Investing Analysis for Royal Dutch Shell vs. British Petroleum

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  • Topic: Petroleum, Royal Dutch Shell, Supermajor
  • Pages : 19 (5483 words )
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  • Published : May 23, 2012
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INTERNATIONAL FINANCE

INVESTING ANALYSIS FOR:
ROYAL DUTCH SHELL & BP

PREPARED BY:
ARMI ARFIFI BIN AZMI
ATMAN BIN KHAIRULFAZI
MOHD NAZRUL BIN AGOS
MUHAMMAD AMIRUL MUKMIN BIN NOR HIDAN

CONTENTS

PREFACE3
1.0 INTRODUCTION4
2.0 COMPANY DESCRIPTIONS6
2.1 SHELL6
2.2 BP7
3.0 PROBLEM DEFINITION8
3.1 Research Problem8
3.2 Project Objective9
3.3 Research Question9
4.0 PEST ANALYSIS9
5.0 SWOT ANALYSIS11
6.0 FINANCIAL ANALYSIS14
6.1 Pyramid Of Key Ratios14
6.2 Profitability Ratio15
6.3 Activity ratios17
6.4 Liquidity Ratios18
6.5 Gearing Ratios19
6.6 Investors Ratios20
6.7 Return Over Period21
6.8 Altman Z score.22
7.0 INTER COMPARISON25
7.1 Royal Dutch Shell26
7.2 British Petroleum28
8.0 INDUSTRY COMPARISON30
9.0 CONCLUSION & RECOMMENDATION32
9.1 Conclusion32
9.2 Recommendation32
10.0 APPENDIXES33

PREFACE

As a part of our MLA2 International Finance Analysis, for our assessment we are required to complete this report project on financial analysis of two competing companies with the purpose of finding which company is the best to invest. We decided to choose oil and gas industry because most world top 10 companies by profit and revenue are from this industry and its much related with our home country, Malaysia. At first we want to pit PETRONAS, a Malaysian oil company with BP but it’s not possible because PETRONAS is a national owned company and not public listed. Thus we change to BP against SHELL. The material has been compiled from various online sources, mostly from the company’s website itself for the company annual report and financial statement review, as well from finance websites for share performance, market and industry related. We hope this report will be beneficial to those reading it and especially to Ms. Grotenrath in her decision making the right investment. We hereby take this opportunity to put on records our sincere thanks to Mr. Matthias Eschweiler under the light of whose able to guidance, we able to complete this project in an effective and successful manner Last but not the least, we would like to thank all those concerned people who have directly or indirectly contributed in the completion of this entire report project

1.0 INTRODUCTION
The petroleum industry or oil & gas industry includes the global processes of exploration, extraction, refining, transporting (often by oil tankers and pipelines), and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline (petrol). Petroleum is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics. The industry is usually divided into three major components: upstream, midstream and downstream. Midstream operations are usually included in the downstream category. Petroleum is vital to many industries, and is of importance to the maintenance of industrial civilization itself, and thus is a critical concern for many nations. Oil accounts for a large percentage of the world’s energy consumption, ranging from a low of 32% for Europe and Asia, up to a high of 53% for the Middle East. Other geographic regions’ consumption patterns are as follows: South and Central America (44%), Africa (41%), and North America (40%). The world consumes 30 billion barrels (4.8 km³) of oil per year, with developed nations being the largest consumers. The United States consumed 25% of the oil produced in 2007. The production, distribution, refining, and retailing of petroleum taken as a whole represents the world's largest industry in terms of dollar value. Supermajor is a name commonly used to describe the world's five largest publicly owned oil and gas companies.Trading under various names around the world, the supermajors are considered to be: BP p.l.c. (United Kingdom)Chevron Corporation (United States)ExxonMobil Corporation (United States)Royal Dutch Shell plc...
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