Accounting project proposal

Introduction

Shell is one of the biggest and amongst the most recognized energy and petrochemicals companies in the world. The company has employs as much as 101,000 employees in its operations in more than 90 countries worldwide. The innovations that the company has undergone in the past few years have helped it to take up as many challenges in the field of energy that come by in the future. The company has its headquarters in The Hague in the Netherlands. The company has the strategy that aims to keep themselves at the apex in the oil and gas industry and also be able to prove the best possible shareholders' return and be able to fulfil the energy demand globally. The company has been focusing incessantly on exploring the new oil and gas reserves and also add to the current value of the firm by developing major projects. The company has the basic fundamental of finance in mind as to generate as much from the existing assets and also participate equally in the investments for the growth of the market. (Products and Services , 2010)

Services

One would have to acknowledge the fact that Shell provides its services in a huge diversity. The following are the services that the company provides on the road in the GCC region:

  • Card Services
  • Fuels
  • Loyalty
  • Oils
  • Station Locator

The following are the business services that the company provides:

  • Bitumen
  • Chemicals
  • Chemical Fuels
  • Global Solutions
  • Shell for Lubricants
  • Marine Products
  • Shell Gas
  • Sulphur
  • Shell Trading and Shipping
  • Card Services

The following is the list of participation of Shell in Motorsports:

  • Shell and Ferrari
  • Shell and Ducati
  • Shell and NASCAR

Activities

The company has made a land mark in the GCC region as well. The company has made an extensive collection of manufacturing chemicals, storing them and also in the logistics and trading sectors. The activities of the company are available in the following places:

Saudi Arabia:

The Company exists as a joint stock partner in Saudi Arabia Petrochemical Company (SADAF). The company produces petrochemicals of about 4.7 million tonnes. The chemicals that the company produces include are ethylene, caustic soda, methyl tertiary butyl ether etc. There is another joint venture of Shell known as Sasref which is amongst the largest of the refineries in the region. The products that the refinery produces are naptha and benzene.

Dubai:

The Company operates in three different teams in the city. These are logistics and customer service support, marketing and operations. The company markets polyols which is used for the production of polyurethane and also monopropylene glycol. All the products that the company manufactures are stored in the chemical terminal that is available in Dubai. There also exists a drumming facility in the city so as to take care of the packaging requirements of the customers. (Factsheets, 2010)

Qatar:

In Qatar as well, the company has a partnership with Qatar Chemicals so as to develop the largest Gas to Liquid Conversion plant in the world. The company has also planned for an ethane based cracker that would be amongst the best in the world. It would also make a derivatives complex in the Industrial city of Ras Laffan.

Glimpses of Financial Statements

The company has a dividend per share value of 1.60 as seen in the table. This is an indication of the high distribution that the company has been making in order to draw investors. This is much over the last year. This also approves of the diversities that the company is hoping to make in the GCC region in the near future.

It can be seen that gas and power is produced o the highest extent. We have already seen the activities of Shell in the above mentioned portions. It is an indication of the fact that the company has great plans for development in the gas and power sector. The GCC region also supports the fact considering the rich oil content in the region.

Here again, one can see that the company is profiting a lot from the gas and power plant sector. As per as the above analysis of the production of oil and gas in the GCC region, the company is also seen to produce a huge amount of the same. This is in fact negative in USA. So, one can see the importance of international presence of the company. It is also a matter of pride that much of the work has been taken care of by the GCC countries that include Kuwait, United Arab Emirates and Saudi Arabia as we have seen above.

The above tables give a little clue about the presence of Shell in the GCC region. This information would be used as a base to compare the performances of the company as in 2009 and in 2008. The above data has been given for 2008.

In order to understand the company better, it is also required that the analysis of the following ratios are done. They have been mentioned as follows:

Short-Term Liquidity Ratios

Current Ratio =

Current Assets/Current liabilities

Working capital=

Current assets-Current liabilities

Activity Ratios

Inventory turnover =

COGS/ average inventory

Number of days of inventory=

365/inventory turnover

Profitability Ratios

Profit margin on sales =

Net income / net sales

Net operating income to sales

= EBIT / net sales

Capital Structure and Coverage ratio

Fixed assets to Equity Capital=

Fixed assets / Total Equity

Net tangible assets to long-term debt=

Net tangible assets / long- term debt

Leverage:

Degree of financial leverage (DFL) =

% change in net income/% change in operating income

(Or)= EBIT / EBIT-I - [P / (1-T)]

Degree of operating leverage (DOL) =

% change in net operating income/% change in sales

(Or)= contribution margin / contribution margin - F.C

Financial leverage ratio (equity multiplier)

Average total assets / average common equity

The above ratios and an evaluation of the balance sheet, income statement and the cash flow statement of the company would determine the financial status of the company. (Leverage Ratios Calculation Formulas and Explanations, 2010)

References

  • Products and Services. (2010). Retrieved on April 2, 2010 from http://www.shell.com/home/content/products_services/
  • Factsheets. (2010). Retrieved on April 2, 2010 from http://www.shell.com/home/content/chemicals/aboutshell/media_centre/factsheets/shell_petrochemicals_middle_east/shell_petrochemicals_middle_east.html
  • Leverage Ratios Calculation Formulas and Explanations (2010), Retrieved on April 2, 2010 from http://www.bizwiz.ca/leverage_ratios.html

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