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(Kaplan Financial Study Text Paper F7)

In all, Ratios have limitations but are still regarded as the best tool for analyzing the financial performance of the business and so I also used it.

III. ANALYSIS

In this section of the report I will explain and analyze the financial performance of Shell and will compare its results with BP.I will also explain Shell’s financial position in the current year.

a. Company History: “The Royal Dutch Shell Group was created in February 1907 when the Royal Dutch Petroleum Company and the "Shell" Transport and Trading Company Ltd of theUnited Kingdommerged their operations. This move was largely driven by the need to compete globally with the predominant American oil company”

(www.wikipedia.org)

b. Financial Analysis: Here is the analysis of the financial data of Shell (Revenue, GP and NP) over the last three years.

§ The revenues in 2008 were ($458.4 billion) 28.8% higher than in 2007, when they were ($355.8 billion) 11.6% higher than in 2006.

(Appendix)

§ The oil and gas prices was One of the main reasons of increase in revenues in 2008

§ “Brent crude oil prices average $97.14 per barrel in 2008 compared with $72.45 in 2007, while West Texas Intermediate average $99.72 per barrel compared with $72.16 a year earlier. Oil prices saw great fluctuation in 2008”.

(Annual Report Shell 2008)

§ A 6% increase in Gross Profit of Shell in year 2008 and 2007 as compared to gross profit in year.

(Appendix)

§ Its shows an increase in production costs in line with increase in revenues on high margin products.

§ Earnings ($26.5 billion) were lower by 17% in 2008 compared to 2007, when they were ($31.9 billion) 21% higher than in 2006 ($26.3 billion).

(Appendix)

“The decrease in 2008, compared with 2007, reflected the effect of declining oil prices on inventory in the second half of the year, lower production volumes, lower realised refining margins and higher operating costs. These more than offset the positive impact on earnings from higher realised oil and gas prices as well as higher LNG and GTL product prices”.

(Annual Report Shell 2008)

“Second quarter 2009 reported earnings were $3,822 million compared to earnings of $11,556 million in the same quarter a year ago”.

(2nd quarter results 2009, www.shell.com )

§ Earnings By Business Segments : All figures in this table are in $million

The table shows that earnings in 2008 were higher by 47% in Exploration & Production, Gas & Power and Oil Sands segments as compare to 2007. On other hand earnings were lower by 100% in 2008 as compare to 2007 in Oil Products, Chemicals and Corporate segments. This 100% reduction in last three segments causes overall reduction of earning in 2008.

“In the Second quarter Exploration & Production segmen本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。