 19 Profit After Taxation 1056. 03 1062. 81 1255. 00 1508. 01 2460. 86 Table 4. 9: Shell Pakistan Limited Vertical Common Size of Balance Sheets (2001-2005) 2001 2002 2003 2004 2005 Current Assets 53. 62% 60. 39% 47. 39% 51. 57% 62. 58% Fixed Assets (Gros s) 49. 95% 56. 67% 58. 21% 56. 75% 47. 07% Accumulated Depreciation 18. 14% 23. 15% 25. 36% 25. 11% 22. 29% Fixed Assets (Net) 31. 80% 33. 52% 32. 86% 31. 64% 24. 77% Capital Work in Progress 3. 85% 4. 52% 4. 35% 3. 55% 2. 86% Long Term Investment & Deposits 0. 73% 1. 57% 15. 40% 13. 24% 9. 78% Total Assets 100. 00% 100. 00% 100. 00% 100. 00% 100. 00% Current Liabilities 53. 62% 50. 16% 54. 17% 58. 93% 58. 78% Long Term Liabilities 0. 55% 0. 40% 0. 60% 0. 28% 0. 24% Deferred Taxation 1. 17% 0. 25% 0. 13% 0. 82% 0. 10% Financed By Paid-Up Capital 2. 91% 2. 96% 2. 70% 2. 29% 1. 72% Reserves & Surplus 41. 75% 46. 23% 42. 39% 37. 68% 39. 16% Total Liabilities & Equity 100. 00% 100. 00% 100. 00% 100. 00% 100. 00% Analysis: Vertical common size of the B/S of Shell Pakistan shows that the company has been pretty much maintaining its proportion of all the assets, liabilities\r\n'