Investment in Bp Plc

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Financial Statement Analysis

Compiled by

MBA Association
FEM 205




3.Current Performance 20066


5.Ratio Analysis 2001 – 20059

6. Profitability Ratios11
a.Return on Ordinary Shareholders Funds 11
b.Return on Capital Employed13
c.Net Profit Margin15
d.Gross Profit Margin16

7. Efficiency Ratios17
a.Average Stock Turnover Period17
b.Average Settlement Period for Debtors / Receivables19
c.Average Settlement Period for Creditors / Payables20
d.Sales Revenue to Capital Employed Ratio21
e.Sales per Employee23
8.Liquidity Ratios24
a.Current Ratio24
b.Acid Test Ratio26

9. Gearing27
a.Gearing Ratio27
b.Interest Cover Ratio29

10.Investment Ratios30
a.Dividend Payout Ratio30
b.Dividend Yield31
c.Earnings per Share32
d.Price / Earning Ratio33





Appendix 1 – BP Financial Statements37

Appendix 2 – BP Ratio Calculations40

Appendix 3 – BP Financial Statements Additional Breakdown42

Appendix 4 – Shell Financial Statements56

Appendix 5 – Shell Ratio Calculations62

Appendix 6 – BP AGM Apr 06 Presentation63


It is the intention of this report to encourage you the reader and prospective investor to engage with BP and realise the investment potential it can offer.

In order to make an accurate and conversant decision we have provisioned you with all the relevant documentation and reports that are required to a make a decision of this nature.

Contained within this report is a snapshot of how the company has performed over the last five years. We will show you how the Company has grown by utilising the profit figures over the previous five years. There is also information about BP’s current performance in 2006. A brief background on how the BP was formed and its initial capability are also contained within the report.

The main context of the report is the financial ratios these are based on previous years figures from 2001 – 2005. In this section of the report you will be able to understand the relationship between the ratios and why they have been included. Also within this segment we have made a comparison to a similar company within that same industry, Shell. It will show how much of a better performer BP has been within this section.

Finally conclusions have been drawn on the information provided and then recommendations have been included for your ease of reading.


BP is one of Britain's biggest companies and one of the world's largest oil and petrochemicals groups. |Financial Snapshot | | |31 December 2005 |31 December 2004 |31 December 2003 | |Turnover or Gross Income |249,465m USD |199,876m USD |232,571m USD | |Net Income |22,341m USD |17,075m USD |10,482m USD | |Total Assets |206,914m USD |194,630m USD |170,662m USD | |Shareholder Funds |79,976m USD |76,892m USD |70,595m USD | |Adjusted EPS |1.01 USD |0.77 USD |0.53 USD | |Number of Employees |102,700 USD |104,200 USD |108,150 USD |

‘This graph is indicated to meet legislative requirement and shows the growth in the value of a hypothetical £100 holding in BP p.l.c ordinary shares over five years relative to the...
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