Financial Ratios and British Petroleum Essay Example

rating from the public due to the oil spill in the Gulf of Mexico, British Petroleum still stands as number four on the Fortune 500 listing. Brief History on Major Competition As the Chief Financial Officer of British Petroleum you must try and understand facts as to why other company's financial statements and reports important. This particular company Royal Dutch Shell is the largest company in this gas and oil industry. The Royal Dutch Shell Company and British Petroleum are both multimillion-dollar companies.

These two petroleum companies serve similar products.. The Royal Dutch Shell Company is also known as Shell and is headquartered in the Netherlands. The Royal Dutch Petroleum Company is the largest company in the world in terms of revenue. Shell is also one of the world's most valuable companies. According to "Royal Dutch Shell", "Shell topped the Fortune 500 list of largest companies in the world. Royal Dutch Shell's revenue was equal to 84% of the Netherlands' $555. 8 billion. It has operations in over 90 countries, and produces around 3. A million barrels of oil equivalent per day and has 44,000 service stations worldwide. " The Shell Oil Company is one of the United States' largest businesses especially compared to British Petroleum, other smaller threats apply and help affect British Petroleum's Financial Statements. Company's Performance Position Advice According to the data recorded in past years British Petroleum numbers have decreased a lot since the major oil spill. In order for your company to make changes, I recommend that you review your organizational design. The organizational design is much more than Just the structure of the company.

Organizational design is the process

of situating the company's mission statement. This is thinking outside of the box to get the difference between workflow and responsibility/authority. You have to sake sure they all support the good aspects of and objectives of good business. Having good organizational design meaner that the company would have awesome communication, and production, and those are what you need to t be in a great work environment. Then I believe that customers will return instead of turning their backs on British Petroleum.

Current ratios measure a company's ability to repay debts within the next 12 months. This is an indication of a company's ability to meet creditor's demands. If current liabilities exceed current assets the company may have problems meeting short-term obligations. Quick ratio determines the ability of the company to use its near cash or quick assets to retire its current liabilities immediately. This includes current assets that can be quickly converted into cash at close to the book value. A company with a quick ratio of less than 1. 00 cannot pay back its current liabilities.

Receivable turnover shows the ability of the company to extend credit and also collect on said accounts. This is an active ratio. Inventory turnover is a measure of how much inventory is used or sold in a certain period of time. Profitability Ratios Profitability ratios are financial figures that are used to assess a business's ability o produce revenue while comparing its expenses and other applicable costs incurred during a specific period of time. For most of these ratios that will be discussed, having a higher value than a competitor's ratio or the same ratio from a previous

period is suggestive that the company is doing well.

The profitability ratios that will be covered in this section are assets turnover, profit margin, return on assets and return on common stockholders' equity. The first topic of discussion is asset turnover, which is used to determine how well a company uses its assets to generate revenue for the business. In 2012, BSP asset turnover ratio was 1. 5% while the industry average was 1. 06%, the asset turnover ratio is determined by dividing the net sales by the average total sales