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Oxford Brookes University

Research and Analysis Project

An analysis of the financial situation of

Pakistan State Oil Co Ltd

By: ABC

March 2005

Mentor: XYZ

4780 Words

Table of Contents

Introduction3
The company3
The oil sector in Pakistan3
Aims and Objectives4
Information Gathering5
Books5
Texts5
Articles5
Reports5
Company Software6
The Internet6
Informal interviews6
Analysis7
Vertical or trend analysis7
Analysis using absolute data7
Ratio Analysis10
Liquidity Ratios10
Current Ratio10
Quick Ratio10
Operational Cash Flow to Current Liabilities11
Profitability Ratios11
Gross Profit Mark-up11
Net Profit Margin11
Return on Capital Employed (ROCE)12
Return on Equity (ROE)12
Activity Ratios12
Inventory Turnover12
Average Collection Period13
Asset Utilisation13
Gearing/Leverage Ratios13
Interest Coverage13
Capital Gearing13
Horizontal analysis14
Conclusion15
Appendices16
Appendix 1: Balance Sheets16
Appendix 2: Profit and Loss Statements17
Appendix 3: Ratio Definitions18
Appendix 4: Ratios19
Appendix 5: Ratio Calculations showing Excel Formulas20

The Key Skills Statement21
PREPARING FOR MEETINGS22
QUESTIONING22
LISTENING23
ASSESSMENT OF THE PRESENTATION24
Outline of the Presentation25
SELF-ASSESSMENT OF INTERACTION27
Bibliography28

Introduction

The topic of this Research and Analysis Project is “An analysis of the financial situation of your choice of organization.”

I enjoy working with numbers. Whenever I have been given a choice, I have been inclined towards numerical topics. This project topic was therefore my obvious choice. However this was not the sole reason. Being a working professional I found it to my advantage to base the project on my own organisation. Being one of the largest companies in Pakistan, there was a lot of information available externally, while my employment enabled me to obtain information internally.

Moreover, this project topic also appealed to me because it has direct relevance to the accounting and finance profession. I chose it because I felt that I had a good grasp of the topic through my studies at paper 2.4, 2.5 and 2.6. Additionally, since I am now studying for the core papers I felt that this topic would again polish me for 3.7 and/or 3.6.

The company

The organisation selected for the project is “Pakistan State Oil Co Ltd.” PSO is the oil market leader in Pakistan enjoying 79% share of the black oil market and 59% share of the white oil market. It is engaged in the import, storage, distribution and marketing of various POL (petroleum, oil and lubricants) products including Mogas, HSD, fuel oil, jet fuel, kerosene, LPG, CNG and petro-chemicals. This blue chip company, the winner of the Karachi Stock Exchange Top Companies Award and a member of the World Economic Forum, has been a popular topic of case studies in Pakistan and abroad based on its radical corporate turnaround over the last few years. (Orix-PSO CRM Software, 2004)

The company has an average turnover of US $ 3.4 billion with market capitalisation of US $ 755 million contributing US $ 873 million to the national exchequer. It has ISO 9001:2000 and ISO 14001:1996 certifications for its various outlets. It currently has a workforce approaching 2000 personnel. (PSO Annual Report, 2004)

The oil sector in Pakistan

In the Oil-marketing sector, five Oil Marketing Companies (OMCs) namely, Pakistan State Oil Company Limited, Shell Pakistan Limited, Caltex Oil (Pakistan) Limited, Attock Petroleum Limited and Total-PARCO Pakistan Limited are operating in Pakistan with an overall market share of 67%, 22%, 7%, 2% and 2% respectively. Three new OMCs viz PARCO-Pearl, Bosicar...
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