Financial statement analysis is the process of examining relationships between financial statement elements and making comparisons with relevant information. Financial statement is a valuable tool used by investors and creditors, financial analysts, and others in their decision-making processes related to stocks and bonds.
On this assignment there is a financial statements analysis of Oman Oil Marketing Company SAOG. Oman Oil Marketing Company SAOG is a subsidiary of Oman Oil. The company's principal business activities include marketing and distribution of petroleum products. It is engaged in fuel retailing, lubricant marketing, storage and distribution. Oman oil is the only distributor of Castrol and BP-branded lubricants in Oman, offering several products that include Castrol lubricants, Lube Plus and Lubricants. Its operating network comprises retail network stations across Oman, which provides car services and Quick Shop convenience stores. Its customer service center is located at its main office in Oman.
The report provides a comprehensive insight into the company, including the financial statement. The hallmark of the report is the financial analysis of the company. This highlights the company's ratio analysis for the past four years from 2006 to 2009.
Aims and Objectives:
To analyses and interpret financial statements of Oman Oil SAOG in comparative and common-size form.
To compute and interpret financial ratios of Oman Oil SAOG.
To judge company performance of finance statement for the past 4 year.
Scope:
- The report provides detailed financial ratios for the past four years from 2006 to 2009.
- Financial ratios include profitability, liquidity and efficiency ratios.
Horizontal Analysis
Vertical Analysis
Horizontal balance sheet
Cash increase from 2006 to 2009 it was 5% in 2006 in 2007 increase to 16 but in 2008 reduce to 5% and 2009 increase 16 the reason could be the company could make another income from another business.
Account receivable in 2006 was 48% in 2007 was 38% and in 2008 reaming the same but in 2009 reduce to 34% the reason the sale reduce by 13% so they are not resaving too much.
Net receivable in 2007 was -11and in 2008 was 0 but in 2009 increase to 8% the reason is the company receivables money from customers early.
Other receivable in 2007 was -19 and in 2008 increase to 49% but in 2009 reduce more to 40% the reason could be the company stop making other business.
Current receivables in 2007 was -11 in 2008 increase to 1% but in 2009 increase to 9% the reason the company could make other business to get another income also they received money early.
Provision inventory remaining the same 0
Total inventory increase in 2009 to 49% the reason could be they purchase more stock.
Prepaid expense in 2007 was 23% in 2008 was -2 but in 2009 increase to 9% the reason is the company have more expense and they have paid early.
Total current asset increase in 2009 from 13% to 43% which is good for the company because they have enough assets.
Land and building increase from 2006 to 2009 by 118% the company may open new branch in other country.
Machinery increase it was -28 in 2007 and in 2008 was -100 but in 2009 increases to 62% because the company open new branch so they need for more machinery.
Fixed assets in 2007 was 19% than in 2008 increase to 65% and in 2009 is 70% the reason could be the company purchase more assets to increase the sale.
Total long term investment reaming the same -100
Total assets in 2007 is 15% in 2008 increase is 24% but in 2009 increase more to 51% the reason of increase is the company want to increase the sale so they need more assets.
Account payable in 2007 was 12% in 2008 is11% and in 2009 increase to 14% because the sale reduces by 13% and the company purchase assets.
Total long term liabilities remaining the same.
Total liabilities increase from 2007 to 2009 by 36%.
Account payable in 2007 was 12% and in 2008 reduces to 11% and in 2009 increase again to 14% the reason the company want to increase the sale so they purchase more assets.
Accrued expense in 2007 was 231 and in 2008 is 188 and 2009 is 281 it increase the expense for the company because they purchase more assets.
The shear holder and equity in 2007 was 17% and in 2008 to 39% bit in 2009 increase more to 59%the reason the sale reduce so company sale shear of the company to get more money and tray to increase the sale.
Horizontal profit @ loss account:
Gross revenue in 2007 was 26% and in 2008 increase to 40% but in 2009 reduce to 39% which is not good for the company the reason is the company maybe increase the price so the demand reduce because the demand looking for lower price.
Cost of goods sold in 2007 was 26% and in 2008 increase to 40% but in 2009 reduce to 38% the reason is the sale reduce in 2009 by 13% so the cost of good reduce by 12%.
Gross margin in 2007 was 26% and increase in 2008 to 40% but in 2009 increase more to 47% the reason is the company making profit over the year but the sale only reduce in this year.
Net operating expense in 2007 was 22% in 2008 increase to 53% but in 2009 reduce to 22% the reason is because the sale reduce by 13% so the expense of the company reduce.
Interest expense in 2997 was -25% in 2008 was -16 but in 2009 reduce more to -28 the reason is the sale reduce and the operating expense reduce so normally the interest expense will reduce.
Interest income in 2007 was -29 in 2008 increase to 657 but in 2009 was 457 the interest income increase because the cost of good reduce by 12% and the sale reduce by 13%
Total investment income in 2997 was 74% and in 2008 increase to 229 but in 2009 reduce too much to -100 the reason is the sale reduce by 13%
Other income in 2007 was -100 but in 2009 is 88% which is not good for the company because they have to pay more for other expense.
Net profit in 2007 was 41% and in 2008 is 58% it increases which is good but in 2009 the net profit was 34% it reduces because the sale reduces by 13%.
Tax for zakat reduces from 2007 to 2009 by -4% because the sale reduces by 13% so they don't have much income so the tax for zakat reduces normally.
Net profit after tax it was 41% in 2007 but in 2008 increase to 57% and in this year 2009 reduce to 33% the reason the sale reduce by 31% so the net profit will reduce.
The earning per shear in 2006 was 0.062 in 2007 increase to 0.088 and in 2008 it increase more to 0.098 but in 2009 the earning per share reduce to 0.083 the reason is the sale reduce in 2009 by 13% so the earning per share reduce by 0.021 from 2006 to 2009.
Vertical profit @ loss
Cost of goods sold remaining the same in 4 years -90%
Gross margin remaining the same in 4years10%
Net operating profit reaming the same4% but in 2008 increase to 5% because the sale increase in 2008.
Interest expense reaming the same
Interest income in 2006 was 7% and in 2007 5% but in 2008 and 2009 reaming the same 0 because the sale reduce in last tow year.
Other income is 0 in 4 year
Other expense in 2006 was 0 and in 2007 was -1 and in 2008 and 2009 remaining the same 0 the reason the company they don't have expense so they don't have to pay money.
Minority expense remaining the same from 2006 to 2009.
Net profit before tax reaming the same 4% in 4 years.
Tax/ zakat provision in 2006 and 2007 was 0 and in 2008 was -1 and in 2009 was 0 the reason of reduce tax is the company have reduce sale so the tax normally will be reduce.
Net profit after tax in 2006 was 3% in 2007 increase to 4% and it remain the same in 2008 but in 2009 reduce agene to 3% reason is the sale reduce by 13% in 2009.
Accounting Ratios for Financial Statement Analysis
of Oman Oil Marketing Company SAOG
Calculation of liquidity ratio: ( liquidity ratio indicate the firm's ability to meet future short term financial obligation by converting assets into cash)
Current Ratio (working capital ratio);-
= Current Assets
Current Liabilities
(Working capital is money available to a company for day-to-day operations.)
(2009)= current assets 31,186 = 1.33:1 working capital ratio
current liabilities 23,282
(2008)= current assets 22,939 = 1.30:1 working capital ratio
current liabilities 17,524
(2007) = current asset 24,747 = 1.40:1 working capital ratio
current liabilities 17,633
(2006) = current assets 21,845 = 1.37:1 working capital ratio
current liabilities 15,889
Observation: the current ratio in (2006) is 1.37:1 and in (2007) increase to 1.40:1 but in (2008) the current ratio decrease to 1.30:1 and in (2009) the current ratio decrease to 1.33:1 so the different between (2006) and (2009) is -0.04
Interpretation: the ratio only provides a good measure of liquidity when account receivable and inventory turnover rates are high. That's mean for example in 2006 is 1.37:1 for etch 1.37 have 1 R.O of liabilities which good and in 2007 is 1.40:1 so for etch 1.40 have one R of liabilities and also it is good because the different not much to 2:1 and in 2008 the current ratio reduce to 1.30:1 which is still good and in 2009 is 1.33:1 it reduce more still it is good for the company. "The current ratio of Oman Oil Marketing continued to remain at healthy level. Despite the drop in 2008 and 2009 the liquidity position of the company was satisfactory when compared to the industry".
Quick ratio:-
= current assets - inventories &prepaid expenses
Current liabilities
(Quick ratio is viewed as a sign of company's financial strength or weakness (higher number means stronger, lower number means weaker)
(2009) = current assets - inventories &prepaid expenses 31186 - 5218 =1.11
Current liabilities 23282
(2008) = current assets - inventories &prepaid expenses 22939 - 4284 = 1.06
Current liabilities 17524
(2007) = current assets - inventories &prepaid expenses 24747 - 3430 = 1.21
Current liabilities 17633
(2006) = current assets - inventories &prepaid expenses 21845 - 3590 = 1.15
Current liabilities 15889
Observation: the quick ratio in (2006) is 1.11 and in (2007) is 1.06 but in (2008) the quick ratio increase to be 1.21 and in (2009) it reduce to be 1.15 the different between (2006) and (2009) is-0.03.
Interpretation: (the quick ratio is better indicator of liquidity when inventory turnover rates are too low to enable them to be converted quick into cash )the quick ratio is reduce in (2006), (2007) and (2009) the reason of reduce is the company may have funds tied up in short term low yielding assets. This means that the company may be able to manage on less cash. In (2008) increase to 1.21 the reason is a vulnerability to creditors such as the inability to pay wages or utility bills.
Net Working Capital Ratio = Current Assets- Current Liabilities
Total Assets
(Working capital measures how much in liquid assets a company has available to build its business.)
(2009) = Current Assets- Current Liabilities 31,186-23,282 = 0.16
Total Assets 49,317
(2008) = Current Assets- Current Liabilities 22,939-17,524 = 0.13
Total Assets 40,550
(2007) = Current Assets- Current Liabilities 24,747-17,633 = 0.19
Total Assets 37,432
(2006) = Current Assets- Current Liabilities 21,845-15,889 = 0.18
Total Assets 32,572
Observation: the net working capital in (2006) is 0.18 and in (2007) increase to be 0.19 but in (2008) the net working capital reduce to be 0.13 and in (2009) it increase again to be 0.16 the different between (2006) and (2009) is -0.02
Interpretation: (measures how efficiently the company generates revenue from its working capital) the reason of reduce the net working capital is the current assets is less than current liabilities' for example the fixed assets and inventory is less.
Summary of liquidity ratio:
Liquidity ratio helps as to determine firm's ability to pay debts.
The current ratio is important as it provides an indication of your ability to pay your immediate bills.
Calculation of profitability ratios:- (Profitability ratios measure the firm's use of its assets and control of its expenses to generate an acceptable rate of return)
1- Gross profit ratio:- (This ratio is the percentage of sales left after subtracting the cost of goods sold from net sales. It measures the percentage of sales remaining (after obtaining or manufacturing the goods sold) available to pay the overhead expenses of the company)
= Gross Profit *100
Sales
(Gross profit is profit befor expense and tax have been deducted)
(2009) = Gross Profit 17,408 * 100 = 10.33
Sales 168,444
(2008) = Gross Profit 17,138 *100 = 10.07
Sales 170,049
(2007) = Gross Profit 14,882 *100 = 9.74
Sales 152,664
(2006) = Gross Profit 11,819 *100 = 9.73
Sales 121,397
Observation: the gross profit in (2006) is 9.73 and in (2007) increase by 1% to be 9.74 and in (2008) it increase to 10.07 and in (2009) the gross profit to 10.33 the different between (2006) and (2009) is 0.6.
Interpretation: the gross profit increase in (2008) and in (2009) the reason of increase is high sales price cost of good remains constant and a combination of factors in sale price and cost of different product widening the margin. But in (2006) and in (2007) the gross profit was decrees the reason could be the company purchase of raw material at unfavorable rates and over investment or inefficient utilization of plant and ma resulting in higher cost of production.
2- Net profit ratio :-( is the amount left over after expense plus interest and tax)
= Profit after Tax *100
Sales
(2009) = Profit after Tax *100 5,360* 100 = 3.18
Sales 168,444
(2008) = Profit after Tax *100 6,323 *100 = 3.72
Sales 170,049
(2007) = Profit after Tax *100 5,681*100 = 3.72
Sales 152,664
(2006) = Profit after Tax *100 4,016*100 = 3.31
Sales 121,397
Observation: the net profit in (2006) is 3.30 and in (2007) increase to be 3.72 but in (2008) the net profit remaining the same 3.72 and in (2009) it reduce to 3.18.the different between (2006) and (2009) is -0.2
Interpretation: the net profit is high in (2006), (2007) and (2009) the reason there is a high earning margin or expense are being held down. The net profit in (2009) lower because perhaps the expense of doing business are too great there are inefficiencies or sale are too low for the cost.
3- Operating expenses ratio=
= Operating Expenses *100
Sales
(2009) = Operating Expenses *100 6293 *100 = 3.74
Sales 168,444
(2008) = Operating Expenses *100 7878 *100 = 4.63
Sales 170,049
(2007) = Operating Expenses*100 6278*100 = 4.11
Sales 152,664
(2006)= Operating Expenses*100 5138*100 = 4.23
Sales 121,397
Observation: the operating expense in (2006) is 5.50 and in (2007) increase to be 5.63 and in (2008) reduce to 5.44 and in (2009) increase more to 6.59 the different between (2006) and (2009) is 1.09.
Interpretation: the reason of increase the operating expense is the net profit increase 88% and they have to pay zakat 36%
4- Return on Equity (ROE) = (. It is used as a general indication of the company's efficiency; in other words, how much profit it is able to generate given the resources provided by its stockholders)
Profit after tax =
Total Equity Fund
(2009) = Profit after tax = 5,360*100 = 22.21
Total Equity Fund 24,138
(2008) = Profit after tax = 6,323*100 = 30.06
Total Equity Fund 21,035
(2007) = Profit after tax = 5,681*100 = 31.96
Total Equity Fund 17,776
(2006) = Profit after tax = 4,016*100 = 26.49
Total Equity Fund 15,159
Observation: return on equity in (2006) is 26.49 and in (2007) increase to be 31.96 and in (2008) reduce to 30.06 but in (2009) the return on equity increase to 22.21.
Interpretation: the reason of increase on return on equity is the profit increase so the returnt on equity increase because retain on equity depend on profit of the company because you are getting more so you will give more.
5) Return on investment = EBIT / Capital Employed
Capital Employed= Total Equity + Noncurrent liabilities
(ROI measures how effectively the firm uses its capital to generate profit; the higher the ROI, the better)
Capital Employed= Total Equity + Noncurrent liabilities
(2009) 24138 + 18132 = 42270
Return on investment = EBIT / Capital Employed
6098 / 42270 =0.14
Capital Employed= Total Equity + Noncurrent liabilities
(2008) 21035 + 17611 =38646
Return on investment = EBIT / Capital Employed
7205 / 38646 =0.18
Capital Employed= Total Equity + Noncurrent liabilities
(2007) 17776 + 12685 =30461
Return on investment = EBIT / Capital Employed
6442 / 30461 =0.21
Capital Employed= Total Equity + Noncurrent liabilities
(2006) 15159 + 10727 =25886
Return on investment = EBIT / Capital Employed
4560 / 25886 =0.17
Observation: the return on investment in (2006) is 0.17 and in (2007) is increase to 0.21 but in (2008) the ROI is reduces to 0.18 and in (2009) reduces more to 0.14 the different between (2006) and (2009) is -0.03.
Interpretation: the reason of reduce the ROI is perhaps you could have done better investing your money in saving bonds or some other investment opportunity. This could indicate inefficient management performance or it could reflect a highly capitalized conservatively operated business.
Summary of profitability ratio:
Profitability ratio measured by the profit margin, return on assets, return on investment and return on sales.
The rate of return on sales must be used with caution when comparing your business with others.
Your return on investment can be compared as a return on net worth or total assets.
The net profit ratio is a valid ratio to compare your business to your industry average.
Calculation of Activity ratio:- (Activity ratios measure the effectiveness of the firms use of resources).
Inventory Turnover Ratio= Cost of Goods Sold/Average inventory at cost
(Note: Average inventory=Op.stock+Cl.stock)
(2009) = 151,037/ 4782.5 =31.58
Op.stock=4284
cl.stock=5281
(2008) = 152,911/ 3857 = 39.64
Op.stock=3430
cl.stock=4284
(2007) = 137,781/ 3510 = 39. 25
Op.stock=3590
cl.stock=3430
(2006) = 109,578/ 2850.5 = 38.44
Op.stock=3590
cl.stock=2111
-No. of Inventory Holding= 365/ Inventory Turnover Ratio
(2009) = 365/ 31.58= 11.55
(2008) =365 /39.64 = 9.20
(2007) =365 / 39. 25 = 9.29
(2006) = 365 / 38.44 = 9.49
Observation: the number of inventory in (2006) is 9.49 but in (2007) increase to 9.29 and in (2008) reduce to 9.20 but in (2009) increase more to 11.55 and the different between (2006) and (2009) is 2.06.
Interpretation: the reason of increase of number of inventory could be blocking unnecessary funds can be utilized somewhere else more profitably, unnecessary payment for extra godown space for plied stock above all slow movement of stock means slow recovery of cash tied in stock. 9 or 10 days stack days means that they have very fast moving stock, therefore they don't need to hold for long time. This evident from their core business as they products are flammable products which mean holding it for long period will increase their stock cost substantially.
2) Debtors turnover ratio= Credit sales / average debtors
Collection period= 365 / debtors turnover ratio
(2009) Debtors turnover ratio= Credit sale / average debtors
168444 / 15885 = 10.60
Collection period= 365 / debtors turnover ratio
365 / 10.60 = 34.43
(2008) Debtors turnover ratio= Credit sale / average debtors
170049 / 1848 = 92.01
Collection period= 365 / debtors turnover ratio
365 / 92.01 = 3.96
(2007) Debtors turnover ratio= Credit sale / average debtors
152664 / 13181 = 11.58
Collection period= 365 / debtors turnover ratio
365 / 11.58 = 31.51
(2006) Debtors turnover ratio= Credit sale / average debtors
121397 / 14751 = 8.22
Collection period= 365 / debtors turnover ratio
365 / 8.22 = 44.40
Observation: the collection period in (2006) is 44.40 to high but in (2007) reduce to 11.58 and in (2008) the collection period is 3.96 to much lower and in (2009) 10.60 the different between (2006) and (2009) is -33.8.
Interpretation: the reason of reduce collection period is the company was collecting money in (2006) after 44 days but in (2007) they collect money after 11 day which good for the company So in (2009) the companies collect money after 10 day which is good for the company because they resaved money early.
3) Working capital turnover ratio= Sale / Working capital
Working capital= Current Asset - current liabilities
(Ratio that shows the number of times the working capital is converted into revenue in an accounting period, or how efficient the management is in using its working capital to generate sales revenue)
(2009) Current Asset - current liabilities
31186 - 18132 = 13054
Sale / Working capital
168444 / 13054 =12.90
(2008) Current Asset - current liabilities
22939 - 17611 = 5328
Sale / Working capital
170049 / 5328 = 31.91
(2007) Current Asset - current liabilities
24747 - 12685= 12062
Sale / Working capital
152664 / 12062 = 12.65
(2006) Current Asset - current liabilities
21845 - 10727=11118
Sale / Working capital
121397 / 11118 =10.91
Observation: the working in (2006) is 10.91 and in (2007) increase to 12.65 and in (2008) it increase more to 31.91 but the working capital in (2009) reduce to 12.90 the different between (2006) and (2009) is 1.99.
Interpretation: the reason of reduce working capital is the current assets is more than current liability for example total assets have high fixed assets and total inventory fixed assets increase by 51% and total inventory is 55%.
4) Total Assets turnover ratio=Sale / Total Assets
(The sum of all current and fixed assets)
(2009) Sale / Total Assets
168444 / 49317=3.41
(2008) Sale / Total Assets
170049 / 40550=4.19
(2007) Sale / Total Assets
52664 / 37432 =1.40
(2006) Sale / Total Assets
21397 / 32572 =0.65
Observation: Total assets in (2006) is 0.65 and in (2007) increase to 1.40 in (2008) increase more to 4.19 but in (2009) the total assets reduce to 3.41 the different between (2006) and (2009) is 2.76
Interpretation: The total assets reduce in (2009) which is not good for the company because the assets give as more sale and more sale gives as more profit.
5) Creditor turnover= credit purchase
Average tread creditor
Payment period= 365 / credit turnover
(2009) credit purchase / Average tread creditor
3465 / 14736= 0.23
Payment period= 365 / credit turnover
365 / 0.23 = 1586
(2008) credit purchase / Average tread creditor
2616 / 14307 =0.18
Payment period= 365 / credit turnover
365 / 0.18 =20277
(2007) credit purchase / Average tread creditor
3011 / 14511= 0.20
Payment period= 365 / credit turnover
365 / 0.20 =1825
(2006) credit purchase / Average tread creditor
909 / 12908= 00.7
Payment period= 365 / credit turnover
365 / 0.07 =5214
Observation: creditor turnover in (2006) is 0.07 and in (2007) increase to 0.20 but in (2008) reduce to 0.18 and in (2009) it was 0.23 so it increase more the different between (2006) and (2009) is 0.16
Interpretation: Creditor turnover ratios reduce in (2009) which is good for the company because they reduce the credit purchase and they pay early to the supplier.
6) Z= 0.012x1 + 0.014x2 + 0.033x3 + 0.006x4 + 0.999x5
X1=working capital / total assets
X2=retained earning / total assets
X3=Earning before interest and tax / total assets
X4=market capitalization / total deters
X5=sale / total assets
Z- Score calculation
Altman Z- score for Oman Oil Marketing Company for the year 2009
Working Capital = Current Assets - Current Liabilities
31186 - 18132 = 13054
Market Capitalization = Market volume of share* Market price
=2838000*1.926=5465988
Z= 0.0012 X1 + 0.014 X2 + 0.033 X3 + 0.006 X4+ 0.999 X5
Z = 0.0012 * 0.26 + 0.014 * 0.31 + 0.033 * 0.12 + 0.006 * 3.91+ 0.999 * 3.41=3.43
Altman Z- score for Oman Oil Marketing Company for the year 2008
Working Capital = Current Assets - Current Liabilities
22939 - 17611 = 5328
Market Capitalization = Market volume of share* Market price
= 2838000* 2.140=6073320
Z= 0.0012 X1 + 0.014 X2 + 0.033 X3 + 0.006 X4+ 0.999 X5
Z = 0.0012 *0.13 + 0.014 * 0.30 + 0.033 * 0.17 + 0.006 * 3.14+ 0.999 * 4.19=4.21
Altman Z- score for Oman Oil Marketing Company for the year 2007
Working Capital = Current Assets - Current Liabilities
24747 - 12685= 12062
Market Capitalization = Market volume of share* Market price
= 2838000* 1.996=5664648
Z= 0.0012 X1 + 0.014 X2 + 0.033 X3 + 0.006 X4+ 0.999 X5
Z = 0.0012 * 0.34 + 0.014 * 0.24 + 0.033 * 0.17 + 0.006 * 1.24+ 0.999 * 4.07= 4.08
Altman Z- score for Oman Oil Marching Company for the year 2006
Working Capital = Current Assets - Current Liabilities
21845 - 10727=11118
Market Capitalization = Market volume of share* Market price
2838000 * 2.298= 6521724
Z= 0.0012 X1 + 0.014 X2 + 0.033 X3 + 0.006 X4+ 0.999 X5
Z = 0.0012 * 0.34+ 0.014 * 0.20 + 0.033 * 0.13 + 0.006 * 1.48+ 0.999 * 3.72=4.07
Z for 2006 = 4.07
Z for 2007 = 4.08
Z for 2008 =4.21
Z for 2009 =3.43
In the all four year the Z- score is more than 3.43 this means that the risk of failure of Oman Oil Company is low and it will continue with its performance without any serious problem which is good for the company .If it is less than 1.18 it will be problem for the company.
Summary of Activity ratio:
Activity ratio measures how well you are conducting your business.
Activity ratio helps to keep your business in balance.
To find out the amount of fixed assets that are a part of your net worth divide your fixed assets by your net worth.
Dividing the cost of goods sold by your average stock will provide you with the number of times you replace your stock per month or per year.
CRITICAL ANALYSIS OF CASH FLOW STATEMENT
Period End Date
31-Dec-09
31-Dec-08
31-Dec-07
31-Dec-06
Period Length
12 months
12 months
12 months
12 months
Currency
OMR '000
OMR '000
OMR '000
OMR '000
OPERATING ACTIVITIES
Net Income before Tax and Minority Interest
6,098
7,205
6,442
4,560
Depreciation & Amortization
2,453
2,007
1,735
1,499
Change In Operating Activities
-1,833
-3,573
4,471
-242
Change in Provisions
200
-147
318
25
Other
0
0
0
0
Cash Flows from Operating Activities
6,919
5,493
12,965
5,841
The net income before tax and minatory interest in (2006) was 4560 and in( 2007) increase to 6442 in( 2008) increase more to 7205 and in (2009) is 6098 the reason of increase the company could have another income.
Depreciation and Amortization in (2006) is 1499 and in( 2007) increase to 1735 in (2008) also increase to 2007 and in (2009) still increasing to 2453 the reason the company purchase more plant and equipment in (2009)to opened new branch.
Change in operating activity in (2006) was -242 and in (2007) increase to 4471 in (2008) reduce more to -3573 and in (2009) was -1833.
Chang in provision it was 25 in (2006) in (2007) increase to 318 but in (2008) reduce to -147 and in (2009) increase to 200.
Others remaining the same in 4 years.
Cash flow from operating activity in (2006) was 5841 and increase in (2007) to 12965 and in (2008) reduces to 5493 and in (2009) increase more to 6919.
Limitations:-
The study is done only for limited period (4 years).
The evaluation of the performance only done though Financial statement analysis.
Time.
PEST FACTORS
Political and legal factors
Tax policy in Oil Company is different from one area to another.
Regulation and trade restriction because it is different from one place to other even though all the golf countries enter some trade agreement to follow the same roles in all the Oil company countries .
Economics
Economic growth, the company strongly related to any change in the economic growth Exchange rate, Oil marketing company is international company so any change in the rate will affect her directly.
Technology
Change in technology rapidly because the company should follow the new technology to save time and money and grow fast.
Social Culture factors
Age distribution ,affect the employee force especially in some countries like Oman where the company should hire Omanis'
Strengths:
Developing economy: Historically, demand for petroleum products has traced the economic growth of the country. With GDP expected to grow at near 7% in the long-term, the energy sector would benefit from the same, going forward.
Government decisions: The recent price increases and also the decision to allow oil companies to increase prices within a band of 10% augurs well for the industry.
Weakness:
Crude prices: Nearly 70% of India's crude requirements are fulfilled by imports and this figure is likely to increase going forward. Crude prices have breached the $45 barrier again and are likely to remain at around $40 per barrel range.
Lack of freedom: Although the government has decided to provide autonomy to oil companies to increase petrol and diesel prices within a 10% band, other products such as LPG and kerosene continue to remain under the government controlled price mechanism.
Opportunities:
Equity Oil: Major oil marketing companies are now venturing into upstream exploration and production activities so as to secure crude supply.
Threats
Competition: Until FY04, oil-marketing companies had complete control over the downstream marketing business while private sector players were restricted to only refining.
Continuing government interference: During the first six months of the current fiscal year, the oil marketing companies were refrained from increasing product prices due to political reasons.
Source: (http://www.rediff.com/money/biz.htm)
Consolation:
The report provides a comprehensive insight into the company, including the financial statement. The hallmark of the report is the financial analysis of the company. This highlights the company's ratio analysis for the past four years from 2006 to 2009. The Pest Factor of Oman Oil Marketing Company is Political and legal factors, Economics, Technology and Social Culture factors.
