financial analysis statement of ogdcl

MUHAMMAD SALEEMSULEMAN SALEEMTESLEEM SHAHZAD M.UMAIR YOUNUS

GROUP MEMBERS

Introduction to OGDCL • OGDCL is the national oil & gas company of Pakistan.

• OGDCL was created under an Ordinance dated 20th September 1961

Background of the Company

• The company's oil and gas production stands at 59% and 23% respectively

• OGDCL annual sales for the year 2005 are 39,130 barrels of oil per day, 919 million cubic feet per day of gas, 334 metric tons per day of lpg and 71 metric tons per day of sulphur

Financial Data

• The authorized share capital of OGDCL is Rs. 50 billion

• 85% share is of Government of Pakistan and remaining 15% is issued to general public

CURRENT RATIO 2006 -2007

• Current Ratio decrease in year 2006 to 2007

• The interest accrued decreased with 45.75% and financial asset decreased with 33.14%.

2007-2008

• In 2008 the ratio decreases from 6.160 to 3.686.

• Increase 14.21% and liability increase

• 90.88 %.

Conclusion

• In 2007 Current ratio decrease to 6.160 but it is favorable as compared to industry average. In 2008 it is cut near to half to 3.686 but greater then Industry average. So we consider this change as good.

QUICK RATIO 2006-07

• In 2006-07 quick ratio decrease from 6.66 to 6.15.

• Due to increase in current asset by 5.72% and increase in current liabilities and stock by 42.95%, so quick ratio decreased.

2007-08

• In 2006-07 quick ratio decrease from 6.15 to 3.68.

• Due to increase in current liabilities by 90.88% and increase in stock by 61.84% so quick ratio decreased because current assets increase only 14.21%.

Conclusion

• In 2007 quick ratio decrease to 6.15 but it is favorable as compared to industry average. In 2008 it is cut near to half 3.68 but greater then Industry average. So we consider this change as good.

RETURN ON ASSETS2006-07

• Decrease from 54.34% to 47.56%.• Due to Total assets increase by 6.61%.

• to major increase in exploration and prospecting expenditures are nil in 2006 but in 2007 that are 7406280

2007-08

• In 2007-08 ROA improved from 47.56% to 55.72%.

• Total assets are increase by 16.41%

• EBIT increased by 36% Due to increase in other income by 129.28% so overall EBIT is improved

Conclusion

• Although in 2006-07 decrease from 54.34% to 47.56% due to increase in exploration and evaluation that increase by 149.52% and increase in asset 5.72% EBIT decrease but compare with industry average it is high. In 2007-08 EBIT improve by 36% due to increase in other income by 129.28% so overall EBIT is improved. That is also above industry average.

RETURN ON EQUITY 2006-07

• In 2007 ROE decrease from 1.069 to 1.061.

• Percentage decrease• Net income decrease by 0.73% but Share

holder’s equity remains same. So ratio shows small decrease.

• Reasons for Decrease• Due to increase in finance cost 4407.78%

and decrease in other income by 14.89% so the net income decreases by 0.73%

2007-08

• Return on equity increase 1.061 to 1.154

• Reasons for Increase:

• Due to increase in sale 25.12% other income increase 129.82% and exploration and prospecting cost decrease 10.71% so the net income increase 8.73%

Conclusion:

• In 2006-07 ROE decrease from 1.069 to 1.061 due to decrease in net income .73% but if we compare with industry average this ratio is below. In 2007-08 return on equity increase 1.061 to 1.154 due to other income increase 129.82% and exploration and prospecting cost decrease 10.71% .Although ratio improve but this is again below from industry average.

GROSS PROFIT MARGIN 2006-007

• In 2006-07 gross profit margin increase from 68.435% to 69.62%

• Reasons for Increase: • Due to increase in sale by 3.62% expenses

increase by 54.88% so the gross profit increase 5.41% that is the reason gross profit margin improved

2007-08

• Gross profit margin improve from 69.62% to 70.01%

• Reasons for Increase:

• Due to increase in sale by 25.12%, on the other hand expenses increase by 23.49% so gross profit margin improved

Conclusion:

• In 2006-07 gross profit margin increase from 68.435% to 69.62% due to increase expenses by 54.88% so the gross profit increase 5.41% comparing this with industry average 50.68% this ratio is better than industry average.

• In 2007-08 Gross profit margin improve from 69.62% to 70.01% reason is increase in sale by 25.12%, on the other hand expenses increase by 23.49% this again high from industry average that is 50.89%.

NET PROFIT MARGIN 2006-2007

• In 2006-07 NPM decrease from 47.51% to 45.51%.

• Reasons for Decrease: • Due to increase in finance cost by 4407.78%

and decrease in other income by 14.89% NPM decreased.

2007-08

• NOM decrease from 45.51% to 39.55%.

• Reasons for Decrease:

• Sale increase by 25.12% In expanses large increase in Royalty which increased by 58.70%. Transportation charges increase by 33.36% so the net income increase only 8.77%.

Conclusion

• In 2006-07 NPM decrease from 47.51% to 45.51% due to increase in finance cost by 4407.78%

• Decrease in other income by 14.89% NPM decreased comparing this with pear group average 34.665% this ratio is good.

• In 07-08 NOM decrease from 45.51% to 39.55% due to large increase in Royalty which increased by 58.70%.

DU PONT ANALYSIS 2006-2007

• In 2006-07 ROE decrease from 1.069 to 1.0061

• Reasons for Decrease: • The equity multiplier ratio improved from

2.8207 to 3.0072 but net profit margin decrease 2% and Asset turnover decrease 0.7976 to 0.7752 so ROE decreased

2007-08

• In 2007-08 ROE improve from 1.061 to 1.154

• Reasons for Increase:

• Asset turnover increase from 0.7752 to 0.8331 and also equity multiplier ratio improve from 3.0072 to 3.5008 so ROE improve.

Conclusion • In 2006-07 net profit margin was

45.51%,asset turnover 0.7752 and equity multiplier was 3.0072 so ROE ratio was 1.061 comparing this with industry average that is 0.466 this ratio is good.

• In 2007-08 net profit margin is 39.55%, asset turnover 0.8331 and equity multiplier was 3.5008 so ROE ratio was 1.154 comparing this with industry average that is 0.712 this ratio is good

MICHEAL PORTER MODEL

• RIYALRY• THREATS OF ENTRY• BUYER POWER• THREATS OF SUBITUTES • SUPPLIER POWER

SWOT ANALYSIS • STRENGTH • WEAKNESS • THREATS • OPPORTUNITIES